Maximizing Hotel Profits Even While Renovating

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | December 07, 2014

Money never sleeps, and neither do hotels. It’s often one of the biggest challenges faced by hoteliers: maintaining facilities to the standards expected by discerning guests, and determining how and when to upgrade those facilities without turning away or losing business.

Hotels need upgrades, but it’s important to keep guests happy while major physical changes are occurring around them. Careful attention must be paid in facility upgrades, and hoteliers must minimise guest disruption and use renovations as an opportunity to refresh and maximise branding and revenue generating opportunities.

Some hoteliers may take the view that there is never a good time to renovate their property; it can result in a whole or partial closure of their business. Unfortunately, there is no way to avoid substantial property refreshers in the longer term if hoteliers want to ensure their property looks its best and caters to the expectations and desires of targeted guests. The question then for hoteliers considering an upgrade or renovation: total or partial?

To Close or Not to Close

Many hoteliers struggle to decide whether a total or partial renovation is best for their property given the likely short-term impact on revenues. A major factor in the renovation decision is whether or not short-term cash flows are needed. If that is the case, then a partial or staggered renovation is often the best course of action. Major hotel brands usually take this approach, whereby the whole property does not close and a level of operating revenues are maintained. However, if long-term revenue and profit generation—or even repositioning the hotel at a different service or star level—are the key motivators behind the property refresh, it would be best to close the whole property while the refresh is undertaken. A major re-opening of the property then elevates visibility and interest: similar to the project undertaken by the Savoy in London.

The Perfect Time to Reposition Your Business

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.