So, is a hotel business profitable? The obvious answer is yes.
The hospitality industry is a highly profitable sector with lots of opportunities. Among its many arms are hotels. As tourism and travel increases, the need for lodgings services has also increased.
There’s a steady growth in the number of hotels being built or redesigned across the world. Our interest here will be to discuss how profitable they are. As you read on, you’ll find relevant information that will be of great help in investing in the hotel industry.
Is hotel ownership profitable? Let’s dig into the facts.
Are Hotels Automatically Profitable?
Having established the fact that hotels are profitable, it is important to note that they don’t automatically turn profitable.
There are lots of hotel businesses suffering from revenue losses due to many factors. So, if such businesses aren’t automatically profitable, what can you do to make them turn a profit?
GUIDE: Buying An Hotel
There are lots of things you can do to launch them into profitability. These actions include the following;
Pay Close Attention To Your Most Treasured Assets
Quite confusing right? What are your most treasured assets? It’s easy! Your employees are! How? You may ask.
Hotel staff and employees play a key role in the success or otherwise of the business. Never underestimate their little contributions in making the business run smoothly.
It all starts by creating a healthy and productive work environment. Work-friendly environments and conditions spur your staff to double their efforts. Most importantly, you’ll need to chart a course of action to promote profitability.
This includes encouraging them to come up with ideas on how best to ensure efficient operations and increased revenue generation. There should also be a reward system in place to further fuel the drive towards excellence.
The Inclusion Of Smart Technology In Hotel Operations
Technology has evolved over the years and has become applicable to all human endeavors. Hotel businesses aren’t left out of the trend. Smart technology has greatly helped in increasing efficiency, thus impacting revenue generation positively.
This can be deployed in several operational areas such as smart energy management, predictive maintenance, smart guest experiences, big data & big data protection, as well as smart reserved parking.
Other areas of application include remote check-in/check-out, mobile room keys, smart marketing practices, and online reputation management technology among others.
Create A High Perceived Value And Move Up The Rating Scale
Whenever customers perceive value, they are willing to readily part with or exchange their money for it. If the value you created cost you less (say $10) while the customer thinks it’s worth more than that (say $30), you’d have succeeded in creating an effective revenue-generating strategy that impacts positively on your entire operations.
Going up the hotel rating scale is very important too. By focusing on that, you’re creating a growth-oriented hotel operation. The higher your rating, the more likely you are to attract high net-worth clients.
Promote Repeat Patronage
When guests patronize a hotel, they are likely to return if you put in the extra effort to make them see reasons. One of the major things to focus on has to do with their experiences. By ensuring your guests have an unforgettable experience, you’re directly giving them the reason to patronize your hotels in the future.
Another effective way to make them come back is by marketing directly to them. The contact information they supply is very key to reaching them with the right products and service promotions.
Audit All Relevant Areas Of Your Operations
Remember that the aim is to increase profitability. As such, helpful tips for improving revenue generation will include auditing key areas of your operations. These include energy cost, supplies, phone systems, and technology amongst others.
Lighting systems installed can be changed from incandescent to LED lamps. Also, energy-efficient HVAC systems will save the business lots of revenue among other things. By carrying out periodic auditing of your hotel operations, you’re able to significantly cut down on wastage and increase efficiency.
Get Creative On Making Your Operations Stand Out
There are lots of hotels competing for the attention of guests. It all boils down to winning them (guests) over through the provision of cutting edge services which sets you apart. You don’t need to break the bank to make your hotel highly competitive.
Creating additional value-added services as well as excellent customer service among other things will likely create a lasting positive impression in the minds of your clients. This results in repeat patronage as well as referrals which are highly needed.
Create Outstanding Services
As a hotelier, you want to create a lasting impression in the minds of your clients. An effective way to do this is by creating an outstanding service. You’re after the happiness of your customers. This translates not only into positive reviews but also leads to your happy customers sharing such experiences with their friends and families.
Customer satisfaction shouldn’t be taken for granted if you must operate a highly profitable hotel business.
Include Deals, Discounts And Packages To Attract Patronage
This is another great way to ensure customers have a reason to patronize your service. However, we recommend you do this only after you’ve become profitable. Before guests choose or patronize your hotel, they try to compare services and packages on offer. They go for those with a better offering. You want your business to be considered in this category.
Reviews Are Vital
It is important to ensure every guest that comes into your hotel leaves with a positive perception of your business. This is not to say that you won’t come across difficult clients. Rather, you want more people satisfied and happy with your operations than those who aren’t.
People leave reviews about hotels they’ve patronized. Encourage your satisfied clients to drop some reviews of your service. This helps in attracting new clients.
Hotels are profitable businesses only when running effectively. We have gone further to provide you with tips on how to increase your profitability as a hotelier. These strategies have been tested and found to be highly effective.