How to face the hospitality industry challenges this season

by Julia Rey - 13 October, 2022

The Revenue Breakfast Club by Beonprice has recently visited Sevilla and Palma de Mallorca, bringing us some interesting insights on the state of the hospitality industry.

The hospitality industry has undergone a number of dramatic changes over the past few years. This is largely due to the crisis that the tourism sector has experienced as a result of the Covid-19 pandemic. Challenges include new legal requirements, changing customer habits and behaviours, global travel restrictions and the economic consequences. However, the biggest challenges identified in the hospitality industry as a result of the pandemic are labour shortages and fluctuations in demand. Both of these factors can be addressed by focusing on digitisation: internal processes automation and offering an improved guest experience.

But let’s focus on a shorter term approach for now: what has happened in the industry recently and what can we expect for the near future. Beonprice, with the aim of bringing together the knowledge of experts in the sector, continues with its Revenue Breakfast Club, whose roadshow has taken it to cities as important as Seville and Palma de Mallorca. These gatherings were the perfect opportunity to debate and share experiences with the main hotel agents in each area. These are the highlights from our latest events:


Beonprice RBC Mallorca

Impact of the revenge travel phenomenon

Summer 2022 has been seen as the time of recovery for the tourism sector worldwide. People have restricted their travel over the past two years because of the pandemic. The psychological effect of this situation, together with the accumulated savings, has encouraged the phenomenon of revenge travel, increasing the demand for leisure travel during the 2022 holiday season.

“We came from a very difficult winter in holiday destinations, but the summer season has performed very well in terms of occupancy and ADR in both the Mediterranean and the Caribbean” – Cristina Moreno, Bluebay Hotels & Resorts.

Not only occupancy rates have reached similar levels to 2019 results, but also ADR has been increasing over the past months in most destinations, even exceeding pre-pandemic levels.


Expectations for the upcoming season

Despite the optimism generated by the good results of the last few months, the hotel sector remains vigilant and tries to be conservative in the face of unforeseen fluctuations in demand. Some indicators show there is still a bit of uncertainty regarding stabilisation of demand:

  • Lead time has been drastically reduced, as well as cancellation rates are now higher, and it is taking a lot of effort to reverse the situation and boost back advance bookings.
  • The macroeconomic situation of inflation and rising supply costs may cause consumers to hold back on travel spending during the fall and winter seasons. Booking pace is expected to slow down.

“Last minute pick up has saved the season in many destinations. The macroeconomic situation is not helping, and the consumer shows atypical behaviour.” – Aída Muñoz, HI Partners

In terms of pricing strategies, we can see that greater professionalisation of the sector, not only in terms of revenue management, but in all sectors of the hospitality industry, is preventing a price war. On the contrary, it is leading to an improvement in guest experiences with the aim of attracting more demand.

“It is necessary to take cancellations into account when analysing the pick-up information. By establishing a series of semi-flexible and non-refundable rates, with different discounts depending on lead time, we have achieved good results in controlling cancellations.” – Pedro Pavón, Casual Hotels

In addition, the same situation of rising supply costs means that hotels have to maintain their pricing strategies upwards.

“Even with the highest raw material and energy costs, the industry has managed to maintain a good RevPAR. However, we must remain vigilant, as further cost increases are expected.” – Neville Isaac, Beonprice.


Beonprice RBC Sevilla

The path to success

As mentioned, the industry has changed enormously in the last few years. We are doing more with less, and we need to maximise all our revenue streams. Margins are being squeezed. Hoteliers need to reevaluate their goals and think about how to optimise resources to get the most out of them and reach sustainable growth.

If we think about Revenue Management traditionally, it was really focused just on room revenue, and we are now really good at it. But now, if you want to survive this new era, you really need to start thinking further, and include new concepts into your business strategy, such as net revenue, distribution strategy, total revenue and total profitability per square metre.

“There has to be a change of mindset in terms of ancillaries. There are many customer pain points where profitability can be achieved.” – Fermín Carmona, Hotelverse.

What other income streams do you have in your business and how can you maximise them? If you map up the guest journey carefully, you will be able to identify all the touchpoints, not only those that bring in a specific revenue stream, but also every moment where we can impact the customer experience. This will influence revenue throughout the entire cycle.

Incorporate different KPI’s beyond the classic ones that we tend to use in Revenue Management: Customer Lifetime Value, Customer Acquisition Cost, Repeat Customer Rate, Net Promoter Score. These are important metrics that will provide you with valuable insights on how your guest behaviours and satisfaction, your distribution strategies and loyalty levels are impacting your bottom line.


App connectivity for Total Profit Management

The evolution of the RMS on automation and dynamisation in decision making has been exponential. The clarity in management, the identification of the return on each decision and the certainty of making the best decision, at the right time, make RMS essential tools in the daily work of an accommodation.

“It is necessary to integrate data from various sources. Technology allows us to make more efficient decisions and we must extend it to all areas of the hotel.” – Estelle Lavoine, HM Hotels.

The challenge is how to connect the dots between all revenue streams and create an integrated strategy to produce a total profit contribution that maximises your income for your assets. In order to decide where to invest your money when it comes to building your ideal tech stack, you really need to think first about your strategy and what tools are going to help you reach your objectives. Next step is finding out if these tools are connected and can share data between them, avoiding information silos.

In terms of technology for revenue optimization, we need to change the approach as a response to the hospitality industry’s need for more advanced revenue management tools, leading to the concept of total profit. Find ways to make the decision-making process easier and more efficient, which would obviously reduce your time to market, and increase your potential profitability. All the different tech applications that you are working on need to be interconnected, and speak to each other, to help you have a holistic strategy and unlock your potential.


Beonprice Revenue Breakfast Club Roadshow

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