Discover the secret behind hotels’ revenue strategy! Ever wondered why, in F&B, hotels and resorts prioritize check average over enhancing value, quality, and service to drive Guest frequency? Let’s unveil the reasons and explore how it all fits together.
Hotels, like any business, need to thrive financially, of course. Maximizing revenue per guest (PPA), known as the check average, is a primary approach. By increasing Guest spend during stays, hotels can boost their overall income and profits accordingly. More incremental revenue equals more “flow” to GOP.
But what about enhancing value, quality, and service to encourage Guests to return to restaurants and bars more often than once per stay? This is crucial and it is imperative that this is they way to induce loyalty. Afterall, that is how successful independent restaurants do it. They focus on all three all the time. With fierce competition and evolving preferences, hotels face challenges in driving Guest frequency.
However, by focusing on increasing the check average, hotels can directly impact their revenue but also can suffer the inverse relationship problem that, as check average goes up, “capture” percentages decrease. Operators can certainly offer enticing add-ons like room upgrades, spa treatments, and exclusive dining experiences, elevating the overall experience and incremental spend but that will not drive people back to your restaurants and bars frquently.
This strategy ensures a predictable revenue stream, allowing hotels to plan accordingly but is that planning focused in the wrong areas? Can check average cover all woes or is the tantamount to the same old adage “you can’t cost-cut your way to profitability“? Can you price your way out of ‘capture’ just to hit your budget? Why, yes you can!
Rest assured, some hotels also prioritize enhancing value, quality, and service to build a loyal customer base. They understand that exceptional experiences lead to positive reviews and word-of-mouth recommendations, attracting new guests.
The hotel industry has an intricate revenue puzzle, designed to create memorable experiences that keep Guests coming back for more. Can we do the same in F&B? We say we can!
