Do you put your Premium Rooms on a pedestal? A more nuanced approach will yield more revenue.
Suites are a peculiar thing within the hotel industry. They are, after all, just hotel rooms for rent. But some hoteliers are very attached to what their premium represents–the hotel’s very best. In a way, these special rooms are protected. Some hotels may not even yield the biggest and best room rates. In this article, you’ll learn how to maximize your premium room revenue.
Rationalize the Merchandising of Your Premium Rooms
To maximize revenue, you need to rationalize the merchandising of your premium rooms. Your suites change in value to a guest once that guest has a reservation for another room. It isn’t zero. Just because the guest has a reservation for another room doesn’t mean the suite has no value to them. The guest still wants to stay in that premium room. Through intelligent upselling pricing, you can make that empty suite for you. But you may have to think differently about those special, grand rooms.
What is so Special About your Suites?
The pithy answer is; nothing. Of course, context is everything. Nobody doubts your suites are a fantastic experience. But as a real estate investment, they are only as special as they can produce revenue on a nightly basis. An empty suite is not only ‘un-special.’ it is, in fact, a drag on the real estate investment airframe.
When business in your market is good, the bills are paid, and the urgency to find revenue is lessened. However, the pandemic quickly exposed hotels’ balance sheets. Before 2020, owners were satisfied with letting their fortunes rise and ebb with the tide. But Covid abruptly changed that. Business ebbed so far that many hotels found themselves on the rocks and everyone else looked towards their monthly reporting with dread.
But there is nothing that brings out efficiency and innovation like hard times, and 2020 motivated hotel executives to rethink their notions of profitability and revenue diversification.
“Covid has forced everyone to view their assets and their real estate and try to understand whether or not there are alternative routes to generate revenue,” said Laura Brinkmann, VP Private Equity, Europe, at Brookfield Asset Management, in a recent interview.
In short, this means your owner expects every square foot or meter of property to perform, regardless of room type. That puts premium rooms and suites in the crosshairs.
There are hundreds of thousands of suites worldwide, but most are only occupied about 20 percent and sit empty the rest of the year. It’s not overly unusual that the nicest ones aren’t even listed or available to book on a hotel’s website.
Some brands are hesitant to showcase their unique inventory and assume that suites will be filled by loyal VIPs who wouldn’t book online.
So, if empty suites are lowering your REVPAR, how does one fill those rooms? The challenge is that OTAs and the Internet have conditioned most guests to gravitate toward the cheapest room type possible. Room-only rates tend to be at the top of the search results and thus sell first, leading to overbooking lower room types.
Put Your Space to Work – Upsell
Here is a concept that will make those empty suites more productive: once you have secured a customer, it is time to de-couple the suite’s retail (or merchandised) value from the reality that it is merely just square feet (or meters) of the hotel investment. In short, once the guest makes an initial reservation, offer them the opportunity to upgrade their reservation.
Hotel rooms are a perishable product. Upselling for a discounted rate does not de-value the product’s brand perception after initially acquiring the customer. Anything they get now will be viewed as a wonderful bonus – not a cheaply priced suite. Upgrades and stay extensions, such as early check-in and late departure, provide an enormous opportunity to capture and capitalize on additional sources of revenue.
By viewing your entire room space as a series of opportunities to drive additional revenue, you maximize your chances of increasing your REVPAR and guest wallet share.
When it comes to logistics, there is no question the pandemic has had a significant impact on staffing resulting in severe operational challenges. A task such as in-person upselling is no longer manageable or practical with fewer resources.
But new intelligent technology solutions enable hoteliers to do more with less and maximize revenue opportunities. By automating, hotels can reduce errors and operate more efficiently. Via ROOMDEX automation, room upgrades and other services can be offered to guests before they reach your property, enhancing the guest experience while simultaneously providing a greater opportunity to increase revenue.
Where Real Estate is Available, there’s Revenue to be Had
The pandemic has provided the opportunity to hit the reset button and rethink revenue management practices. Hotels need to start looking at all their core revenue streams (rooms) and focus on maximizing the value during both good and bad. Upselling is one such way to do this. With automated upsells, hotels can quickly and easily maximize their space and drive revenue by otherwise underutilized real estate inside their hotels.