How hotels can diversify their revenue
Diversifying your revenue is essentially a means of maximizing your property’s full potential. And it doesn’t always require drastic steps: here are eight ways to diversify hotel revenue.
1. Monetize all your space
If we were to ask you about your RevPAR performance, it probably wouldn’t take very long for you to find the latest numbers. But how about your RevPAM?
Revenue per available meter squared is a holistic metric that will tell you more about how effectively you’re using all the space in your property. There are almost endless ways to monetize all of the unused (and used) space in hotels, but the thing to remember is to do what fits with your brand and vision for hospitality. You can get really creative (pop-up barbers, cookery classes) but as a starting point, consider the following:
- Parking spaces
- Event spaces (weddings, exhibitions, work team building)
- Day-use hotel rooms (sold by day or by hour)
2. Cater to extended stays
Extended stays or long stays (typically stays of a month or more) are increasingly common as work and travel habits change – and they can also be lucrative for you. Guests who stay longer at your hotel will be in need of more facilities like a workspace and somewhere to eat – perfect cross-selling opportunities to further diversify revenue.
If you need more convincing about the business value, this article about accommodating the long stay guest covers why these reservations have fewer cancelations, higher long-term value and streamlined operational costs.
3. Invest in F&B
Food and beverage is often the first port-of-call for hoteliers who want to build more revenue on top of rooms or beds. And it makes sense: everybody needs to eat. If you already have a bar or restaurant onsite, here are a couple of tips to make sure you’re not leaving money on the table.
- Upsell dining packages before your guests arrive by adding these options to your booking engine or online check-in process
- Encourage locals to become regulars with happy hours, lunch deals or resident offers
- Add your restaurant to delivery services to expand your reach
4. Maximize upsells
It’s one thing to offer an upgrade to a bigger room. It’s another thing entirely (and to be clear, a much better, more profitable thing) to offer attribute-based pricing. Give guests the ability to book a room based on specific preferences like window view, floor number and bathroom specs and you can monetize every feature of every room.
5. Leverage your amenities
When you hear ‘amenities’ maybe you think of toiletries and bath robes. But we think of products and services that can be sold like retail. You could offer luxury sheets or upscale toiletries as purchasable extras – on site or as part of the booking process. Let guests choose extra housekeeping for a fee – or less housekeeping for a complementary drink at the bar – or offer room services like a butler service or baby/pet sitting (same thing?).
There are services that you already offer that could also be monetized for visitors and locals too: airport transfers, dry cleaning, and facilities like spas, pools and gyms.
6. Offer a subscription service
Subscriptions – or memberships – work particularly well if you have a chain of properties, although they can also be a success at standalone hotels. Guests benefit because they know they have convenient access to a range of services and experience, delivered at a standard they can rely on. Hotels benefit because it’s a steady stream of revenue that’s good for cash flow.
7. Provide co-working space
Most people don’t like working in offices. Working in a trendy hotel co-working space, however, is a different proposition. As flexible working becomes more popular, people want attractive, accessible spaces that are convenient for when they travel for work. And on the other side of the coin, you have local workers who want a change of scenery from their small home office.
Selling desks and meeting room space by the day or by the hour is a great way to diversify your revenue. It will also boost your F&B earnings as the demand for regular coffee and snacks takes over.
8. Build a community
The modern guest desires authenticity when they travel. A big part of this is staying at a hotel that’s genuinely connected with the local community. That could be through partnering with local businesses and brands to sell their products like food, drinks and toiletries, or experiences such as neighborhood tours or art classes.
Creating a community will also bring in locals and diversify your customer base. This is vital for keeping revenue up during your low season when fewer guests are traveling.
Conclusion
There are plenty of ways to diversify your hotel revenue. Not all of them will work for your hotel, but focusing on two or three that best fit your goals will likely boost your cash flow, revenue and guest happiness.
This article only scratches the surface of what’s possible. If you’d like a deeper dive into how to diversify hotel revenue, download our eponymous guide: How to Diversify Hotel Revenue.
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