Surprisingly, the value of operational excellence on commercial performance is often not talked about enough. Hospitality is a competitive industry and maximising revenue isn’t solely the responsibility of a select few, but rather, it’s a collective effort that involves every member of the team, from frontline staff to back-office personnel.
Hospitality belongs to a category of industries known as perishable asset industries, where the product, whether it be a hotel room, a restaurant table, or a flight seat loses its value if it goes unsold. Unlike tangible goods that can be stored and sold at a later date, the inventory in these industries must be sold within a specific timeframe, or the opportunity for revenue is lost forever. This inherent characteristic of perishable assets underscores the importance of effective revenue management strategies, where every opportunity to optimise revenue must be leveraged.
The impact of operational performance on revenue cannot be overlooked. Operational performance underpins value perception and directly impacts guest conversions and revenue outcomes.
Frontline staff possess the unique ability to directly influence guest spend through personalised interactions and service offerings. Their proficiency at upselling room upgrades, promoting amenities, and suggesting additional services directly impacts the average spend per guest, thereby driving revenue growth. Further, their commitment to delivering exceptional service fosters guest loyalty and positive word-of-mouth referrals enhancing revenue opportunities.
Beyond frontline, employees across various departments indirectly impact revenue outcomes through their contributions to operational excellence. Housekeeping staff ensure the cleanliness and presentation of hotel rooms, enhancing guest satisfaction and perceived value. Maintenance and facilities management teams maintain amenities and facilities, minimising downtime, and maximising guest enjoyment. Administrative and support staff optimise internal processes, reducing costs and improving operational efficiency.
However, when operational performance falls short of expectations, it can have profound implications for revenue generation. A decline in service standards can lead to negative guest experiences, diminishing the perceived value for money. Guests may be less inclined to return or recommend the property to others, resulting in lost revenue opportunities and decreased conversion rates. Thus, the importance of operational excellence in shaping guest perceptions and driving revenue cannot be overstated.
Harnessing the collective potential of every employee as revenue management ambassadors, organisations can foster a culture of collaboration, empowerment, and accountability. Training programs can equip employees with the skills and knowledge necessary to identify revenue opportunities and deliver exceptional service. Incentive programs can incentivise and reward employees for their contributions to revenue generation, fostering a sense of ownership and accountability.
Moreover, organisations must prioritise operational excellence to ensure that guest experiences consistently meet or exceed expectations, and especially when room rates rise. More recently I have observed an increasing number of online review scores citing “lacks value for money.”
By investing in staff training, implementing robust quality control measures, and fostering a culture of continuous improvement, accommodation operators can enhance guest satisfaction and perceived value, thereby maximising revenue potential.
By recognising the interconnectedness of operational performance and revenue generation and empowering employees to excel in their roles, operators can reach their full revenue potential and achieve sustainable growth.
