Many decision-makers in hotel companies operating several hotels tend to look into the rear-view mirror when making decisions for the future. The reason is tradition because historically, hotels focused on monthly reports and did not have forecasting processes due to difficulties in obtaining accurate data. As a result, most decision-makers only have experience reading and analyzing monthly reports and are unaware of modern technology solutions to understand the future outlook better.
The ideal solution would be to keep looking into the future to take action and adjust plans before it is too late. Monthly historical reporting can help analyze current situations, but they seldom reveal the information necessary to make relevant decisions about the future. So let's look at how a hotel decision-maker can change from looking into the rear-view mirror to looking forward when driving the business.
It is all about growing revenue to drive the long-term financial performance of the business. However, a good overview of a company's revenue sources when operating several hotels can be challenging due to various factors. Here are a few of the critical challenges.
- Diverse revenue streams: Hotels often have multiple revenue streams, such as room sales, food and beverage, events, and other services. This diversity can make consolidating and analyzing financial data across the entire business challenging. Hoteliers need a good overview of the total business and not just rooms and partly other revenue sources.
- Data consolidation: Consolidating financial data from multiple hotels, systems, and software applications can be complex and time-consuming, especially if the data is not standardized or easily accessible. Many hotels are still organized in siloed functions, where each function has its systems, processes, and objectives.
- Real-time data access: Financial data may not always be readily available or up-to-date, making it difficult for management to make timely informed decisions. Today, everything is about speed. If the decision-maker cannot make timely decisions, the opportunity will be lost, impacting revenue and profits.
- Varying performance metrics: Different hotels in the hotel group may use different definitions of performance metrics, such as RevPAR (Revenue Per Available Room), ADR (Average Daily Rate), and occupancy rate. A standardized definition of these metrics must be consistently tracked and analyzed across the entire portfolio to understand the company's financial health accurately.
- Different locations and currencies: If the hotels are spread across multiple countries, financial reporting and analysis can become more complex due to fluctuating exchange rates and differences in accounting standards, tax regulations, and compliance requirements.
To overcome these challenges, companies should invest in robust forecasting systems and processes, standardize reporting across all locations, and employ a skilled team of revenue managers to help analyze and interpret all revenue streams. Once the hotel has systems, processes, and standard reporting, it can enjoy several benefits.
Benefits of future focus
Getting a good overview of the on-the-books data, pick-up pace, and forecasts of all the revenue sources in a company operating several hotels offers numerous benefits.
- Informed decision-making: Having accurate and comprehensive data allows management to make better-informed decisions regarding pricing, promotions, marketing strategies, and resource allocation to optimize revenue and profitability.
- Enhanced forecasting: By understanding the historical and current trends in revenue sources, a company can develop more accurate forecasts, which can help in planning for future demand, managing inventory, and setting appropriate revenue targets.
- Resource optimization: With a clear understanding of the revenue streams, a company can better allocate resources and investments to areas with the highest growth potential, ensuring the most effective use of capital and operational resources.
- Increased agility: Access to real-time data on revenue streams allows the company to respond quickly to changes in market conditions, customer preferences, or competitive pressures, ensuring that the business remains agile and adaptable.
- Improved collaboration: When different departments within the organization access the same financial data, it fosters better communication and collaboration. This can lead to more effective cross-functional decision-making and problem-solving.
- Enhanced performance monitoring: A comprehensive overview of revenue sources enables the company to track performance against established goals, identify underperforming areas, and take corrective actions to improve overall financial performance.
- Better investor relations: Providing a clear and transparent picture of the company's financial performance across all revenue sources can help build trust and confidence among investors, which is crucial for securing financing, attracting partners, or going public.
A good overview of all revenue sources in a company operating several hotels is essential for driving growth and ensuring long-term success in the competitive hospitality industry.
Invest now for future success
There are a few technology solutions available for future-focused decision-makers. One of them is Demand Calendar which automatically collects revenue information from all systems in a hotel to provide insights through dashboards and reports to top management and commercial roles in hotels. Demand Calendar solves all the above challenges and a few more and provides all the above benefits.