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One of the biggest changes we鈥檙e seeing in hospitality is the willingness to think beyond the traditional heads in beds mindset. There鈥檚 a realization that in order to increase and diversify your revenue, it鈥檚 important to embrace a new use of space, from adapting existing spaces to monetizing new ones.
This is the topic at the heart of our Realizing Your Property鈥檚 Full Potential session from December's Unfold. You can rewatch the webinar in its entirety or you can keep reading here for some of highlights. Joining Richard for this panel were:
- Bertrand Blancha, VP Global Hotel Technology, Accor
- Charlie McGregor, Founder, The Social Hub
- Klaus Kohlmayr, Chief Evangelist and Head of Strategy, IDeaS
- Rami Zeidan, Co-Founder, Life House
Thinking beyond rooms
The Social Hub have long been innovators when it comes to thinking beyond heads in beds. Their blended, communal hospitality supports long-stay living, with co-working a big part of that. 鈥淭he pandemic has shown that having a diversified top line is really, really important,鈥 says Charlie, their Founder. 鈥淎ll of our hotels were cashflow positive during the crisis, we had a global occupancy of above 50%.鈥
Although it鈥檚 only now that this kind of thinking is entering the mainstream, diverse revenue streams have been around for a long time. IDeaS have had a car parking revenue management product since 2008, as well as function space revenue management. According to Klaus, the industry is now starting to converge and experiment with these new models. 鈥淭here are different things from subscription models to using spaces differently... Managing rooms obviously is important because it produces a large part of a hotel's profitability, but there are a lot of other revenue streams.鈥
Bertrand and Accor as a whole are in total agreement. 鈥淚t's no longer only a room, it's a hotel with its space. And I think with the pandemic we have learned that we need to reinvent and we need to reinvent quickly to stay on the top of the market.鈥
Automation has a huge role to play (of course). The more you can automate, the more connected your various services will be and the more you can offer. 鈥淟ong term management can really be somewhat autonomous,鈥 said Rami, whose Life House brand is built on leveraging existing cloud software and APIs. 鈥淚n the concept of realizing your properties' full potential, the hoteliers can focus on the guest experience, the brand, and the real estate problems, and not have to focus on operating finance or revenue management.鈥
Exploring new revenue streams for success
Let鈥檚 say a guest has a room booked for one full day and night. Of those 24 hours, they鈥檙e only using the room for its main purpose (sleeping) for about eight hours of that. So what do they do with the rest of their time? How can you start looking at the rest of that time when the guest is still in your care?
Moving away from only looking at RevPAR will give you some more direction. Metrics like RevPAG (revenue per available guest) and LTV (lifetime value) will encourage a more holistic approach to their experience as well as more varied revenue streams. As Charlie says: 鈥淩evenue per guest is an interesting metric because it indicates that somebody's staying in your building and buying stuff, so presumably they'll be happy, otherwise they'd leave.鈥
Another emerging concept is the attribute-based pricing model. This is the idea that guests can make purchase decisions based on exactly what they want, for example paying extra for an in-room whirlpool bath or for a super king-sized bed. This is something that Klaus and his IDeaS team are looking closely at: 鈥淭he interesting conversation that has grown over the last couple years is the whole concept of the attribute-based shopping and the opportunities that merchandising enables for the industry over the next couple years. We see that accelerating significantly, especially over the last six to eight months.鈥
Switching to new metrics can be a little daunting. If you鈥檙e not ready or don鈥檛 yet have the tools to start measuring broader data points, you should focus on acquisition costs and bringing them down. As Rami says, 鈥淭he conversations and the metrics that are becoming ever more important are the cost of acquiring the RevPAR, and the net RevPAR more so than LTV, which is going to be a longer-term evolution.鈥
Loyalty programs and subscription models
The subscription model is another model that鈥檚 starting to make bigger waves within hospitality. It鈥檚 a way of monetizing loyalty and massively increasing a guest鈥檚 lifetime value. But it鈥檚 still in its infancy. Klaus points to the example of ski resorts, many of which have consolidated, allowing them to offer guests a ski pass that gives them the option to spend a certain number of days skiing across a large number of resorts.
鈥淚s that a model that I could see the hotel industry adopting generally? No. But in pockets, absolutely. Would I love to pay $1,000 to give me the right to stay an unlimited number of nights in certain properties or with certain lifestyle brands? Why not? I think that would be a fascinating model for certain brands and certain type of hotels, for certain kinds of people. And I think that would be very valuable for a specific segment of the market.鈥
Points-based loyalty programs have been around for a long time, sometimes with great success. But this is increasingly at odds with what younger generations want. Millennials and Gen Z are 鈥渧ery clear on what they want from their life, and sustainability and things play a much more important role,鈥 explains Charlie. 鈥淏eing recognized and adding value to their experience or their purpose is what they're looking for. They're not looking for points.鈥
So how do you keep these guests coming back? Charlie continues: 鈥淔or us, it really is building that lifelong customer journey, understanding what we can offer them when they've left our building, either as a traveling student, a young professional, the digital nomad, the new generation of corporate travelers etc. How do we keep in touch with them? How do we genuinely add value? And how do we put them actually first? And if we can do that properly, then this generation will really embrace you as a company and be loyal to you for a long, long time.鈥
Rami is also sceptical about the value of loyalty programs, at least for his Life House brand. 鈥淲e're not big believers, at least in the short term, of the value of investing in a loyalty related program. I think modern consumers want optionality and the ROI for us, at least, of investing in something like this doesn't make sense.鈥
That being said, Rami went on to highlight the important of pre- and post-stay communications when it comes to organically building guest loyalty. They think about loyalty as 鈥渞eliability oriented鈥, which means a focus on providing a smooth experience through the entire journey.
What does the future hold?
You may think that this exciting future of sustainability and maximizing spaces belongs to the smaller, more agile hospitality brands. Not so. Accor are undergoing a 鈥渞evolution鈥 with their technology in order to meet changing guest expectations. 鈥淲e need to move fast, we need to move to the cloud,鈥 explains Bertrand. 鈥淲e have reviewed our PMS strategy, we are doing the same with the POS, next year we will start to do the same with all of technologies.鈥
France recently announced that they鈥檙e change the way they score hotels with the stars. Sustainability will become part of this, as will how you manage spaces in your hotels. Bertrand continues: 鈥淪o do you do coworking? Are you sharing your swimming pool with hotel just in front that has no swimming pool? Are you carbon free? All those things. Our world of hospitality is evolving in a good way.鈥
This is just a taste of the conversation from the Realizing Your Full Potential session at Unfold 2021. If you鈥檇 like to sample the whole thing, you can watch the session here

Author
Tom Brown
When Tom isn't creating outstanding marketing content for 糖心logo入口 as Principal Copywriter, he writes fiction for himself. Either way, he only uses the best words.

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