In limited service hotels, over 98% of the profit is associated with room revenues. In full service hotels, the corresponding figure is probably at least 80% and usually more, with few exceptions. While the importance of expense control in all areas of any hotel is critical to success, the fact remains that maximizing revenues is equally important and usually more difficult.

Expense control involves fewer people in the decision and subsequent action steps on a per dollar basis and the issues are usually more clear cut. Maximizing room revenues involves more people, in more subjective steps, for thousands of transactions (20,440 in a 100 room hotel with 70% occupancy and an average stay of 1.25 days!). Each of those transactions' value is at least equal to the average daily rate (ADR) and usually a lot more, depending on the length of stay. You could have several dozen employees at the front desk alone with the potential to make a significant impact on your room revenue. This staff includes reservationists, guest service agents (a.k.a. desk clerks), night auditors, switchboard/pbx operators and various supervisors. 

In the case of the 100 room hotel above, assuming it has a $45 ADR, this would be room revenue of $1,149,750! And most of these employees are only paid between $1 to $3 over minimum wage. Imagine a 300-room hotel with a $65 ADR. Clearly, this is where the money is in a hotel; it's a hotel's reason for existing.

How many reservationists answer the telephone and search for an excuse to give a discount so the sale will not be lost? "Are you with a company or a group?" are almost the first words spoken. Some franchisors use discounting as the core of their marketing; one even tried to get their motels to sign people up for discounts when they were checking in with a confirmed reservation for a higher rate. No owner can take occupancy percentages to the bank to pay the mortgage, only dollars are accepted. Any time ADR is given up to achieve peak occupancy, money has usually been lost. Here is an example using our 100 room limited service motel for a year with a variable rooms department cost of $6.25: 

There are 25,550 occupied so the variable rooms so the variable cost cost is $159,687.50 is $148,281.25. Profit before departmental Profit before departmental fixed costs is $990,062.50 fixed costs is $1,002,381.30 

The point is that a properly trained and motivated front desk and reservations staff can dramatically increase a hotel's profitability. I have previously written about hiring in this column and am not writing a column on training today but I do want to stimulate your thinking on increasing ADR with little or no corresponding decrease in occupancy.

A typical hotel has five opportunities to establish the room rate charged the first-time guest: 

• location; 
• affiliation (or lack thereof); 
• physical appearance and condition, 
• the reservation process; 
• and check-in. 

Yes, location can be improved by changing names (Days Inn Capitol Hill to Days Inn Capitol Downtown for instance), adding van service to one or two major demand generators or stretching the truth in maps and descriptive materials. The latter doesn't help repeat business, though. Affiliation must be appropriate to the market and the hotel's physical characteristics. The potential guests must perceive the condition and appearance of the physical facilities, particularly the exterior and lobby, to be equal to or somewhat better than what they are expecting to pay. 

If the finishes and decor are much higher quality than they expect, they will be scared into believing the rates are higher than they actually are. Conversely, extra investment in guest rooms and in-room amenities will have a positive impact on repeat business. The owner and manager must give the front office staff a base from which to work on maximizing the room rates each day.

Even the simplest original design Super 8 Motel can offer at least two room types: a room with one double bed or a room with two of them. From that simple choice on, hotels and motels can layer on various bedding types, room sizes, locations, view and access. While construction and furnishing costs are almost identical, the room rating variations are larger. The room rating plan and related descriptions which are developed to appeal to the property's major customer types are one of the keys to increasing ADR at the front desk.

Here is a simple example of how this applies to an guest checking in with a confirmed reservation for the Super 8's room with one double bed: The guest service agent (GSA) simply offers the guest the room with two double beds so he or she will have more room to, "spread your things out." And the GSA points out that the double-double is "only $5.00 more". It is important to stress only the marginal additional cost. Clearly in a more sophisticated hotel with a concierge level, suites and king bedded rooms, the options are much larger and the opportunities to increase ADR easier. The point is, just because a guest has a reservation with a confirmed rate it does not mean an attempt cannot be made to upgrade the guest to a higher-rated room.

The real opportunities occur when people call to make reservations or walk in. In this situation, the first exchange with the guest is usually rate related. Instead, however, the pertinent questions at this point are really, "What dates would you prefer, for how many nights, and how many adults are in your party." One of the things a good reservationist or GSA will begin to discern from the answers to these questions is the purpose of the stay. This forms the basis for offering the guest the most appropriate room choices for their stay. Here it is of utmost importance to understand need/benefit selling and the concept of offering choices as a selling tool. 

Need/benefit selling is simply the art of making a sale based on developing an understanding of the guest's needs and then subsequently offering the various room types not by just describing their physical characteristics but by translating those characteristics into benefits that might satisfy that guest's needs. The classic example might be offering a family of four two connecting rooms at a slight discount (single occupancy rate) rather than a double-double or offering a couple a king-bedded room. An obviously exhausted person might be offered a room with a whirlpool tub or a business person a room on the concierge level because it includes an honor bar and other amenities which are designed to appeal to those guests. Remember, these offers can also be made to a guest checking in with a reservation.

Another aspect in offering choices is how the rate offer is made. There are several techniques available for quoting rates and the appropriate one needs to be used for a particular guest. Some of the alternatives are:

• from the bottom up (that is quoting lowest first, then higher rates);
• top down (offering the highest rate and then backing off); 
• or quoting the full range from bottom up and then repeating one, usually the middle one for emphasis. 

Once you use them, or any other training program, keep using them for new hires and refresher training. Good luck and go for the dollar!