When the numbers are added up, it looks like the entire hotel industry had an amazing 2016. But that’s a global total, not necessarily your hotel’s reality. In fact, global profits and a local hotel’s situation can be light years apart, leaving certain hoteliers feeling they’re not making enough money managing their hotel.
That’s because smart professionals always feel no matter how much revenue a hotel pulls in, there’s always a desire to add more cash to the bottom line. Hotels that are using a cloud based property management system, such as the SkyTouch Hotel OS® from SkyTouch Technology, are leveraging built-in tools that can both lower operating costs and manage their rates more effectively.
Here’s a simple three step recipe to help beef up that bottom line.
Step One: Understand Your Opportunity
One challenge hoteliers have is underestimating true guest pricing threshold. Hoteliers may think they know, but it’s critical to always double check an assumption. It’s why SkyTouch developed an Average Daily Rate (ADR) calculator*. You can use this calculator to simulate how a few dollars difference in ADR can potentially make a big change to your total revenue over a 12-month period.
For example, for a small 65 room hotel with a current ADR of $75 using the industry average of 70% occupancy, a $10 lift in rate can bring an extra $13,650 annually, the equivalent to 47 week’s pay based on the current federal minimum wage employee rate. That’s nearly one full year of work for just thinking about rate a little differently.
Plus, customers using Skytouch’s OS real time rate management features find it a breeze to operate. Explore the complimentary rate calculator and take a few moments and discover how much even the smallest change to your ADR strategy can mean to the overall health of your property. Try it today with our SkyTouch ADR Calculator.
Step Two: Automate Rates For Higher Returns
Spending too much time setting rates may simply not be worth your effort. There’s a more efficient way to potentially yield more revenue, while also eliminating people hours that were formerly required for changing rates across a myriad of channels.
Automatic rate management ensures you’re getting the most effective room pricing out to market. And it all can be done at the touch of a button … that is if you’re using a modern PMS with the right assortment of features such as the SkyTouch OS.
Automated revenue management allows a user to set rules assisting in managing inventory value. All the user needs to do is define rate alert triggers with minimum and maximum dates from date of stay. Then the right system automatically adapts BAR levels based upon changes in actual occupancy or number of rooms sold. Plus, a technologically advanced hotel PMS will allow for the setting of shared selling limits among designated wholesale rate plans.
Together, these two powerful, yet simple to use tools can help a hotel increase profitability.
Step Three: Cut the Fat
Another way to help make more money without raising rates is by lowering expenses. It’s a great way to put more money in your pocket.
Make sure your property management system is designed to save you money, not cost you money. Hotels that are still using on-site, server based property management systems are missing out on big savings. When a PMS is not in the cloud it can become outdated quickly. That means missing out on new cost or time saving features, security updates, and the ability to manage the hotel remotely to react quickly to opportunity and market changes.
In addition, a modern PMS typically has an easier to use interface and online training tools. Together, these features enable front desk agents to learn the system, and be productive quickly. Also, ease of use can reduce training expense for new hires while eliminating distractions for the GM needing to spend countless hours supporting new staff on the PMS.
When a hotelier fully understands how to maximize rate opportunities while finding exciting new ways to lower operational costs, they’re suddenly more in control. That’s the most effective way to help increase yield for an underperforming hotel. It’s also a great way to start off the New Year.
*These calculators are for illustrative purposes only and are designed to be informational and educational tools only, and do not constitute financial or legal advice. The default figures shown are hypothetical only and may not be applicable to your individual situation. The calculations and results are based on a range of stated assumptions, as well as the figures you input, and are intended as hypothetical estimates only. Your individual results will vary. Do not rely on these calculators when you’re making decisions about financial or legal matters. Instead, we strongly recommend that you seek the advice of a financial services or legal professional. Choice Hotels International, Inc. and Skytouch Technology, and their affiliates, expressly disclaim all liability and responsibility to any person who relies, or partially relies, on anything done or omitted to be done by these calculators, as well as any decisions or actions taken in reliance upon or as a result of the information provided by these tools.