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Quit Counting Pennies

Jon Sholter




Today in less than 5 minutes we are going to cover:

Direct your energy on generating, not saving your way to a successful hotel.


We love to talk about money saving ideas here at Hotel Theory. However, do not be deceived, if you want your hotel to succeed on a major level, you need to focus on making money.

Many of us are guilty of focusing on saving pennies instead of making dollars.

Meaning we put a lot of energy into cost cutting, but not enough energy into revenue generating. With Covid behind us (we hope), we're excited to focus on the latter.

Absolutely every operator needs to realize you can always make more than you save. Saving is good business, generating IS business.

Let's look at some paradoxes, think of some things that drive you nuts. That over charge on a services invoice, that expired milk in your breakfast room fridge? Or how about that good feeling when you find a person who quotes $300 less for a job than the next guy, ahh yes, I am amazing thinks the Hotel Manager.

Meanwhile, you have calls being missed by your front desk, a reactive sales department and you forgot to close out low rated business on a sold out night. There are so many examples here, but the main point is, a management team directing energy and attention to revenue generation will always run a more profitable hotel than the contrary.

But why is this the case? Why does cost cutting get more attention than revenue generation? Well one major reason is cost cutting is easy to measure. Everything you cut costs on is a defined line item on your income statement. It's black and white, you can 100% tell if your work saved your hotel money. It's right there in the comparative statement!

However, when you are talking about top line revenue, it is not always as easy.

Can you highlight those few extra rooms you got today because of your efforts on your quarterly reporting? Does that missed call directly translated into a highlighted revenue loss on your income statement? No its does not, but the additional call centre fee for handling overflow reservations does.... Maybe we should cut back on that? Yes, now this is starting to make sense.

So what can we do about this, aside from having the best Sales and Revenue Manager's:

  1. Make sure you are doing all you can to measure revenue loss mitigation and revenue generating opportunities. Ensure your sales department has a method for tracking how they generate business and what business they have lost. Developing these systems does not occur with a click of a button and takes diligent thought and research.

  2. Ensure your entire team is mindful and actively thinking about revenue generation. If you are overseeing your hotel, make sure your leadership team is more intentionally tracked on revenue generation and that your conversations with leadership demonstrate this much. If you are a GM of a hotel, ensure all your departments are working together for this goal and get rewarded for their efforts.

  3. Actively analyze where you can invest in your hotel. Meaning, what can be viewed as an investment as oppose to an expense. Would adding that extra few hours of labour on certain days of the week actually bring you more revenue? Would investing in data and software bring you the information and processes you need to generate? How about your marketing efforts?

  4. Think outside of the box. Perhaps there's little extras you can do in your hotel to generate some top line outcomes. Increasing your vending/market/laundry prices, selling more attraction passes, advertising partnerships or adding services like a games room, atm, vending, upsell software. You name it, there's a lot of incremental revenue to be made out there.

Let's not be foolish, it is always prudent to save money. But saving money is easy, its second nature. Making money is the differentiator.

Remember, saving money is good business, making money is business.

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