Customer acquisition is no mean feat and comes at a cost, so, once on-property, how can hoteliers maximise the guest revenue opportunity? And how can product be aligned with profile to maximise top line revenue and bottom-line profitability?
Paul Harnedy, executive vice president of Cedar Capital Partners – which invests exclusively in the hospitality sector with an emphasis on luxury, full service and lifestyle hotels – says that investors need to be considering the guest profile at the development and conceptual stage of the hotel.
“You’ve got to know who your customer is going to be or who you want it to be to understand the product that you want to offer. There’s no point in developing something that people aren’t going to buy or isn’t going to appeal to your target market,” he says.
That guest profile and understanding the demand will then subsequently impact your pricing.
“You need to take a step back before you start thinking about how you get the customer to buy and make sure that the product that you offer and the price point at which you offer it are appealing to the markets in which you want to operate, he says.
Use data to deliver a personalised offer
Key to understanding what customers want and what they’re willing to pay for it, he continues, are technology and data, knowledge which can then be applied to maximise spend by personalising the packages that are marketed to them at the point of booking, what add-ons are offered to them during their stay, and to raise awareness of any opportunities for retail at the end of the stay.
“Understanding what your customers want is paramount,” says Harnedy. “Don’t think you know automatically what the markets wants and needs and what will drive the best return. And then utilise all the technology but also the people in your business at every point of the guest journey, from the reservation stage right through to the departure and onwards, to personalise those products, services and experiences to them.”
Travis Cabrera, regional director, EMEA at guest data and communication solution Revinate agrees: “The insights, the intel – that’s going to help you deliver that offer, that personalised experience,” he says.
He urges hoteliers to collect data at every possible touchpoint, whether that be a phone call with a reservation agent, engagement with marketing emails that are being distributed, and even property management system (PMS) data.
“The more that you can apply added hyper segments to your communication, that has a direct impact in getting people to engage with it and obviously people to book, spend and upsell their stay,” he adds.
Maximising pre-property opportunities
The opportunities to maximise guest spend before they are even on-property are significant, for example when it comes to revenue management.
The world of revenue management is “getting more and more complex”, says Rupert Gutteridge, head of sales at hotel upselling software provider Oaky, which is working with brands from Radisson Blu to Hard Rock Hotel.
Gutteridge says he has already become aware of dynamic food pricing being implemented in a very large hotel chain and, while he acknowledges revenue management can be “incredibly complex”, he says the rewards are “amazing” and the uptake “really positive”.
“When we see what flexing the price on an early check-in or late check-out is doing to some hotels, it’s incredible. But it has to be flexible, because if the price of the room goes up or down a lot, the price of everything else has to surely relate to that,” he says. “I’m afraid it’s going to get more and more complex out there.”
Meanwhile, another opportunity is marketing and communications – Generation Z and Y “love to engage with the hotel remotely”, says Gutteridge, emphasising that this guest segment wants to understand what experiences are on offer at a property before they get there.
He encourages hoteliers to communicate the property ‘experience’ through good imagery and content and being clear about what the guest could potentially experience – whether that’s a spa or swimming pool onsite or availability of a package deal – to maximise spend opportunities before they’ve even arrived. But, going back to data, communications must be appropriate to that individual guest for it to work.
“Segmentation, personalisation, experience – you’ve got to wind all of that up into some nice software package that’s going to give you just what they want,” he says.
Deliver on your commitments
However, this process doesn’t end when you’ve successfully seduced guests to pay for add-ons and additional services, warns Harnedy – whatever a hotel has committed to through the buying cycle, that experience and commitment then needs to be delivered on-property. He points out that it is only by delivering on that expectation that a hotel will build reputation, loyalty, and direct revenues.
David Orr, CEO of Resident Hotels, which added the Sleeperz brand to its portfolio earlier this year, says that the group’s approach is “reputation-driven”.
“Our approach is very much about understanding the channels which we do have control over and working to make them the most effective,” he says – adding that while the company seeks to maximise spend, it is also conversely “maximising leakage”.
“What we’re doing is hopefully getting people to engage with the environment around the hotel, not just being obsessed about what happens inside the four walls,” he explains.
All those quoted in the article appeared on stage at the Annual Hotel Conference held in Manchester between October 3 and 4, in a session called: The Whole Guest: Maximising Spend, Minimising Leakage.