This is the second article of our three-part Inflation Story series. You can read the first part here.
Inflation is steadily going up all over the world and hotel businesses cannot afford a second disruption in three years. Here are some key challenges hoteliers must address today:
1. Cash flow forecasting
When inflation is on the rise, hoteliers might find it difficult to forecast finances. Because of the dwindling economic situation, it becomes difficult to predict customer behavior, and you cannot be sure about operational costs either as the numbers keep on changing.
In times like these, a great approach is to offer curated packages and subscriptions to attract guests on a retainer basis. As long as guests are getting good value for their money and are happy with your services, they will invest in subscriptions. This allows you to convert a one-time purchase into a long-term relationship, and build a predictable revenue stream.
Another way to handle the situation would be to switch up your suppliers and shop for better deals, if available. This will help you to keep the expenses limited and continue offering top-notch services without compromising on your profit margins.
2. Price adjustment
One of the biggest dilemmas you face as a hotelier is whether to increase hotel room prices or not. During inflation, the cost of running a business, procuring goods, and overhead costs are all high, so raising rates does make sense. However, this increase has to be in line with the economic conditions and industry trends.
This is where time-based pricing comes into the picture. Hoteliers don’t have to constantly be on their toes to analyze the current market scenario to decide the per-room price. With time-based or dynamic pricing, the automated algorithm adjusts room rates based on the present demand and supply, competitor rates, seasonal trends, and other factors.
This way you can strategically increase or decrease the room price, so you can minimize the risk of lowering occupancy rates. Travelers and bleisure guests who prefer luxury stays are less likely to be bothered about a slight price change. While the price bump can make price-sensitive travelers unhappy, the demand for travel is still high—so the risk of driving away guests is low.
3. Operational challenges
Almost all industries are facing a major labor issue, and the hospitality sector seems to be the most affected by it. After the pandemic, sourcing and retaining staff in hotels has not been easy. The low supply of labor has increased labor costs, taking a toll on the operational cost of hotels.
Not just the expenses, this burning issue is the reason why hotels are facing operational challenges at multiple touch points such as check-in and check-out, catering to the individual needs of guests, or providing them with a comfortable and seamless experience. and internal maintaining rooms and the hotel premises, etc.
As a hotelier, you have to be well-equipped to handle situations like these. If you’re finding it difficult to operate with a staff shortage or cannot figure out how to enhance the guest experience further, it’s time to make optimum use of hotel technology. With MyCONECT’s two-way integration to your hotel PMS, you can improve interdepartmental communication, reduce the staff’s workload, and offer a hassle-free contactless guest experience using automation.
4. Attracting new customers
The soaring prices push you to cut down all unnecessary expenses related to the business and stick to only the core components. But wait—do not curtail your marketing budget yet! You cannot afford to depend only on OTAs for attracting guests. Effective marketing can help you scale your business in times of inflation by bringing in new customers. In times like these, you have to focus on creating a solid cash inflow and increasing RevPAR, so it’s essential to put your hotel brand out there and market it to your target audience.
You can get started by maintaining a mobile-friendly website where customers can get a taste of your brand, check out the ambiance of the hotel, and know about your values, offerings, packages, and prices. Optimize the website with CTAs to make it conversion-focused, and make sure both the content and the visual represents your hotel business authentically. You could also go a step ahead and offer a guest app to ensure a more personalized and interactive experience.
Another channel you can focus on is paid advertising. Initially, it may seem like a redundant expense but with consistent efforts, the ads have the potential to generate high ROI.
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