27 July 2017

Revenue and cost strategies for boutiques, independents

Find the right tools and embrace the cost generators that best fit your independent property.

By Robert A. Rauch, CHA - President of RAR Hospitality
  • Revenue and cost strategies for boutiques, independents | By Robert A. RauchRevenue and cost strategies for boutiques, independents | By Robert A. Rauch

With many moving parts and no brand systems or guidance to assist, it is essential to a hotel's revenue success to invest in the right tools, most of which will save dollars.

Let's look at the revenue components of an independent hotel. A savvy sales team can make or break your hotel as group business generally books well in advance to provide the ideal base business. Without the power of a brand sales team and the tools that they provide, your independent hotel's sales efforts need to ensure that they are utilizing the right channels to effectively capture transient demand.

While global distribution system business is mostly pay-to-play, it provides exceptional return on investment in the right markets. Responding to requests for proposals from national accounts can be tedious, but it is an essential piece to your revenue puzzle. Local negotiated rates are equally important for your sales team to seek out. These accounts are special rates set up with local businesses that have travel needs in the area and driven by the relationships your team develops with the travel manager of the company.

Direct bookings are the most cost-effective business for boutique hotels, so it is always the goal to drive business to our own booking channels. Identifying what percent of business you need from group sales, GDS and online travel agencies is paramount to a successful revenue strategy. Understanding the cost of all of your booking channels allows you to properly layer in business by evaluating the effective average daily rate and adjusting your available rates accordingly. Set occupancy thresholds for your hotel as key indicators of when to increase your rates.

Balancing meeting rooms and sleeping rooms has always been tough for revenue managers who have not been on the group sales side of the business and salespeople not familiar with RFPs. They must equip themselves with new tools. Identify your hotel's ideal rooms-to-space ratio to optimize profits on any piece of group business and to ensure your revenue manager and sales team are on the same page.

Events and other contributing factors
While events might not provide a large number of roomnights, they do get people in the door of your hotel and help marketing efforts. If your hotel has an in-house food-and-beverage department, then capitalizing on these events is even more critical to achieving financial success and should be incorporated into your revenue strategies. Farm-to-table and locally-sourced product is expected at every dining occasion, and healthy options are also prized in today's market. Ensure your F&B team is keeping up with the latest event software—we use Social Tables)—healthy living trends, maintaining creativity and adjusting their menus accordingly.

A destination is a high contributing factor in the decision-making process, so your sales team should highlight all of the attractive aspects of the local area. Does your hotel have a great bar for guests to grab a happy hour drink after their meeting? If your hotel is limited on amenities, then provide information on your local area and everything that could be attractive to a first-time visitor. The "work hard, play hard" mentality has taken the market by storm, so even if a client is looking to host a business meeting, they will also be exploring what to do once their meeting is finished.

Digital marketing
The importance of marketing in your overall revenue strategies cannot be overstated, as it is the crux of how your boutique hotel sets itself apart. Establishing your hotel's identity and voice and ensuring that they are effectively communicated to all outlets is a must. Without the power of a big brand behind you, you are awarded the chance to create a brand that really defines the hotel and the experience your team provides. Your social media platforms create a stage for your hotel's voice to be heard, so their importance is far greater than they would be for a branded hotel. Develop creative packages and collateral that capture the guest experience to set yourself apart from a franchised hotel. These pieces tell a story that evokes a potential guest's wanderlust and shows value.

Your website should be constantly updated with local happenings, events and hangouts to keep up with search engine optimization (SEO) changes that stress local focused searches. This is a complete advantage over branded hotels that have monotonous websites with limited control over content. The goal is to create a local community hub that provides exceptional content to any visitor.

Revenue management should never be on the back burner, especially for boutique hotels. Strategies need to be constantly looked at and questioned so that they can evolve. Pay attention to your rates daily and check them multiple times per day during peak demand periods. Schedule weekly revenue meetings with your hotel's key managers so that everyone involved is staying engaged and on the same page with your current strategies. Independent hotels can adapt quickly to changes in the market, so use this to your advantage.

Good luck!

Robert A. Rauch, CHA

Robert Rauch, CHA, is a nationally recognized hotelier and President of R. A. Rauch & Associates, Inc., a leading hospitality management and consulting firm. Rauch has over 35 years of hospitality- related management experience in all facets of the industry. Widely recognized as the 'hotel guru', Mr. Rauch maintains a blog where he expounds upon insights and trends in the hospitality industry at www.hotelguru.com. Along with the blog, he also publishes Hospitality Innsights, an electronic newsletter that is distributed monthly. Mr. Rauch held nearly every position in the hotel business including General Manager of full-service Four Diamond hotels for Hilton and Embassy Suites. His education includes a bachelor’s degree in Hotel Administration from Western International University and a master’s degree in Tourism Administration from Arizona State University. He is a Certified Hotel Administrator and has served as chairman of numerous tourism organizations nationally and in the western U.S. He has been directly involved in developing several leading brand hotels, some of which the firm still owns and manages. R. A. Rauch & Associates, Inc. currently operates hotels in California, Arizona and Colorado with several under development.


Revenue ManagementBoutique & LifestyleGlobal

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