Six Ways to Drive Better Cash Flow For Your Hotel Property

Huge capital expenditures, construction costs & ongoing reinvestments find hotel owners & investors routinely making large investments – closely

managing fiscal operations.

As a hotel owner or investor, your ultimate objective is increasing your

hotel’s value through higher cash flows & returns.

This objective may shift its shape in different ways but the bottom line

comes full circle back to achieving a stronger cash flow.

Here are six ways you can capitalize on revenue management to drive stronger

cash flow for your hotels.

Proactive Forecasting & PricingIntelligent demand forecasting lays the foundation for a successful revenue management strategy.

These forecasts enable you to make strategic decisions & afford you a clear picture of potential impacts in occupancy or demand, as well as better management of price & inventory. Forecasts can also allow you to consider different “what-if” scenarios for potential changes in demand or increased competitor prices.

You can then quickly react to market changes, establishing strategies that address diverse market segments - keeping long-term revenue in mind.

#1

#2 Optimizing RevPAR & Ancillary RevenuesA “first come, first serve” approach often results in a mix of business that doesn’t positively contribute to RevPAR performance. Hotels should use an accurate unconstrained demand forecast to determine their right mix of business.

Data from all transaction systems should also be included for a pure picture of guest behavior & overall value – inclusive of ancillary spending.

Understanding where guests spend their money helps you make informed decisions about who should receive a last available room or offered a discount to drive demand.

#3 Operational EfficiencyBy anticipating accurate levels of demand, the optimal numbers can be staffed at the right times. This positively impacts cost optimization & increases customer satisfaction – the latter being critical for repeat business, word-of-mouth marketing & future business.

Forecasting demand over peak check-in & check-out times ensures adequate staffing for any “spikes” in guest volumes throughout the day.

This same staffing & inventory principle can be translated throughout all of your hotel’s operations & the optimized wage costs translate into savings that contribute to your hotel’s bottom line.

#4 Driving Better Cash Flow for a Hotel PortfolioData collection & comparisons between multiple properties allow you to decide how to price your properties within different markets. Accurate forecasting data, market research & analysis also allow you to execute realistic feasibility studies for all future opportunities.

Estimating future project successes before outlaying capital investment will help your hotel group make decisions that are likely to increase its long-term cash flow & value.

#5 Channel & Contract OptimizationClearly understand business channels & your representation in each. Relationships with distribution partners can generate incremental business, but it is important not to be locked into inflexible long-term contracts.

Make the most of your third party channel benchmarking information by understanding where your hotel is falling short against your competition & when competitors are moving their rates. This helps the hotel position itself within the market at the right price, with the right business mix, to ensure revenue is maximized.

Don’t forget about contract optimization: Evaluate whether contracts contribute positively to RevPAR performance over the long term –and control that business over the short to medium term.

#6 Integration Across the Entire HotelYour revenue management strategies need to be strongly supported & aligned with the goals across the organization. Revenue management can help determine your most valuable customers, their individual preferences & assess the price points to attract these markets.

Revenue managers should work closely with the marketing, sales & finance teams to ensure that all hotel department efforts are aligned in reaching mutual business goals.

These six considerations are significant contributors to successful revenue

management & capable of generating long-term cash flow for a more valuable

asset to owners & investors.

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