Hotels are an integral part of our society, utilized for leisure, business travel, conventions, special events, and a million other reasons. On the flip side, there’s heavy competition in the industry, and a constant challenge to experience high levels of success as a hotel owner. There are many variables at play when it comes to owning, managing, and operating a hotel, and it’s imperative that a keen eye is kept at all times. The industry is constantly changing and evolving, and a successful hotel must not only keep up with the changes, but transform ahead of them by implementing hotel growth strategies.
Constant evaluation of strategies and tactics is crucial. In order to achieve long-term success, a hotel owner must be able to balance, make decisions about, and produce results in all of the departments – finance, marketing, sales, catering, rooms, channel distribution, as well as overall management.
For decades, HMG Hospitality has been successfully assisting hotel owners to achieve their fullest potential and developing hotel growth strategies and tactics that enable constant improvement. Some of the most experienced members of the HMG Hospitality management team share some key insights into the best hotel growth strategies below.
3 Hotel Growth Strategies You Can Implement Right Away
News Trends in Revenue Management
Yolanda Bender, President
The discipline of revenue management has evolved into one of the most critical tools in the industry. Revenue management’s future will include a rapid evolution as a strategic asset driving future decision-making. Total revenue management put simply is the expansion of analytics beyond rooms-revenue.
In order to reap further benefits for the top and bottom lines, leverage the same principles to function space, food and beverage, and other ancillary revenue sources of your hotel. Even Disneyland recently announced that they will begin “revenue managing” admission prices on high demand days.
As a hotel owner, your focus should be on finding, building, and retaining revenue management talent. Additionally, Hoteliers must constantly track, analyze, and maximize social networking platforms as an integral part of revenue management. Be proactive with user-generated hotel reviews, blogs, videos, and images.
Donna Lewis, Vice President of Sales & Marketing and Revenue Management
The best leaders have the ability to bring out the best in the teams. A complicent General Manager can and will negatively influence even the brightest stars on their teams. Too often General Managers complain how they would have made more profit if only they had more top-line revenue, hinting that increased revenue was out of their direct control.
Well, when General Managers feel a detachment from their hotel’s revenue lines, it typically reveals that revenues are failing. An excellent General Manager accepts ownership of poor revenues, as well as healthy revenues, and is a true sales leader. Sales leadership is the most important general management role.
Additionally, an excellent General Manager constantly looks for his/her team’s small successes and rewards them. Even audibly speaking a “well-done” brings an immense amount of satisfaction and pride to the team, yet it seems to be very uncommon. For those General Managers who think you do this well, think again. Too often an insincere facial expression or casual insincere comment belies the true intent a manager seeks. Praise in public, criticize in private!
“Having two ears & only one mouth should indicate that one should listen twice as much as talk,” the best General Managers demonstrate this daily. Great leadership derives from understanding the needs of the team, and understand comes from listening.
Maximizing Your EBIDTA
Young Yoon, Corporate Director of Development
EBIDTA (and EBIDTA margin) are commonly used to measure a hotel’s performance. Simply speaking maximizing profitability requires increasing revenue and decreasing expenses. One of a owner’s primary hotel growth strategies must focus on increasing RevPAR.
How is your hotel positioned? How effective is your revenue management strategy? It’s also equally important to understand that RevPAR growth doesn’t always equal EBIDTA growth. A hotel must implement a strategy that involved finding the proper blend of increases in occupancy and ADR to maximize profitability. Growth only through occupancy and a low ADR will result in higher expense levels, affecting profitability margins.
Effective cost controls are crucial to maximize profitability. Labor is generally the highest expense in hotel operations, but there are additional areas owner should evaluate. Do you carry high inventory counts in your operating departments? When is the last time you renegotiated contracts with your suppliers? Asses both of those questions and you’ll already be making steps to get back on track.
Running a hotel isn’t easy or cheap, it takes intense planning, organization, and capital to start a hotel and to keep it going. Furthermore innovation, creativity, and determination are required to reach success. It doesn’t take much for a hotel to become distressed or to underperform. Between the constantly changing economy, to a lack of understanding of the travel industry, to letting less ideal team members remain on the team, there are hundreds of reason a hotel can find itself in trouble.
Once a hotel becomes distressed, it’s imperative that action is taken before it spirals out of control altogether. HMG Hospitality knows the top hotel growth strategies, plus the experience and determination to turn around even the most challenging of situations. Contact us to get your hotel on the path to a healthy and happy bottomline today.