Success story: The beach hotel that increased its income by 19%
We call this a “normal” case, as the increases experienced by this four-star hotel with 65 rooms, located in the Costa Brava, is within the expected range when we start to work with a hotel. Hotel-lo has been offering Outsourcing services for 15 years and if we’ve learnt anything at all in this time, it’s that when you master the techniques of Revenue Management and get to know the ins and outs of online and offline Commercial Distribution, then you’ll always see results.
We don’t like attracting clients by promising results far beyond what we can achieve. It isn’t in our nature to predict increases in RevPar of between 40 and 50%. We like to be realistic and honest and, as in the case of the hotel on the Costa Brava, forecast (and achieve) a significant increase which is, at the same time, sustainable.
In summary, we’re talking here about improving the profitability of a beach hotel with the following characteristics:
- 4 stars
- 65 rooms
- Located on the Costa Brava
- Very dependent on the tour operators
- Little experience in Online Distribution
- No knowledge of Revenue Management
- Introduce the culture of Revenue Management to the entire hotel team.
- Streamline the marketing mix.
- Provide tools and new knowledge to improve sales quantity and quality.
- Plan and develop strategies.
- Control costs.
- Help them grow in a solid, consistent, and sustainable way.
We always start with an audit in which we focus on a number of decisive factors in the business’s marketing :
After analysing each of these areas in detail, we define a commercial strategy and make the relevant changes in all areas.
This is our way of working and the approach isn’t very different if we’re dealing with an urban hotel rather than a coastal hotel. However, it isn’t very long before the differences start to appear, because a beach hotel without any experience in Revenue Management usually has the following characteristics:
Segmentation: A significant percentage of tour operator sales.
Pricing: Due to the previous point, only a percentage of the hotel rates are yieldable.*iba a poner flexible pero me di cuenta que yieldable es un término del mercado. However, it’s also possible to apply Revenue Management techniques to the rates that are agreed upon in a contract.
Channels: An enormous potential for sales growth through OTAs and the hotel’s own website.
Technology: If the OTAs and the hotel’s own websites haven’t been fully exploited, then connectivity with the channel manager (if any) is usually very basic. It’s also very likely that the PMS has become obsolete.
In the case of a beach hotel such as ours, which is independent and closes down for the winter, Hotel-lo’s main focus has been to modify the marketing mix and boost the sales on the most profitable channels. As a result, there has been an increase in occupancy in intermediate months such as May and September.
At the same time we carry out staff training, both for the team as a whole, as well as personalized training for key team members.
At Hotel-lo, we take care of the daily rate changes, but at the same time we maintain a constant dialogue with the hotel management in order to modify procedures, explore new sales channels and improve the hotel’s online presence.
As you can see from the table:
In the intermediate months, the increase in revenue has been outstanding. In the high season, it hasn’t been as striking in terms of percentages, but in absolute values it has been just as remarkable.
It’s difficult, but not impossible, to maintain the same rates of growth in the second year of working with a hotel. We have a very clear strategy to achieve this ambitious goal in 2019, and success will require expanding sales channels in order to exploit all sales possibilities, as well as strengthening the rate structure to increase the average price. And, of course, we’re going to work to boost direct hotel sales, because, in this type of hotel, you can achieve an impressive reduction in distribution costs.