Yes, you read that right. There are times when a small hotel is better off NOT attempting to maximize revenue.
Revenue management strategies are not one size fits all. In fact, revenue management strategies for small hotels differ quite a bit from those implemented at larger hotels. I had the opportunity to explain a few of these differences while training a client’s new hire last week. She was new to their team, but not the industry, and had the experience and confidence to challenge me on several decisions that seemed to contradict our goal to maximize revenue.
We first waived an F&B charge that a guest anticipated having to pay for. Then, we released the hotel’s last room to a tour operator, at a higher cost of sale, rather than require the travel agent to book direct. Later, we honored a Black Friday offer for a guest who had already confirmed their reservation months ago. We also waived cancellation penalties for guests who tested positive for COVID and allowed another to confirm two years out, while honouring last year’s rate. They had already postponed several times, but each time, a government or airline decision affected their ability to travel.
BIG PICTURE GOALS
In each case, the decision was mine to make, albeit with the backing of the owner and GM. They have built a ‘relationship first’ ethos into their operation, and the indirect result is a revenue strategy worth its weight in gold. Even now, as the industry reels from Covid, this hotel’s booking pace is exceeding last year…without discounting. Decisions are made with the ‘big picture’ in mind. The most important goal is to make the guest feel good about their choice.
While discussing why this hotel operates the way it does, their newest team member observed that we are very different from her last hotel. She went on to say our methods are not quite in line with her understanding of typical revenue strategies. I like challenging norms (and love that this particular client encourages it), so I listened with interest as she shared what her last Revenue Manager might have instructed her to do in each instance.
A VERY MERRY UNBIRTHDAY
“Consider me an unRevenue Manager;” I explained, “the goal is to maximize revenue, yes, but not at the expense of the relationship. Whether the relationship is with a travel agent or a direct guest, it takes precedence.”
In each of the examples above, we could have added incremental revenue. The impact on the hotel’s bottom line, though, would not have been significant enough to outweigh the potential wow factor. Prioritizing opportunities to ‘wow’ is the Mad Hatter equivalent of celebrating 364 ‘unbirthdays’ (multiple wins) versus a single birthday (a one-off up-sell or penalty payment).
This holistic approach is what sets boutique ROI apart as a hotel consulting company, too. We don’t just care about your bottom line, we care about your people, guests included.
THE BETTER WAY TO MAXIMIZE HOTEL REVENUE
Considering the time, money, and effort required to raise brand awareness and convert sales, it surprises me to see boutique hotels enforce policies that thwart their potential to turn every encounter into a great story and every guest into a brand advocate.
Boutique hotels have what today’s travelers want: authenticity, intimacy, and personality. As an independent hotelier, you offer the experiences and emotional connections that your target market craves; they will choose your hotel because of how the experience makes them feel. That means you have the ability to build long-lasting relationships that drive organic word-of-mouth referrals, reviews, and recommendations. And all of these compound into countless opportunities to truly maximize your hotel revenue for years to come. In short, rethink some of those short-term revenue grabs, and play the long game.
Make sure your revenue strategies are working for you, not against you. Get in touch to learn how our boutique hotel revenue management services can help.