To refresh your memory, in the last post, we were charting the progress of two hoteliers from Amsterdam who were attempting to boost revenue with a very small budget.
When we left them last, they had identified early arriving guests as potential way to increase revenue and improve their personalisation of service. They had started generating revenue by emailing guests the night before they arrived to offer them early check-ins if they were arriving on the early morning flight. But they had run into three main issues:
- They were selling more early check-ins than they could actually provide and their housekeeping team were not happy!
- The manual element of these tasks was making too much work for an already stretched front desk team.
- They weren't sure how much to charge for each early check-in as somedays they had plenty to offer, but somedays only one or two. It didn't feel like they maximising their revenue.
So how did they solve all these problems? In this post I'm going to dive in to the strategies they used and analyse why they were so effective.
Let's get started.
It's at this point in the story when I first met David and Maikel at a conference in Amsterdam. They explained the problems they were facing and I offered to help out.
We sat down strategise how we could solve these three problems, let's break them down in order.
Problem 1: Inventory Management
The first problem was one of inventory management. How could we ensure that rooms would be ready for the guests who bought an early check-in.
We thought about hiring more cleaning staff, but that wasn't really an option on a small budget.
We then hit on a very simple solution, that proved to be very effective.
With my team here at HotelFlex, we built a simple system that only sent early check-in offers to guests if there was an empty room in their room category the night before. That way we could always be confident that there was a clean and empty room ready for them whatever time they arrived which meant that this strategy now had no impact on their housekeeping team. Which made them much happier!
However, as with everything in life, the timing proved to be the key. At what time could you they be confident that they weren't going to sell that room? We ran an analysis of their bookings and learn't that the vast majority of their same day bookings happened before 7pm. Walk-ins after 7pm were (relatively) rare.
However, the other side of the coin was that we were targeting guests arriving on long haul flights, so we had to make the offer before they boarded their flight.
We analysed all their guests and where they were travelling from and resulting flight schedules. We learnt that the majority of them boarded their flights between 12 might-night and 2am Amsterdam time.
So to give us the best chance of the guest seeing the offer, we sent them at 7pm. The perfect balance between being confident on the inventory available and the guest receiving the offer before they left.
Problem 2: Creating Too Much Work
The second problem we faced was that sending the emails, monitoring the replies and updating the PMS was creating too much work for an already stretched front desk team.
To solve this problem, the team and I went away and built a solution that integrated into their PMS to automate the entire process. Now all the front desk team have to do is welcome the guest into the hotel. We estimate this saved up to 5 hours of work for the team each week.
Problem 3: Pricing
Like every hotel around the world, their occupancy differs on each day of the week. And consequently they could offer more early check-ins on some days than others. Added to this, they were also seeing a greater demand for early check-ins on some days than others. For example, more business travellers were arriving early on a Monday morning for a week of meetings and so the demand was highest on this day.
So we began to think, should we charge the same amount each day? Or should we charge dynamically based on supply and demand? And should we charge the same amount for a guest arriving at 8am as a guest that arrives at 11am?
We began to experiment, we built a simple algorithm that increased the price if supply dropped and demand rose and visa versa.
We also added a layered pricing option where guests could choose their arrival time and pay according to the added amount of hours they needed.
These three strategies not only hugely increased the revenue generated from this activity, but also took away all operational impact resulting in zero manual work for the hotel. Ticking all boxes for the hotel.
But how much revenue did they generate? I'll dive into the financial impact of this strategy and more in the next instalment of the Innovative Hotelier.
But before you leave, leave a comment below, I would love to hear what you think about these strategies. Have some better ideas of your own? We would love to hear about them.