Why independent hotels need to automate to rebound from COVID-19 - IDeaS
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Why independent hotels need to automate to rebound from COVID-19 - IDeaS
IDeaS Asia Pacific Vice President Rachel Grier looks at how independent or smaller scale properties can position themselves to not only survive but rebound and prosper after COVID-19.
No hotel in Australia is unaffected by COVID-19. However, while much industry focus is on the performance of larger chains and higher profile hotel brands during this period of market disruption, independent or smaller scale properties face significant challenges to drive revenue.
For independent or smaller scale properties, pricing rooms incorrectly has a much more noticeable impact on total revenue performance. Whereas, if there is a pricing error at a larger hotel, it is easier to ‘bury’ the rate mistake or absorb any short-term revenue loss due to a greater volume of rooms and bookings. With smaller inventory properties, managing booking pace and capturing optimal reservations by accepting the most valuable demand across arrival dates and lengths of stay is even more critical during periods of disruption and in the early stages of market upswing.
It is important to note, though, that independent hotels frequently have fewer resources compared to larger chain hotels, and often do not have a dedicated revenue manager. The revenue strategy can often be left up to the general manager, director of sales and marketing, reservations manager, or even the accountant—all of whom already have busy schedules filled with other responsibilities. This lack of a dedicated resource and isolated operating systems may result in rooms that are either overpriced, or under-priced, which ultimately turns guests away or secures guests at a lower than ideal booking rate for the hotel. All of this creates significant implications for properties trying to rebuild business in a soft and unpredictable market.
Automate to survive
Without appropriate technology, it is difficult to compile and analyse all the disparate data points accurately and effectively. In a rapidly evolving business environment, manually collecting, evaluating and calculating data via spreadsheets is not only a tedious process, but it’s also slow and highly susceptible to mistakes and missed opportunities. Global hotel brands equip their properties with revenue management technology for this reason. Automated revenue management systems (RMS) and technologies liberate hoteliers from being data collectors and instead enable them to focus on strategies to leverage every opportunity in tandem with the sales and marketing teams to stimulate and capture maximum share of demand.
An advanced RMS not only generates prices that adapt to market changes but also considers the competitive landscape and a guest’s willingness to pay. An RMS scientifically monitors competitor hotels’ pricing for an equivalent room type and its impact on your hotel’s pricing to gauge how aggressively (or otherwise) to react when a competitor changes pricing. In a crisis like the COVID-19 pandemic, history shows that hoteliers tend to overact with drastic price drops, to compete on price for the remaining demand that does exist.
Chain and larger scale hotels depend on the efficiencies and data science delivered by RMS solutions in order to maximise profitability and productivity. If an independent property has any of these properties in their own competitor set, those hotels have a competitive advantage by having greater data ‘visibility’ and demand insights that allow them to price their rooms more accurately and attract the right business at the right price.
Develop adjustable, sustainable revenue strategies
While there has been recent positive news for Australian hoteliers with the opening of the New Zealand travel bubble, which will likely support business in tourist areas like northern Queensland over winter months; guest demand overall in Australia may be compressed over a longer period, due to wider international travel restrictions still being in place. Independent hotels should leverage automated revenue technology to analyse the types of demand still available in their local market and to understand what guests need. For some hotels, it could be returning residents under quarantine orders. For others, it could be staycation couples or family in the city stays. No matter what type of demand is available, with the right data insight, hotels can create relevant offers and services to meet the customer’s needs.
While the hospitality industry is starting to offer glimmers of hope and return, the fight for a share of occupancy continues. Traditional business hotels have repositioned to capture business from the domestic leisure market, and your 2019 competitor set is likely to have changed significantly. A detailed review of your hotel’s competitive environment is a worthwhile exercise—understanding rival properties’ own products, their positioning and pricing strategies is key to driving your product development, marketing and achieving fair market share.
Revenue management as a cost saver
Automated revenue systems are essential in a hotel’s business technology platform rather than a ‘nice to have’ expense. Understanding future demand via RMS forecasting enables enhancement of both labour scheduling and purchasing decisions. Detailed demand forecasts by room type empower staffing managers to determine which areas are most affected by the number of guests staying in the hotel. The number of occupants a hotel carries can directly influence housekeeping needs, the number of staff needed on the front desk to check guests in and out, the number of servers required in restaurants and valets to park cars, etc.
Another area in which RMS forecasts can add value is to the food and beverage department, a large source of potential waste for hotels, especially when it comes to those items with an expiration date. Knowing when there will be periods of high and low demand, as well as from which segments the key consumers of these perishable items will be, helps hoteliers ensure they order the products at the right time and avoid costly spoilage.
These same operational forecasting principles can be translated throughout the hotel’s entire operation for better overall staffing and inventory levels. The optimised wage costs translate into real savings, which contributes directly to the hotel’s bottom line in a time when every dollar counts.
Don’t just survive, thrive
Independent hotels in Australia are, in many ways, more exposed to market disruption than any other segment of the hotel sector. Through moving towards proven, automated systems that help attract the right guest, for the right price—even in an uncertain market—independent and small properties are positioning themselves to not only survive but prosper into the future.
For more information on how independent hotels can benefit from automated revenue systems, please visit: www.ideas.com
Click here for more information about IDeaS.
The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters.
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