Despite economic headwinds stoking fears of a 2023 recession, the hospitality industry still defies expectations and posts strong numbers. Asian markets opening back up to travelers had a profound effect on Q1 earnings posted by the industry’s biggest brands. Travel demand, while currently robust, may be impacted if companies need to cut costs in the face of a worsening economic outlook but are not showing any signs of slowing down.
Still, the macroeconomic environment is changing rapidly, and the hotel industry is feeling the effects when it comes to inflation. With operational costs increasing by up to 25%, hotel asset managers are under immense pressure to find ways to increase revenue by keeping costs under control. In this blog, we will examine the impact of these changes on hotel revenue trends in 2023 and explore specific examples of how hotels are successfully implementing operational efficiencies to manage their bottom line.
One area where hotels are successfully implementing operational efficiencies is in workforce management. By using technology to automate and optimize staff workflows, hotels can reduce labor costs and improve productivity. For example, one Hilton hotel in Northern California implemented an automated staff scheduling system that reduced labor costs by 10%. The system used historical data to predict demand and generate staffing schedules, reducing the need for manual scheduling, and allowing the hotel to optimize staffing levels. The good news is that this cost reduction is easily replicated across most hotel segments and markets.
Many hoteliers have found savings through productivity increases as the result of implementing an operations management platform. By better managing and automating the assignments of housekeeping, guest service requests, and maintenance tasks, managers have optimized staff workflows, reduced labor costs, and improved overall productivity. As a result, the hotels have seen increased revenue and reduced operational costs, ultimately improving their bottom line. Additionally, the platform provides real-time visibility into operations and helps hotels respond quickly to guest needs, resulting in improved guest satisfaction scores.
Another way hotels are managing their bottom line is by implementing energy-efficient technologies. A hotel in Ohio installed a geothermal heating and cooling system that reduced energy costs by 65%. The system uses the earth's natural temperature to regulate the temperature in the hotel, reducing the need for traditional heating and cooling systems.
Hotels are also leveraging technology to improve their revenue management strategies. By utilizing data analytics and predictive modeling, hotels can optimize their room rates and increase revenue. Marriot International, for example, implemented a revenue management system that uses data analytics to adjust room rates in real-time based on demand and market trends. This allowed the hotel to increase revenue by up to 5%.
In addition, hotels are focusing on creating personalized guest experiences to increase revenue. By leveraging guest data and implementing guest engagement technologies, hotels can create personalized experiences that increase guest satisfaction and drive revenue. The Four Seasons Hotels and Resorts, for example, uses a mobile app that allows guests to make reservations, order room service, and access hotel amenities. The app provides a personalized experience for guests and allows the hotel to increase revenue by offering additional services and experiences.
The changing macroeconomic environment is having a significant impact on how hoteliers are making their 2023 revenue numbers. Operational efficiencies that curb the increasing operational costs are leading the way in opportunities to improve revenue. By implementing technologies that streamline operations, reduce costs, and improve guest experiences, hotels can successfully manage their bottom line and increase revenue.
