By Larry and Adam Mogelonsky
The terms ‘pent-up demand’ and ‘revenge travel’ entered the collective hospitality narrative in the summer of 2020, and they still very much apply to the next big stretch for the hotel industry. Notably, the forward-looking occupancy data for many markets in North America indicate that this upcoming holiday season will likely deliver huge revenues for a highly positive story entering 2022.
For roughly American Thanksgiving through to New Year’s Day, traveler confidence is in the air. Vaccination rates are high and international travel between Europe and North America has resumed in earnest. It’s not all sugar plums and eggnog, though. We want your hotel to maximize its topline over the course of this six week period and that means more attention given to TRevPAR (total revenue per guest), specifically on getting as much prearrival capture as possible.
Thinking in terms of TRevPAR versus only RevPAR (or RevPOR) means that you must know your guests in terms of what demographics and what attitudinal clusters will spend the most onsite and not just put heads in beds. It’s one thing to manage rate on the OTAs in order to grow occupancy as quickly as possible so that your weekly pickup reports look good; it’s a whole other to find and incentive those guests who are also going to fill restaurant tables, book spa appointments and purchase something in the gift shop.
Know thy guest, as they say. In a 2021 elaboration on this adage, your technology must be in shipshape so that you can finesse the product messaging so that it’s actually meaningful then nudge guests to spend more onsite. Having rich data integrations – either natively through a strong PMS or filtered into a CRM/CDP – is essential for identifying the characteristics of those high-TRevPAR guests in order to develop marketing campaigns that target lookalike consumers.
While we say ‘onsite’, really you must ‘seed the spend’ with a good awareness campaign prior to arrival. For the current moment in our industry, the crucial element underpinning getting more of this pre-stay ancillary revenue on the books is the ominous and ongoing labor shortage impacting hotels all over the world. We’ve seen hotels have to cut off yielded weekends at 90% occupancy simply because room attendants couldn’t be found. You need that 10%! We’ve also witnessed hotel bars having to close at 10pm, rather than stay open until 1am or 2am, because the single bartender left standing had to close out and go home. That’s even more money left on the table!
Hence, the more revenue you have on the books in advance of the holiday stretch – be it guestrooms, F&B, spa or other – the better you can plan ahead in terms of confirming staff availability, incentivizing extra shifts or recruiting temps, all so that you have the flexibility in frontline labor to maximize that onsite capture come gameday. To this end, the ideal situation would be to have guests reserve dining, spa, welcome amenities and other purchases directly off the booking engine after confirming their guestroom purchases. A runner-up would be to personally call or email each guest soon after the confirmation goes through to secure those ancillary reservations.
And then, only once your hotel guests are satisfied would you open up your restaurant or spa to non-hotel customers, thereby minimizing the chances of a hotel guest being left without a dining spot or a spa treatment availability because they failed to reserve in advance. Prompting guests in your messaging that the holiday season will be especially busy would also help to untangle any dissatisfaction here.
We hope that our prediction about high travel numbers plays out in your territory, but ultimately it’s your job to make it happen and the execution has to start right now in order to get that big win.