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