Tightening Operations Can Increase RevPAR
By Connie Rheams, Global Business Development, Altiuspar
Recent "commoditization" of the hospitality industry has encouraged companies to compete on price, and achieving differentiation through service has required higher investment (higher quality, shorter operation cycles), reducing overall profitability.
Every year, surveys are conducted that clearly outline companies' need to reduce costs and increase operational efficiencies. Many companies have already made great headway in accomplishing this goal by reducing complexity, implementing best practices and leveraging best-of-breed technologies.
While the hotel industry has experienced strong revenue growth over the past few years, however, bottom-line performance has eroded since 2000, due to escalating expenses, including "non-controllable" costs such as utilities, insurance and government regulation. These costs - along with "controllable" costs such as payroll, staffing and marketing - are expected to only increase in the years to come.
Technology can hold the key to not only driving and enabling substantial product differentiation but also to significantly improving operational business processes - from real-time access to inventory, transparency across multiple channels, seamless exchange of operational information and performance data to the other spectrum of allowing hotels to centralize personnel.
The Goal: More Revenue at Less Expense
The ultimate goal for any business is to increase revenue while minimizing costs associated with operating that business. Below are five reasons why a hotel needs to look at efficient uses of technology solutions in its effort to increase RevPAR and affect the bottom line in other less tangible yet important ways:
In order to achieve these goals, you first have to understand the challenges and potential solutions. I've outlined below - based on my 20+ year career in the travel and hospitality industry and recent experiences at AltiusPAR - what I believe are the typical challenges hoteliers face, as well as possible solutions that are available today.
In addition and for the purposes of this discussion, I've expanded the interpretation of "operations" somewhat since I believe that operational efficiencies can be applied to nearly every part of a business.
The Challenges: Poor Information Flow & Manual Processes
Unfortunately, many hotel operations lack controls to verify whether information is complete and up-to-date and reservations along with guest data too often gets lost in the process.
Additional setbacks in many hotels' models may include the following challenges, among others:
The Solution: One Web-Based System to Manage All Inventory in Real-Time
There are several great software solutions out there today that can help alleviate the challenges listed above. What hotel management needs to look for are technologies that offer a broad suite of inventory management, central reservations and revenue management solutions. They should also be able to be implemented quickly and easily - weeks rather than months - and show immediate results in bottom-line performance.
Another important aspect to consider is whether the software was specifically developed for the hospitality industry and by people who understand the unique nature of the business. Because I've been in the position of reviewing dozens of technology vendors during my career, I know what a huge - and critically important - difference this makes not only in usability but also in ongoing development of the software.
The ability for hotel groups to have the option and flexibility to have centralized or de-centralized operations is one more consideration. Many hotel companies are moving toward putting the control and execution of rooms management in a centralized environment.
There are many advantages to this type of structure, including reduced personnel (removes the requirement of having one revenue manager on site per property), a focused and collaborative group looking across all hotels, and timely decision making. If this is a key consideration for your hotel chain, the technology you choose must support this type of deployment.
In addition to the above considerations, I've outlined below some specifics of what the technology solution needs to offer in order to help increase RevPAR:
While it's true that I work for a company that accomplishes what I've outlined above, I'm writing about this topic because I truly believe - whether you work with us, with someone else or build it yourself - that hotels can leverage new technologies and the Internet to increase operational efficiencies that will not only drive revenue but also increase customer (and employee!) satisfaction:
Ultimately, a better managed operation will result in a more satisfied work force and then satisfied customers. This will result in repeat business, which then reduces customer acquisition costs.
Connie Rheams heads strategic corporate initiatives at AltiusPAR, including partner relations, global business development and marketing. Ms. Rheams was VP of the Travel Distribution Hospitality and Leisure Group at Cendant Corporation. She led business development, management of sales initiatives, and implementation of programs. Prior to Cendant, she was president of TRUST Inc. She spent 14 years at AMR Corporation, where she served on the Latin American Task Force at American Airlines, led the hospitality division at TeleService Resources, and was head of product marketing for SABRE. Ms. Rheams can be contacted at 940-497-5300 or firstname.lastname@example.org Extended Bio...
HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.