Panel: Think outside the room for new revenue streams
 
Panel: Think outside the room for new revenue streams
16 SEPTEMBER 2016 7:49 AM

Speakers at the Hotel Data Conference shared some ways they’re finding new revenue streams at their hotels, from parking and golf to selling roof space. 

NASHVILLE, Tennessee—With worries about the state of the hotel cycle and slowing rooms revenue growth, hoteliers are looking for new and novel ways to drive revenue and profitability at their properties.

Speaking during the “Beyond rooms and F&B: Total revenue management practices” panel at the Hotel Data Conference, sources said there are several ways that many hotels are leaving money on the table.

Isaac Collazo, VP of performance strategy and planning for InterContinental Hotels Group, said there are lessons to be learned from how music festivals and amusement parks manage to create tiered experiences based on how much consumers are willing to pay.

“There are ways to make things easier for the customer and make revenues on that,” he said. “At music festivals, you can buy a regular ticket or a VIP ticket. In hotels, we don’t really think about things that way. We need to figure out what’s a VIP item we can charge for. It helps make the experience better and makes money for the hotel.”

The power of parking and putting
Linda Gulrajani, VP of revenue strategy and distribution at Marcus Hotels & Resorts, said her company has been successful finding “untapped revenue” by hiring a corporate director of parking, which helped turned a cost center into a revenue generator.

She said part of the lesson learned was to not treat parking as “ancillary revenue,” and hotels are largely only charging a flat fee instead of revenue managing it in the same way as room rates.

“On pricing, we’re just doing the same for parking as you do for hotel room,” she said. “You do competitive shops and see what’s in the market. One problem is a lot of (automated) parking machines don’t do dynamic pricing, and it’s great to price special events differently. But you end up doing a bunch of manual work with labor hours to make that money.”

Jamie Pena, VP of revenue strategy and global distribution at Omni Hotels & Resorts, said her company has been putting particular focus on driving revenue at golf resorts and spas, which she noted people are willing to pay for if a hotel or resort is able to “offer value for experience.” She said there is great revenue potential, particularly with golf, if companies are better able to dissect data and look for opportunities to increase rates.

“It’s been great getting into yield management of golf,” Pena said. “It’s where rooms were 10 years ago.”

Gulrajani said Marcus also was able to better incorporate F&B revenue into its golf experiences by buying a food truck to use at a course that had no clubhouse dining.

“We can use (the truck) for group events,” she said. “It’s useful because it’s so portable, and we were able to get return on our investment in a year.”

Other revenue streams
Gulrajani said her company has also had success selling roof space for cell towers, and she noted a shrewd businessperson can add multiple towers to a single property.

“Make sure you don’t sign a noncompete contract,” she said, noting some companies will ask for that in negotiations. “But it’s pretty much pure profit.”

Moderator Paul Breslin, principal at Horwath HTL, said his company has been successful leasing out retail space, and Pena said Omni has seen solid revenue growth by opting to lease out restaurant spaces instead of keeping F&B operations in house.

“We have a hotel in San Diego where, because of labor expenses, we just outsourced (F&B),” Pena said. “It was important that we partner with someone who delivers the product we want. But we make more money outsourcing than running it ourselves.”

During the panel, an audience member asked panelists how they’re handling resort fees and the consumer backlash over the practice.

Pena said transparency is key in the practice, as is making it clear to guests how the fees bring additional value to their stay.

“You have to make sure you have a value proposition tied to that resort fee,” she said. “One example is at the Omni Bedford Springs Resort, part of the experience there is we give guests a s’mores kit and invite them to cook them at the fire pit. And maybe while they’re there, they’ll buy a drink.”

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