INCREASING HOTEL PROFITABILITY AND EFFICIENCY
6 Ways to Increase Hotel Profitability & Efficiency During A Recession
As inflation rises and recession looms, keeping control over all your costs, operations, and processes is essential to protecting the bottom line and guest experience.
If you improve efficiency across the board, you can stay profitable, despite the challenges currently facing the industry. The solution to remaining competitive in this climate of compressed margins and evolving customer expectations is to implement tech solutions and automate processes.
Automation reduces human error, tightens operations, and delivers the experience guests expect—even with a leaner team.
In this article and our series on how to increase hotel profitability and efficiency, we consider where and how you can use technology and automation, drawing on the expert insights of hotel directors, operations managers, entrepreneurs, and thought leaders.
Use Operto for tech-enabled operations that enhance the guest experience and improve efficiency in your communications, check-in processes, and more.
Track data to optimize processes and spending
As John Ryan, owner and managing director of The Ardilaun Hotel explained when we spoke to him, the data provided by technology can mitigate the impact of many of the problems modern hotels face by supporting decision-making and finding opportunities to improve.
“From making things run more smoothly when we’re a team member down to providing a more efficient way for chefs to order food, it makes it easier to make business judgment calls,” he says.
Obtaining a high-level view of costs, staff performance, and operational efficiency empowers you to make decisions on how to cut costs and optimize your hotel’s profit margins. Below, we explore areas of operations where you can use technology to track and analyze operations.
Manage in-room stock with checklists
Tracking in-room stock allows you to avoid unnecessary costs. Using housekeeping software like Operto Teams, you can create a checklist for your room attendants that asks them to record which items they’re replacing each time they conduct a turnover.
You can then use this to run a report on which products aren’t being used or to consider where you could find more cost-effective alternatives.
Identify operational inefficiencies
By compiling data in user-friendly ways, you can investigate what’s holding your team back and amend your processes accordingly.
Perhaps your team is finding it takes a long time for maintenance issues to be resolved after they’ve flagged them, for example.
Using technology like Operto Teams, you can start to optimize your operational costs by taking a look at how long it takes your team to get a room ready. Ensuring their time is being used as effectively as possible while maintaining cleaning standards, you can rate each clean on speed versus quality to find the right balance.
Use key performance indicators
When you’re looking to understand performance, key performance indicators (KPIs) are essential. In order to improve performance and profitability, these should include metrics like:
- Gross operating profit (GOP)
- Gross operating profit per available room (GOPPAR)
- Revenue per available room (RevPAR)
- Cost per occupied room (CPOR)
- Occupancy rate
- Average daily rate (ADR)
- Average length of stay (ALOS)
- Earnings before interest, taxes, depreciation, and amortization (EBITDA)
As John highlights, KPIs give greater clarity on performance. You can benchmark this against your competitors using a service like STR. “You might think you’re doing great,” he points out, “but if everyone around you is doing better then you’re really not.”
Monitor team productivity
In the face of staff shortages, finding ways to identify and address operational inefficiencies is key. Once you have the data, you can implement tools to help fewer staff complete more work in shorter periods of time.
Optimizing hotel productivity means improving communication between team members and ensuring a consistent level of quality throughout your team’s work. And as Barcelona-based operations manager, Rut Morales Archs described when we spoke to her, “in order for small hotels to compete with larger ones, it’s so important to invest in tools that help.”
Track the performance of your staff
Monitoring the performance of your staff allows you to understand where some may be cutting corners and how others could be spending too long on certain tasks. With a tool that facilitates time-tracking like Operto Teams, you can compare how long it takes each of your accommodation assistants to complete a task against how much time they’ve been scheduled.
With an ongoing feed of data on average cleaning time, you can clearly see which tasks are taking more or less time than you expect. From here, you can ask high-performing staff for insights and find ways to support those who are less efficient.
Use a scheduling platform
Rather than using your 10-at-10s for updates on what special functions or operations you have scheduled, you can use a shared platform to give an instantly clear view of the day to the whole team.
With this shared knowledge already in place, you can focus your briefings on higher-level concerns, like how on-the-ground staff should engage with guests.
Give guests independence with contactless check-in and keyless access
By giving guests independence, you reduce pressure on the front desk and improve the efficiency of your customer service. Streamlining check-in with contactless solutions frees up your teams to complete more high-value tasks like ensuring quality personalized service throughout each guest’s stay.
We spoke to Curtis Crimmins, co-founder of automated hotel chain Roomza, about the importance of ensuring a friction-free experience with no need for staff intervention—with front-desk-free hotels, the Roomza business model leverages the benefits of seamless arrival and room access.
Automation plays a crucial role in reducing your front desk workload; this not only helps your teams, but meets the expectations of modern hotel guests, who look for independence and convenience at every stage.
With Operto Guest, contactless check-in works like this:
- Operto connects to your smart locks and your PMS.
- When a guest’s booking is confirmed, a mobile key or unique access code is generated.
- Guests receive a booking confirmation email containing a link to the Operto Guest web app.
- Upon check-in, having digitally verified their identity in the app, their key/code is activated.
Now, your guests can arrive completely independently. They have no need to line up at the front desk, and you can operate with fewer staff working fewer hours. For a clearer look at how this works in practice, look at how Prague Residencies saved $10,000 every month by switching to this model.
Pro Tip: Upgrade your locks to smart locks with Operto Boost to save time and money. We install smart chips that integrate with our keyless access software so you can keep all your existing hardware and avoid the cost of replacing your locks and supply chain delays.
Improve communication to avoid missed tasks
Using a dedicated communications solution allows you to tighten operational efficiency when responding to unexpected situations. If someone calls up to request flowers for their room, for example, this might be left unaddressed during a busy period. As Rut highlights, impromptu tasks can easily “get lost in a platform like WhatsApp.”
Operto Teams allows you and your team to view and update messages and tasks in one place. You can ask someone to fill in on a task and your team can report issues they notice in real-time.
If your room attendant spots a faulty coffee machine, for example, they can instantly inform maintenance, uploading an image or video to the staff app for clarity.
The maintenance manager will immediately see the issue and can check the shared calendar to view room status and check-in time. Once the job is completed, they can mark it in the app, which the front office will see.
Optimize your pre-stay processes
You can also use automated tools to maximize bookings and minimize cancellations. For example, by increasing your engagement with guests before their stay, you significantly reduce the likelihood of them canceling last minute. Here, we look at how you can do this and where automation is possible.
Implement dynamic pricing and automated revenue management
An automated dynamic pricing tool or revenue management system (RMS) allows you to aim for maximum profitability before your guests even arrive. Increase hotel revenue by ensuring you automatically set the right nightly room rates depending on factors including competitive pricing, the time of year, and historic demand.
Improve your pre-sell upsell strategy to reduce cancellations
As John Ryan highlights, “Add-ons like room upgrades engage guests and make them less likely to cancel. And since reservations through booking engines come with higher cancellation rates, this is essential.”
By offering upsells such as restaurant discounts that are tailored to the types of people staying with you, you can keep them excited about their stay. Ideally, keep all pre-sell communications within a branded platform for a consistent, streamlined guest experience.
Create digital guidebooks
Digital guidebooks take engagement one step further, allowing you to share recommendations directly in your guest’s phone, which also reduces their reliance on communication with your staff. Your digital guidebook should be fully customizable and include:
- Arrival instructions
- Parking information
- WiFi codes
- Information on amenities
- Details about the local area
With Operto Guest, you can also create call-to-action smart buttons for additional services. Examples include:
- Requesting poolside food and drinks
- Hiring equipment
- Connecting guests with a partner’s product pages
Consolidate your tech stack
To get the most out of your hotel software, you need to bring your tech together under one roof. Without integrating your solutions inside a hospitality operating system, your management team will struggle to have a clear oversight across all your operations, and their ability to communicate with your on-the-ground team could be impacted.
As Steve Davis, CEO of Operto, describes when discussing hotel tech management, “When you take a constructive look at your stack, you might also find that your solutions are overlapping.” Having to choose which tool to use for a task can add confusion, and redundant software racks up the costs, too.
Operto’s Manager Dashboard gives you visibility over your guest communications, team operations, integrations, and tech solutions all in one place. Inside, you’ll see:
- Bookings straight from your PMS
- Data on room status and occupancy
- Team notifications
- Guest communications
- Data from in-room smart tools like noise monitoring devices
Become tech-enabled to increase profitability and efficiency
Hotels are rapidly becoming tech-enabled to protect themselves against inflation, recession, and energy price increases. Meanwhile, protecting the guest experience while struggling to find the best staff means automating key processes is no longer optional.
Below are some of the ways you can use the latest tech solutions to optimize operations:
- Tracking data to inform your decision-making and reduce costs
- Monitoring team productivity to give staff support where they need it
- Giving guests independence with contactless check-in and keyless access
- Improving team communication to save time and deliver a better service
- Consolidating your tech stack to get more from your management team
The good news is that these solutions for efficiency and profitability help ensure a better guest experience, too—and with greater efficiency, happier guests, and less overwhelmed staff, your business performance will be more sustainable as well.