They say after the storm comes a calm. However, the storm has yet to pass in the hospitality industry. While seeing the light again is possible, the industry still navigates in turbulent waters. Why? With a fierce competition of over 17.5 million guestrooms in 187,000 hotels (1) worldwide, independent hotels know they have to compete for their share of business with branded hotels that benefit from global brand awareness and massive marketing power. Adding to this equation, continued inflationary pressures, and labor shortages, 2023 still shows some rainy days on the horizon.
Top 3 Business Goals for Independent Hotels
In this current scenario, it’s unsurprising that independent properties’ top 3 business goals are occupancy, direct bookings, and operational efficiency, according to Cloudbeds’ 2023 State of Independent Lodging Report. This article will focus on these three goals and the strategies lodging businesses should follow to achieve them.
Goal #1: Increasing Occupancy
Across independent properties, global occupancy rates have consistently improved year after year since the onset of the pandemic. However, despite this progress, they have yet to reach the levels observed in 2019.
While low occupancy rates do not necessarily spell disaster, they can cause concern. It becomes a potent tool for driving future success when assessed alongside other key performance indicators, such as Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR).
Best strategies to increase occupancy:
Increasing occupancy might require adjustments in the pricing model. A well-proven strategy is dynamic pricing. It involves adapting room rates based on local market conditions and nearby competitor pricing. For instance, increasing room rates during a local event attracts a significant influx of visitors.
Another strategy is the so-called value-added pricing, where properties highlight additional services not offered by competitors. Providing extras, such as complimentary breakfast, a hotel room priced at $50 can differentiate itself from a competitor’s $30 room rate.
Segmented pricing can also incentivize guests to book by offering lower rates for specified durations or a minimum number of rooms reserved. Finally, modifying stay restrictions can influence overall occupancy rates. By restricting the length of stay, hotels can fill available spaces more efficiently, especially on shoulder dates.
Goal #2: Increasing Direct Bookings
39% of consumers said they would typically book direct, versus 17% opting for OTA and price comparison sites, says a study from GlobalData. Hoteliers are right when focusing on direct bookings as one of the year’s main goals.
Besides, a direct booking strategy is a powerful force in reducing customer acquisition costs, increasing occupancy, and improving profitability by building greater brand loyalty and giving you direct access to guests.
When aiming to enhance the number of direct bookings, hotels should remember that persistence and a long-term perspective are essential, as the cumulative effects of these efforts will gradually yield positive results.
Best strategies to increase direct bookings:
One of the key tactics to increase direct sales is to choose a commission-free booking engine that is also optimized for mobile devices. With an increasing number of travel bookings on mobile, it is essential to cater to this growing trend.
The hotel website should get all the attention it deserves. Develop an appealing and user-friendly website, including high-quality images and videos to showcase your rooms and amenities. Creating a modern and seamless browsing experience will encourage travelers to make direct bookings.
Also important is to provide communication channels for potential guests. Invest in guest messaging tools that can be integrated into your website. These tools enable efficient management of guest inquiries across multiple channels, streamlining the booking process and enhancing guest satisfaction.
Goal #3: Improving Operational Efficiency
Unfortunately, the struggle with staffing shortages is still here, and some say it will take years until the industry recovers. Being operational efficient is a matter of survival.
Hotel owners and management companies are reevaluating their operational approaches to address labor shortages. Independent hotels increasingly adopt software solutions to automate manual tasks and transactions in front and back-office operations. By embracing technology, hotels can streamline processes, enhance efficiency, generate more revenue opportunities, and improve guest engagement.
Best strategies to increase operational efficiency:
The first step for a successful strategy in hotel operations is to identify touchpoints throughout the traveler’s journey and understand guests’ different stages and interactions. This way, lodging businesses can determine operational tasks and transactions suitable for automation. Evaluate which processes can be automated without compromising service quality.
A highly-recommended strategy in hotel operations is transitioning to cloud-based hospitality management platforms that integrate and unify various software applications such as PMS, RMS, payment systems, and more. By centralizing guest profiles and automating tasks, hotels can streamline workflows, enhance data capture, and improve communication across departments, leading to greater efficiency.
Last but not least, hotel owners and managers should provide comprehensive training and support for the staff to ensure they maximize the potential of hotel technology. Proper training empowers them to utilize the software effectively, improving operational efficiency.
As we reach the halfway mark of 2023, properties face challenges head-on. Hoteliers are focused on creating more revenue and reducing costs by generating more direct bookings and improving operational efficiency. While the calm is not yet, independent properties must weather the storm and take advantage of proven strategies to achieve their goals. A successful year will depend on understanding the state of travel, the business itself, and thinking outside the box.
Free Report: The State of Independent Lodging Report 2023
In this free report, you find a wealth of data from across the globe to deliver key insights on independent lodging businesses, including data from property types and segments often overlooked.
You’ll find answers to pressing questions like the current state of recovery, booking behavior post-pandemic, and the travel trends most influencing consumer behavior.
Click here to download the report “The State of Independent Lodging Report 2023“.
References:
(1) How Many Hotels In The World Are There Anyway? Booking.com Keeps Adding Them
