My last article discussed when not to maximize revenue. While most who commented agreed in concept, there was one friend who questioned me. “Can you add empirical evidence for your long-term revenue maximization piece?” Which is fancy data-speak that loosely translates to: show me the money.
With pleasure, fellow Challenger.
To start, I looked at this client’s repeat business in general. It is broadly related to this topic as guests continue to come back, stay longer, spend more, and refer their friends. Now, I am not claiming that a complimentary upgrade or amenity is solely responsible. On the contrary, I know that several factors support the growth of this segment. However, it is proof of guest satisfaction with regard to value for money.
Choosing to not maximize revenue with ‘nickel and diming’, as these tactics may be perceived, is one way this client reinforces their guests’ value perception. Instead of selling upgrades on arrival, they are offered on a complimentary basis, if available. Likewise, amenities are sent to the room or dinner table to celebrate special occasions. Both contribute to guest satisfaction which ultimately drives long-term revenue growth.
Example 1: 2019 repeat guest bookings grew 23% and revenue grew 29% year-on-year for the same period in 2018. 2018 was up on 2017 by 13% and 21%, and 2017 was up on 2016 by 10% and 8% respectively.
HOW RELATIONSHIPS DRIVE LONG-TERM REVENUE
Another measure we consider is the growth of our travel agent business. This segment continues to grow and is largely powered by word-of-mouth marketing and referrals from other agents. I have a number of examples but in the interest of time and the average attention span, I’ve highlighted two:
Example 2: A travel agent wanted to stay on a reduced rate basis. The name of his agency didn’t exactly coincide with my client’s luxury brand, but we believe that having a travel agent experience the property is the best way to ensure qualified guests and win-wins all around. So, we extended a discounted rate, and after staying just 2 nights, he has booked 30K USD in total revenue. So far.
Example 3: Another agent had a problem with a client who found a better deal through a credit card company. Now, my client wasn’t sponsoring this offer; the credit card was. But it went against the hotel’s rate parity policy, so I closed the credit card company’s availability, indirectly sending her client back to her. We supported her business and in return, she has personally booked over 67K USD in sales with no sign of slowing down. That figure doesn’t include the referrals she has sent our way, either.
Hopefully, these experiences with proof of related revenue growth satisfy my friend, the Challenger, as well as any other skeptics. I wholeheartedly support questioning how data is chopped and as always, thank you for reading. Please do share any empirical evidence of your own as well. I’d love to read more examples that prove a long-term revenue strategy can indeed pay off.