With tourism on the decline, the hospitality industry is facing some challenging times. Recent figures from Travel Weekly suggest that foreign tourism is set to decline by 6.8 per cent. We don’t know if this trend is here to stay, but it’s something everyone should be preparing for.
Amidst these tough times, there are opportunities to focus on maximising the potential of existing secondary revenue streams such as restaurants, meeting and events.
Secondary revenue should now be a primary focus
For many hotels, these sources of revenue haven’t been properly squeezed and optimised yet. They represent low-hanging fruit.
In this climate, growing secondary income makes sense because it doesn’t depend so closely on tourism. By and large, the people in our meeting rooms aren’t the same people in our bedrooms. That is true even in the biggest city hotels.
For the typical hotel, the most frequent users of meeting rooms are local businesses, and many are adopting more flexible and agile working practices. Fewer of them now allocate space to permanent meeting rooms, so they’re increasingly on the lookout for convenient places to meet with clients and colleagues.
This is the trend that real estate companies like WeWork are taking advantage of, and something that hotels can tap into to boost their secondary revenue.
Treat restaurants and meeting rooms like bedrooms
The industry has already got the experience it needs to increase these revenue sources successfully.
Focus should firstly be on increasing occupancy and rates. It is still surprising how poorly promoted many of these additional facilities and services are. Information is often hidden deep on a hotel’s website, if it’s there at all. Improving the marketing of these resources is a surefire investment.
Secondly, intermediaries still make up a significant portion of a hotel’s meeting and restaurant bookings. When you search the Internet for meeting rooms close to you, it’s unusual not to find an intermediary in the top results. This is surprising because providing direct booking channels for bedrooms has been a priority for CEOs over the last few years. However, that discussion is not being had by many management teams about restaurants and meeting rooms yet. Launching direct booking alternatives is a quick and easy way for hotels to reduce cover charges and booking fees, and strengthen their relationships with customers.
Uncertainty is the word of the day in the hotel market. No one quite knows what the future holds, but some of the figures should cause hoteliers to take a second look at our income streams. And grow the ones that hotels may have been neglecting over the last few years.