Re-Imagining The Ways Hotels Generate Revenue
No Space Goes to Waste
By Blake Madril Principal Industry Consultant, IDeaS | October 2022
The need for an adaptable revenue strategy has never been more valuable than it is today.
Hoteliers are contending with unpredictable bursts of guest demand, rising inflation and limited availability of labor, with many operators struggling to identify what their pricing and position in the market should be.
In June, U.S. hotels attained average daily rates of $155.04, a 15-percent increase over the same period in 2019, but occupancy was down more than 4 percent by comparison. But outside of rate and occupancy, hotels can still better optimize their profitability in these conditions by focusing on ancillary revenue beyond the guestroom.
Unfortunately, many hotels today are equipped with hundreds or even thousands of square feet of real estate that are not well utilized today. Many hotels across the U.S. are gradually bringing services back online after shutting them down during the pandemic. These could include shuttered restaurants, inactive spas, empty meeting rooms and unpopulated public areas. How hoteliers decide to adapt these services and space, and how to return them to optimal profitability, is one of many obstacles preventing the industry from maximizing all business opportunities.
It's easy to tell hoteliers to go back to doing what worked in the past when opening these services, but today the rules have changed. While travelers are returning to many pre-pandemic travel behaviors, there are just as many who have had their preferences forever altered during shutdowns. Hotels have similarly adopted new technologies to help them operate more efficiently and better forecast revenue. Now is the time to tap into available technology to understand the trends impacting guest spending–and how hotels can maximize profitability tomorrow.