As a hotelier, there are a few metrics that you absolutely must be keeping track of each week. The most basic of which when it comes to the performance of your bedrooms is your average occupancy percentage and average room rate.
Quite simply Average room rate is your total weekly room revenue (excluding food and beverage) divided by the total number of room nights sold for the same week. Let’s say your total room revenue is £20,000 for that week and number of room nights sold is 200 then your average room rate is: 20,000 / 200 = £100.
To work out your Average Occupancy Percentage you first need to know the total number of hotel rooms you have multiplied by 7 days. For example, if your hotel has 50 bedrooms then in one week you have 350 available room nights available to sell. To work out your average occupancy for the week take the number of room nights you actually sold in that week, multiply it by 100 and then divide by the total maximum number of available room nights. For example, in a week if you sold 200 room nights your average occupancy percentage would be 200 * 100 / 350 = 57.14%
Now you understand the math what we want to try and achieve is to increase our occupancy percentage without adversely affecting our average room rate.
As every hotelier worth their salt will tell you… You can’t sell yesterday’s empty room! So, increasing our occupancy levels will certainly help the bottom line.
However, it’s not quite that simple as most hotels have peak seasons or days of the week when they are full and unfortunately you can’t be more than full. So, what we need to do is fill our rooms during quieter periods.
1) Photographs. Yes, you may have a 40 megapixel on your smartphone but photography is one area that I believe you shouldn’t try and cut corners on. Old photographs can really date your hotel and cost you business. If you’ve recently updated rooms or parts of the hotel make sure your photos are updated at the same time. Interior photographs need to be lit properly, they need to be staged properly with flowers and accessories and they certainly need post-processing to make sure they really pop. The biggest jump I saw in bookings is when we redid the hotel’s website and replaced all of the OTA sites with professional photos.
2) Voucher and discount sites. Get this right and it can dramatically increase your occupancy levels get it wrong and it will dramatically reduce your average room rate! The aim here is to increase our occupancy levels during the offseason BUT NOT discounting rates at busy times. In the case of my hotel, our quietest months were January to March but excluding Saturday nights as we were always full on a Saturday night with guests paying the full rate. The discount/voucher site will be looking for a 40% + discount so how do we pull this off without our average room rate taking a dive? The answer is to add things to the deal with a perceived value and then apply the discount. Lets say your room only rate is £100 if we add a late checkout which we charge £20 for (but costs us nothing) and a bottle of prosecco in their room on arrival that we charge £24 for (but costs us £7) and 2 x full English breakfasts which we charge £30 for (but only costs us £10) we now have a package with a perceived value of £174. If we were to sell this package for £99 we have effectively given the guest a 54% discount which looks like an amazing deal. In reality however, it’s only cost us the trade price of a bottle of Prosecco, and a few eggs, bacon and sausages! Be careful what you throw in for free however as it would be nice to be able to leave a few things to upsell the guest when they arrive at the hotel. The sales person at the discount site will probably suggest selling a dinner bed and breakfast package with a bottle of wine included. The problem here is that you’ve lost the ability to sell them dinner in your restaurant when they arrive and you’ve even included the bottle of wine so you probably won’t make much in drink sales either.
3) Reputation Marketing. So, your website looks great, your photographs look stunning, you’ve got a strong offer that’s the deal of the century, your prospective guest is about to book but decides to check your reviews on TripAdvisor first…. Oh!
With 93% of people reading reviews before making a booking it doesn’t bare thinking about how many bookings you are losing if these are the first reviews a prospective guest sees! So what can we do to improve our hotel’s reputation online? The first thing we should do is make sure our reception staff are asking the guest before they pay their bill if they have enjoyed their stay. Make sure they are trained to professionally handle a legitimate complaint and try to deal with the complaint, or at least escalate it and tell the guest a senior person will be getting back to them before they leave the premises. By doing this we are trying to stop the disgruntled guest from leaving a negative review online before the manager gets a chance to look into the issue and attempt to make things right. Obviously, if the guest had enjoyed their stay there is no harm in politely asking them if they would leave a review. Most people will agree, but whether they remember to do it or not is another matter. A much better solution is to automate the process and use reputation management software to get in front of a disgruntled guest and increase your positive review volume. If a negative review does slip through the net and ends up on an OTA or review site you need to respond to the review and give your side of events as soon as possible. Remember this is not for the disgruntled guests’ benefit but it’s for your prospective guests who are reading the review and may be about to make a booking. Some hotel reputation software will constantly scan OTA and Review sites for new reviews and alert you as soon as a new one is posted. This can be extremely useful as it’s pretty much impossible to manually check every possible review website and OTA multiple times per day!
4) Snail mail. Before email marketing was a thing we use to send postcards with a special offer to guests that had stayed before. With GDPR rules in Europe it’s becoming increasingly difficult to market to your repeat customers using email. OTA’s are also shielding the guests’ real email from you which ads a further barrier. GDPR does not apply to postal mail so I believe this is a marketing channel that is due for a renaissance. If you do a quick search on the internet you will find companies that will allow you to design the postal campaign online and they will take care of the postage. With rates as low as 32p per letter and no stuffing envelopes or queuing at the post office, I think this is a great method to increase your occupancy levels in the quieter periods.
5) Dynamic pricing. If your prices are set in stone you are probably leaving money on the table AND missing out on bookings. The idea is simple – your rates change based on demand. If the hotel is busy and you only have a few rooms left the price goes up. If the hotel is empty the price goes down. Things to keep in mind: Don’t put on a mask! If you charge too much on a very busy day you may well let the room but if the guest feels like they have been robbed you could possibly get a bad review and that will cost you more in the long run. Don’t go too cheap – it’s very difficult to raise prices once people have experienced your product at a lower price. Be mindful of guests that have already booked at a higher price. Get this wrong and you will be discounting existing bookings! There are tools out there to help you do this and some of the OTA’s like booking.com even have their own products that will compare your rates to the competition.