Hotel revenue trends: what’s impacting on your bottom line?
For the past five years, Kiwi hoteliers and accommodation providers have been enjoying a steady rise in international visitor numbers – up almost 40 per cent over half a decade. Recently though, Tourism Industry Aotearoa chief executive, Chris Roberts, warned that this growth is set to flatline, saying that the days of double-digit growth are “well and truly over”.
It sounds like a serious warning, but our advice: don’t worry just yet. Despite the drop in visitors, those hitting our shores are still happy to spend, with numbers surpassing $40 billion annually. And while the flow-on effect of international events and political changes can have an impact on your hotel revenue, there are several other trends to keep in mind that can help reduce the hit to your bottom line.
To keep your profit margins sitting pretty, consider these five hospitality trends that could influence a successful hotel revenue management strategy for your business to comfortably see you through a downturn:
An increase in next-gen travellers
In 2019, Millennials took over Boomers in population numbers, and by 2020, they’re expected to account for nearly half of all business travel spending. While they’re less inclined to spend up large in stores, their desire to seek out unique experiences sees them saving their holiday fund for activities instead.
What could this mean to you? Consider how off-the-beaten-path or value-add activities could fit into your hotel offering. Opportunities to interact with locals for more meaningful experiences or to visit less commoditised attractions appeal to their desire for purposeful travel – while value-add incentives appeal to their pockets.
Millennials and Gen-Zers are also leading the charge when it comes to connectivity. There is increasing expectation to be connected, no matter where you are in the world. Use of technology is influencing how travellers shop, seek information, book and pay for travel. Ensuring your hotel offers a simple and streamlined process online for booking and accessing information is critical. This could mean investing in conveniences such as mobile check-in and ‘digital assistants’, otherwise known as chatbots. Chatbots help with responsiveness to customer enquiries, without relying heavily on human resource so you’re free to focus on face-to-face interactions instead.
A more personal touch
With the increased use of technology comes increased access to data – and smart hoteliers are putting it to good use. Today’s travellers have come to expect a certain level of personalisation with their experience, and with the help of technology platforms, there is an opportunity here to use predictive personalisation to set your hotel apart from the rest. With greater insight into who your guests are and what kind of preferences they have, you can pre-empt queries, predict behaviour, tailor individual guest experiences or prepare more relevant incentives or offers. With memorable guest experiences comes great recommendations and repeat business – and ultimately, therefore, increased revenue.
Total revenue optimisation
For many accommodation providers, revenue management goes beyond just booking rooms. Consider all profit centres in your business, and look for opportunities where you can leverage food and beverage, ancillary revenue sources and conferencing for function spaces to increase the lifetime value of your guests. With the help of technology, you can establish a dynamic pricing model that allows you to maximise opportunities at peak times, and optimise pricing for group bookings.
The rise of the sharing economy
There’s no denying that the sharing economy in New Zealand has had a significant impact on traditional accommodation providers. But instead of looking at it as a frustration, consider it an opportunity to inspire new approaches in your business. Focus on the benefits you can offer above and beyond platforms like AirBnb and work on amplifying them. Many hotels are considering ways that they can create a sense of authenticity and connection – things like co-working or socialising spaces, more relaxed dining options and inviting social areas that encourage guests out of their rooms to interact in more welcoming spaces.
Successful accommodation providers are the ones who don’t sit back and let ‘market trends’ dictate their revenue, but rather who embrace change and understand how they can use it to their advantage. One thing we know is, ours is an industry that is ever-changing. With the right tools and systems in place, you’ll be able to better weather volatility and ride changing conditions, all while still providing incredible guest experience, building a great brand reputation and optimising hotel revenue.