Top Line vs. Bottom Line and the Effect on Market Share

By Mark Heymann Chairman & CEO, Unifocus | February 28, 2016

The hotel industry spends a great deal of money today promoting and attracting customers, with the intent to gain market share, increase total revenue and drive top-line performance. But with all the technology developed and time and energy expended on maximizing the top line, rate and even occupancy are still highly driven by a hotel's competitive market. Within a competitive city market, you won't find a hotel getting a dramatic increase in rate over its direct competitors unless its location is very unique.

While driving revenue will continue to be of primary importance, especially for the franchisor, operating CEOs also need to heighten their focus on driving results to the bottom line. To do so without sacrificing market share, however, requires keeping operating costs in line not only with financial goals but also with service delivery goals. The solution is to find the point at which intent to recommend and return remains high while creating a least-cost structure for service delivery.

The Technological Advantage

A bottom-line focus requires a hotel's operating team to have a level of skill comparable to that of their revenue managers. But while many revenue managers, both regional and on-site, use yield management systems to simplify complicated analyses and put sophisticated data at their fingertips, few operators take full advantage of the advanced technology available that can similarly help with cost and service performance optimization.

This is particularly true in the workforce management arena, where typically more money is spent on systems to manage and control food and beverage costs than on labor management. Yet labor cost ranges from 40 to 60 percent of a property's cost equation while food and beverage amounts to around 15 to 18 percent in relation to total property revenue.

Part of the problem lies in managers' continued reliance on Excel spreadsheets and basic time and attendance software systems to deliver the data they need to meet workforce and quality management needs. Neither Excel nor time and attendance tools are sufficient to handle the complex calculations that are necessary to optimize labor costs and quality service delivery. It may be simple to calculate the number of housekeepers needed based on occupied rooms, for instance, but that calculation becomes far more challenging for other operating departments when one is also considering customer service demand patterns, production economies of scale, and multiple indicators that impact total labor needs. To do so requires a full labor management system (LMS), of which time and attendance software is just one component.
Today's LMS technology enables far more sophisticated planning, scheduling and task management than even five years ago.

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Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.