A change is as good as a rest; why repurposing and repositioning hotels is so popular just now
Back in 1899 the head of the US Patent Office – a gentleman called Charles Duell – secured his place as a little footnote in history. His organisation would be getting smaller and eventually close down completely, he said, ‘because everything that can be invented has been invented’.
While that story might be apocryphal, it’s a sentiment that is often on show in the hospitality world. There is brilliance and knowledge in the industry and many inn holders are excelling in utilising and maximising innovation and increasing revenue in all of its hotel spaces but is there real innovation? Is it going far enough to make an impact?
Innovate and challenge
Hotels are large and complex organisations with plenty of moving parts. Rooms are obviously the largest revenue generator, followed by food and beverage and then additional services such as spas or conferencing. While there are a number of general measures of performance, such as RevPAR, assessing how well a particular property is doing in its different business centres can be challenging. Benchmarking tools such as HotStats is available but how do you use the data? How do you know if your spa revenue this year is good or bad? What sort of performance should you really be expecting from your dining room? How do you set your targets?
Stuck with this sort of uncertainty, the answer may be more about making incremental gains and first set yourself a starting point using your current performance. And the best way to do that is to go back to basics and remember the fundamentals – you exist to provide a great service to guest. The challenge now is making the best use of every available inch of space to do that in a profit-making way. Once you’ve a handle on how much each part of the business is contributing, it’s easy to see if new ideas deliver benefits. Set yourself a revenue target per SqM or SqFt that you want to achieve. You now have a starting point to assess how you maximise the use of your total space or not.
What can I do?
Of course, city centre and resort hotels are completely different beasts, but the concept is the same. Can you introduce improvements in the way you present your services or new commercial spaces that drive revenue? In an urban environment, a hotel may have a small bar but large lobby, for example – merging the two is a simple way of reimagining space in a customer-centric way. Likewise, what about offering work space, private dining or meetings space in rooms during the day, squeezing extra revenue between check out and check in when they are otherwise unoccupied.
In larger properties, opportunities can be more obvious. I once visited a beautiful resort property where the reservations team enjoyed a glorious view of the gardens from a particularly generous office. Great for them, no doubt, but perhaps it would have been far better had it been converted into a coffee shop or juice bar increasing not only revenue but also the guest experience.
In spas, you might begin with an idea of how much revenue you are producing each hour and what your occupancy is. But have you looked at your profitability per SqM or SqFt? From here, it easy to work out how new initiatives and upselling contribute to the bottom line. Spas are a particularly rich and relatively simple area to improve too. Guests enter in a positive frame of mind and are willing to spend additional money – if they’ve an hour massage booked, what about offering a special 15-minute facial as a deal? Or maybe they’d like to book another treatment for the day they depart at a reduced rate? Or even a light lunch? Or could you by moving the SPA manager out of an office convert it into another treatment room? On top, sales of home care treatment products that they can take home are another big earner.
Looking beyond the central guest area
Beyond that, look right across the hotel estate for more opportunities. Car parks can be sublet to neighbouring businesses or rented out on an ad hoc basis. Alternatively, there’s the option of outsourcing the entire operation. In resort properties, are there gardens that might make good wedding venues, or places to host morning yoga or kids’ activities? All of these hit that sweet spot of enhancing the guest experience. It’s not just guests in the mix either – if your conference facilities are empty in the weekend, they might be perfect place for a community event. Can you act as the ‘village hall’ each week and grab extra F&B spend as a result?
Maximise your F&B revenue
Getting the most from F&B is perhaps the most frequent challenge of the lot. Very often, hotels have sophisticated software and teams of people dedicated to maximise yield from rooms but have nowhere near that attention to detail on eating and drinking. Social media has made people far more curious and more willing to accept change, which opens up a world of possibilities to introduce new ways of operating. Doing away with fixed menus that are costly to print and instead flex your previously set prices for each dish is easy if you have an iPad menu that you can change for each meal period depending on your demand. Maybe you could try different cost-conscious menu options for families with kids that prefer to eat early or bring seasonality to your cocktail menu within a few seconds. For some added theatre, an ice cream trolley or fancy drinks cart that pops by your pool twice a day is a brilliant way to tip guests into spending more.
Automate and increase spend whilst reducing cost
This new-found trend towards convenience and technological innovation means guests are far more willing to embrace change. The way bigger brands and budget chains have moved towards automated check in is a classic example, when done in conjunction with the ‘reassurance’ that a member of staff is still available should guests encounter issues. Why not in a 5-star hotel?
Think it through what it all means to the guest experience – only do it if you enhance it
But bear in mind that simply plugging in new ideas isn’t as simple as it sounds. Your car park might look like a great venue for a drive-in movie, but don’t jump in unless you’re sure the demand is there. Do your customer research. With that in mind, it’s clear to see the benefits that partnering with third-party providers and well-known brands can bring. Outsourcing a spa to a world-renowned partner, for example, can really deliver kudos to your brand. As well as offering a great product, you get to benefit from the glow of your partner, and can structure the deal in a variety of ways – either a simple rent, revenue share or with incentives – to cash in and create a win-win.
Finally, remember that optimising the value of space requires expertise. The best waiters and spa therapists know their business and are top sales people too. Their upselling expertise is essential and training is the thing that really nets results. Perhaps start there.
Why Four Corners Hospitality Group?
At Four Corners Hospitality Group we believe in challenging orthodoxy and identifying commercial opportunities that lead to an improved bottom line that ultimately offers incremental returns for owners.
Our team of experts, led by Tim Shearman and Kym Kapadia are known for developing and driving outstanding results across the full spectrum of Hotel ownership support. We’re always happy to chat through our latest insights, trends, and opportunities affecting this exciting sector.