As the hotel industry makes its way through the COVID-19 crisis, it is now clear that we will not see a “single day” when the economy we once knew will return. Yes, the recovery has slowly started, but it will take months, maybe years, to grow steadily back to hotel profit levels we knew in 2019.
So how should hoteliers maximise hotel profit through the recovery period ahead?
Travel today
All regions are moving at a different pace; however, it is evident that recovery is changing the very nature of travel. Many regions face cut-throat slow and potentially painful improvement and require a sharp shift to a focus on domestic travel.
COVID-related benefits such as government support, property subsidies and supplier support are gradually falling away, creating cashflow pressure that requires replacement by operational profits.
Borders are reopening gradually, and in some cases, reclosing with international borders not expected to reopen for most countries for a long time to come. Corporate travel has changed, events have changed, and international leisure travel is not the same as the free flow we once knew. Occupancies in markets relying on these sectors are being hit hardest.
The competition will likely be fiercer than we have ever seen. Supply is still increasing through residual hotel openings and current developments are heavily outweighed by a catastrophic decline in overall demand.
Focus for the future
In many ways, recovery requires a return to focus on the absolute basics. Here are the three fundamentals every hotel manager learns as a student to maximise hotel profit and how training is the key to maximising hotel profits through the long recovery phase:
Control costs
Capability: Payroll in virtually all travel sectors is the number one variable cost. While most organisations have rationalised headcount back to the bare minimum, now is the time to focus on capability, managing the abilities of the team to make smarter decisions. It takes a team effort, a professional, motivated team with a unified laser focus on the objective, with strong leadership at all levels to maximise the profitability of the business. In all areas of operations, supervisors and management must make smart decisions.
Efficiency: Efficiency is the name of the game, managing payroll costs to the dollar, from covers per team member, rooms per attendant and check-in/out per receptionist, now is the time to focus hourly on productivity, which is only possible with a highly capable team. Hotels must either work harder or create a smarter team to drive efficiencies and make better decisions. Fewer professionals in the property will necessitate multi-tasking and multiskilling to achieve the functions required to deliver a high-quality product and service. Most hoteliers will assure that their teams are performing at their maximum capacity, however, boosting capability is always possible resulting in increases in efficiency and quality.
What would your business look like if every one of your team members were performing to the same efficiency as your best team member?
Motivation: In an economy of high unemployment, particularly in hospitality and tourism, it may be tempting to form the opinion that employees need their employer as there is always a replacement waiting at the door. However, motivated staff will deliver higher levels of efficiency, higher levels of customer service and, as a team, deliver a superior experience to your customers.
We know that unmotivated, overworked, or worse, threatened staff at all levels will slowly erode your business. Corporate culture deteriorates, service slides and profitability quickly follows. Now is the time to invest in motivating your team, building morale and a positive, professional culture, including with team members who are furloughed or on restricted hours. To the extent you are permitted, include ALL team members in communications, celebrate wins, no matter how small, and praise often.
Some hotels may be tempted to choose to recruit better people, which will potentially lead to talent leakage and a culture of good staff moving jobs for better salaries. To retain good staff will require more than money; you also need a culture of great leadership, positivity and a long-term commitment to career support. Professional development is often rated by professionals as a benefit they value highly. Support your leadership team by demonstrating an interest in their professional development for the long term, as well as trust in their capabilities to lead through and out of the recovery. Recognising achievements creates a sense of ownership, belonging and worth as well as loyalty long into the future.
Increase revenue
Accommodation: Revenue Management is more important than ever. Having expert revenue managers managing your future business, remaining focussed on forecasting, pricing, market segmentation, packaging and distribution channel management is critical. The right guest, at the right price at the right time, will be the difference between hotel profit and loss and your team are making decisions that affect your profitability. Revenue Management is only as good as the people you have making the decisions. Upskilling team members at all levels in the importance of revenue management, particularly those in decision making roles in accommodation, will ensure they not only make better decisions but also remain invested in the decisions they make in the long term.
Ancillary revenue: At every point in the customer journey, every team member must be focused on earning that extra dollar and ensuring the guest feels their spend is providing them value. The hard sell, forced sell, or tacky upsell will potentially harm your business, so now is the time to think like a guest and add value. Training all customer-facing team members in the art of upselling will engender confidence in the team and provide an immediate return on investment.
Maximise return business: The cost of travel to the local destinations is lower, so local’s propensity to return for shorter stays is higher. This makes local customers an even more attractive market, but only if their expectations are not only met, but exceeded.
Increase customer satisfaction
Customers will become more discerning as they are provided greater choice. Marketing, sales and revenue management will be critical to maximising sales of rooms as will the upselling of ancillary services and maximising rates for every guest. Hoteliers will need to be smarter to identify, target and change their hotels to support new customer markets, such as food and beverage, accommodation offerings, and supporting products like leisure, spa and tour products. Supporting cost departments will also need to align including manning levels and variable costs.
Customer service delivery will be critical to attracting return business, create positive feedback and thereby support the marketing functions.
Customers heightened awareness of security, service and choice will result in an increased value on other customers reviews of your hotel. The old saying that customers cost 10 times more to acquire than retain is even more important now, particularly as domestic tourism remains the new staple.
Caring for your team through recovery
The most cost-effective way to develop your team is through eLearning.
All team members, whether at work, at home or furloughed have the motivation to develop themselves and to retain and progress in their career. Professional development incentivises, rewards and retains your valuable team members.
As business increases, your team will be prepared, motivated and capable of growing with the business. Trained staff will help to drive increased efficiency and ensure you continue to maintain a stable, successful business maximising profitability through this difficult period.
If you would like to learn more about how to move your existing training online cost-effectively, or you are looking for dedicated hospitality online professional development solution to deliver a rapid ROI, enrol in our complimentary course, or contact us to learn more about how you can implement a fully branded online learning solution today, including over 200 courses designed by hospitality leaders specifically for hospitality professionals from skills to executive.
