No one ever said that running a hotel would be easy. With so many moving parts; attending to ever-evolving guest needs, creating a share-worthy property aesthetic, piecing together an all-star staff and creating a memorable travel experience can be a lofty (albeit rewarding) task.

And yet, modern hospitality leaders are taking recent technological changes in stride to consistently create new-age travel experiences both on and off-property, while placing enhanced emphasis on guest personalization and creating a frictionless experience. It’s this momentum that is propelling hoteliers towards an exciting hospitality future, one that boasts high expectations and equally high profit margins.

However, how do we get there? What are the primary pillars to ensuring a property is on-trend and tapping into its true revenue potential? Let’s break it down.

Hoteliers – regardless of the size, type or scale of their property – have at least a few common goals:

  • Provide an experience that meets or exceeds guest expectations
  • Maximize revenue potential for a profitable property model
  • Establish guest loyalty for decreased guest acquisitions costs and increased bookings

When it comes to revenue optimization specifically, occupancy has often been considered king. It’s simple – a fully booked hotel is more profitable than a property with empty rooms, right?  While that is undeniably true, hoteliers must also consider the revenue potential within each individual booking; a potential that extends beyond the decision to book and transforms their on-property experience. Ultimately, the question hoteliers should be asking themselves is this: How can we make the most of each reservation?

Luckily, enhancing the guest experience and maximizing revenue go hand-in-hand, and it’s this positive correlation that is sure to define the hotel of the future.

An Unforgettable Experience? Priceless

Any industry leader will tell you, the hospitality industry is currently moving (at a rapid pace) towards a more personalized, unique and ultimately guest-centric service model. Excellent service is no longer a mere expectation; it’s a demand – one which can make or break a hotel’s success.

As a hotelier, you have to ask yourself: what are the stand-out, memorable aspects of my property? How can we curate a share-worthy experience, that readily exceeds each guests’ expectations? In the current hospitality climate, this answer can come in many forms including (but not limited to) new-age technology, smart rooms or complimentary services such as in-room iPad controls, smart TVs, self-service opportunities, local experiences, on-demand concierge and more. Further to that, it’s a hotel’s dedication to acting on every opportunity to delight their guests. As soon as a guest steps foot on the property, they should be recognized as potential converts, and staff members should be trained to provide unexpected surprises. This could be something as simple as an unrequested, complimentary upgrade or a free appetizer in the on-property restaurant. Whatever it is, it’s those thoughtful (and unscripted) opportunities for guest appreciation and recognition that hit home, especially with modern travelers. As we’ve said before, the devil is in the details, and even the smallest gestures can go a long way.

Consider this example. Say you’re returning to a local coffee shop to purchase your morning caffeine fix. In scenario A, you wait in line and give the barista your name, with little interaction beyond that. They are always busy, and too consumed with the register to focus much on you. In scenario B, you are immediately greeted by one of your regular baristas, who recognizes you with a smile and asks how you’ve been. He/she already knows your standard order and rings you through accordingly. Which coffee shop is more likely to become your café of choice? Our point remains – little gestures equal significant impact.

It’s also important to realize that guests are often more than willing to pay more for exceptional and/or personalized service. In fact, recent studies revealed that 49% of customers bought items they did not intend to buy due to a personalized recommendation from the brand they were doing business with. Further, 40% of U.S. consumers say they have purchased something more expensive than they planned to because of personalized service. Accenture predicts that there is a $2.95 trillion prize for companies that integrate a smart digital strategy to personalize customers’ experiences. We like the sounds of that ROI, don’t you?

With findings like these, we arrive at the realization – it’s often not about offering the best deal or the lowest price, it’s about creating the best experience.

Creative, Personalized Upsells and Add-Ons and Amenities

We’ve already clarified that the initial reservation is only one segment of each guests’ revenue potential – so where does the rest come from? Their on-property experiences, upsells and add-ons (AKA ancillary revenue). These can be everything from room upgrades to personalized packages, on-property incentives or complimentary gestures (such as a glass of wine) that later evolve into a purchase or an upgrade request. The key to an effective upsell strategy? Personalized recommendations. Your staff (or the self-service technology you implement) should seek out opportunities to offer advice and genuine suggestions, rather than searching for a hard sell. Offering each guest options and choices that are unique to their preferences is helpful, and who doesn’t enjoy a little extra luxury while away from home? Once again, a little effort can go a long way. Three $50 upgrades per day could add nearly $57,000 a year in extra revenue.

These opportunities also come in the form of on-property spend, specifically within the F&B segment. Hotel staff could offer guests a half-price drink at the on-property bar upon check-in, or during happy hour, for example. These offers tend to be especially effective when presented in a self-service environment (mobile device, or in-room incentives) where there is no sales pressure.

Of course, while F&B represents an important segment of a hotel’s revenue stream, industry leaders note that higher occupancy does not necessarily mean higher F&B revenues. Guests have rented a room at your property, but are they staying on-property to wine and dine? If not, are there other ways (smaller scale F&B opportunities) to empower the F&B experience on-property? Discounts and offers aside, hoteliers can implement luxury in-room appliances to enhance small-scale F&B, such as in-room beverage service like on-demand wine. This proves especially valuable when we look at the operational demand (staffing costs) associated with traditional in-room F&B opportunities such as minibars and room service. In a tweet that has since been deleted by CBNC reporter Carl Quintanilla, Marriott CEO Arne M. Sorenson said the “chain doesn’t profit from the minibar.” In a survey by TripAdvisor, hotel guests also reported that the minibar was the least important amenity. So it is probably safe to say that much like other outdated services including in-room phone calls, minibar revenue streams aren’t likely to make a comeback.

However, considering that a recent study by Better Homes & Gardens indicates that 93% of millennials spend four nights a week dining in, creating a self-service, in-room F&B environment looks to be a promising trend. After all, food (especially local cuisine) and beverage represent unique experiences for guests, and they are willing to pay for it. Hotels need to find better in-room beverage options to appeal to guests to drive higher capture rates and revenue (our client have experienced 20x capture rates with Plum over minibars).

Enhance Guest Lifetime Value by Focusing on Loyalty

Earning the loyalty of modern travelers has proven to be especially tricky, as the legacy loyalty program models seem to be fading into distant memory. Luckily, advanced technology (intuitive PMS and CRM), amenities and enhanced processes lend to a re-imagined loyalty structure and allow hotels to identify and leverage high-value guests to better maximize reservations. Why is lifetime value so important, you might wonder? The answer is actually quite simple.

Guest acquisition is expensive, especially for hotel brands constantly competing with OTAs. Studies show that it costs five times more to acquire a new customer than it does to keep current customers. Studies show that for each 1% of shoppers who return for a subsequent visit, overall revenue increased by approximately 10%. Ultimately, increasing customer retention by just 5% boosts profits by 25% to 95%. This same consideration should apply to hospitality, as hoteliers realize the importance of not just focusing on guest acquisition, but on guest retention. It’s also important to remember that happy guests are generally willing to spend more, with 61% stating they are open to spending more if an additional service compliments or enhances their main purchase/experience.

This is where new and improved loyalty programs come into play, which allows loyal guests to take advantage of discounted rooms or upgrades, spa treatments, restaurant specials, complimentary wine and more. Studies show that customer engagement leads to customer retention, so the focus for modern hoteliers should be this – how can we engage our guests in a more effective, genuine manner? What gestures (big or small) resonate the most and provide a lasting impact? For some guests, it might be a complimentary upgrade, and, for others, it might be a complimentary glass of wine. In any case, investing in loyal guests is an investment which boasts a promising return, both now and in the future.

About the Author

Adam Hoydysh is Vice President of Hotel Sales for PLUM. He has more than 20 years of B2B technology and hospitality sales and management experience at F5000 corporations and start-ups. Prior to joining PLUM, Adam was Director of Sales for Juniper Networks, driving sales and sales training efforts for Juniper’s advanced technology portfolio of security products. Previous to its acquisition by Juniper Networks for $80 million in 2012, Adam was Director of Sales for Mykonos Software, the leading provider of intrusion deception security for Layer 7. Mykonos was the winner of Wall Street Journal Innovation Award for Information Security. Adam started his career in hospitality at Vail Resorts, the premier mountain resort company and leader in luxury travel.

About Plum

Plum reimagines every aspect of the wine-by-the-glass experience. The world’s first appliance that can serve a glass of wine just as the winemaker intended, Plum allows hoteliers to satisfy the moments that inspire guests to enjoy a glass of wine in the hotel’s room product. The company has partnerships with leading independent hotels and chains, like the Four Seasons, St. Regis, Waldorf Astoria, Conrad, Sheraton, Westin, Auberge, Gemstone Collection, Woodside and Rosewood flags. Plum delivers an unforgettable experience – and profits – in extraordinary style, one glass at a time. To learn more visit www.plum.wine.