The beauty of simplicity on the road to increasing hotel TRevPAR
While there are optimistic signs that the travel industry is beginning to recover from the pandemic, growth varies greatly between regions and is still expected to take a couple of years to reach 2019 levels. In this volatile environment, competition is fierce to tap into limited traffic levels. And with so many hotel properties around the world, hospitality is no exception.
As in other areas of the travel industry, the leisure segment is driving recovery with corporate travel still lagging behind, and expected to do so for some time. Yet, there is pent up demand for travel which is proving to be the engine behind the industry´s progressive recovery. So how can hotels best position themselves to be the winners over their competition in an industry with an 80%+ cart abandonment rate?
Retail strategy – a key to success
As in other industries, personalized retailing is a strategic priority for hotels. Understanding customer needs is the key to getting the upper hand in this competitive landscape. In that quest, data is central to hotels being able to package relevant offers and deliver seamless customer experiences. Yet, while other industries are making great strides, the travel industry is still taking small steps.
Part of the problem is that the travel industry´s technology landscape is complex and fragmented. Often, mission-critical legacy systems and processes inhibit the deployment of modern technologies that can generate a step-change in how hotels package, sell, and service their offers. It´s this infrastructure that dilutes the full potential of smart technologies and their blanket integration across the hospitality stack to convert data into personalized real-time offers. Luckily, there are some quick wins that can help hotels boost conversion and get more heads in beds through personalization.
But personalization and conversion aren't just about heads in beds. They´re also about addressing and monetizing guest needs, holistically, throughout their stay. Increasing a guest´s share of wallet through upsell and cross-sell schemes is retailing's end-game to boosting hotel total revenue per available room (TrevPAR) and delivering better guest experiences. Despite the hospitality industry´s complex IT landscape, technology that sits outside a hotel´s core stack is available to boost personalization and omni-channel retailing with partners.
Personalization can be accomplished through technology solutions that support attribute-based shopping as a first step and then apply attribute-based pricing as a second step. Hotels benefit from these solutions as personalized offers and pricing reduce cart abandonment rates while optimizing margins at the point of sale. Longterm, personalization also helps increase lifetime TRevPar as consumers develop more loyal relationships with the hotel brands that best understand their needs.
Consider the beauty of simplicity
The Manfield family are planning their holiday having determined specific dates, a location, and destination activities. They decide to shop on their two preferred online travel agencies (OTA). Mr Manfield enters the information in the first OTA and it takes him 40 minutes of searching and shopping until he finds a package that meets their needs. Determined to outdo her husband, Mrs Manfield then starts on the second OTA but it only takes her 8 minutes to come up with the same package. And at a discounted price… She also receives a few additional recommendations to make their stay at the destination more enjoyable.
While Mr Manfield looks in awe, what the couple don´t know is that the second OTA is connected to a demand management system. The system doesn´t only connect travel agencies with hotels, it also combines the family´s stored profile data from both, including Mr and Mrs Manfield´s hotel loyalty program, to package and propose personalized offers. And because the hotel has an active partner program, the system allows the Manfield´s to select additional at destination services, such as breakfast for all the family and daily excursions. In addition to enabling a seamless guest experience, the demand management system has increased the hotel´s conversion rate, TrevPAR, and operational efficiency all in one go.
We call this the "beauty of simplicity."
A roadmap for hoteliers
Increasing TrevPAR is challenging. But it doesn´t have to be difficult if you have the right technology. A successful approach for hoteliers to find new ways of increasing revenues begins with the segmentation of existing - and potential - revenue-generating components of their property, group of properties, or brand(s) first. Then mapping technology requirements to business, partnership, and revenue goals. Understanding how these components need to connect to each other to maximize revenue potential while adhering to specific parameters, such as response times, levels of accuracy, or operational efficiency, is the next step.
Klaus is passionate about creating innovative and forward-looking solutions that enable businesses to grow top and bottom-line results. Currently Hospitality Solutions Executive at IBS Software, Klaus partners with hotels, resorts, and casinos to jointly craft solutions that generate revenue, enhance guest engagement, and improve operational efficiency. Klaus possesses a diverse and global experience having held different roles in management consulting, finance, strategy, product management, and operations for a variety of travel technology vendors, hotel brands, and travel resellers. Klaus loves working in the travel and hospitality industry as it brings cultures closer together and smiles on people's faces.