Cross Selling: The Innovative Face of Hotel Revenue Management
Are you leveraging the innovative power of this revenue generation tool?
By S. Lakshmi Narasimhan Founder, Ignite Insight LLC | April 07, 2019
Revenue Growth Expectations
Stakeholders and management alike in hotels dream about consistently upward soaring revenue graphs year after year. This is the reason the paranoia about YOY or Year on Year growth is widespread particularly in stakeholders. But revenue graphs do not move at the whim and fancy of owners. They follow demand and supply behavior and if you are in a demand saturated market (something every hotel will confront more than once in their existence), your prices and average daily rates are likely to be driven down thereby contributing to stalling revenues.
So, every kind of effort is made to eke out incremental revenues with the owners breathing down the neck of managements to deliver. Revenue expectations, in particular, unrealistic expectations are the norm than the exception. It germinates from an anxiety to have delivered the best bang for their bucks. So, what do managements do to succeed and make their bosses happy in this expectation trap?
Variety in Revenue Streams
Traditional hotels (who I call as vanilla hotels) lay store by their tried and tested (not always though) major revenue streams of accommodations, restaurants broadly but sometimes also in a nominal manner by Spa, Transportation etc. The extreme dependence on the two champions of revenue - accommodations and restaurants - means any slowing down in demand for these hit revenue achievements pretty badly. This is also the reason why more and more stakeholders are eschewing this traditional business model and choosing a mixed use model with new revenue streams.
But if you are still, unfortunately, in the vanilla hotel boat, you scramble to devise new methods of delivering revenues in your vaunted accommodation and restaurant departments. You leverage the individual revenue producing departments to hook on to each other in a bundle concept. In other words, you cross sell.