It was a year of growth for extended stay accommodations (extended stay hotels, aparthotels and serviced apartments), particularly in North America – the world’s largest region for extended stay - according to the Apartment Service Worldwide’s Global Serviced Apartments Industry Report 2016/17.
NB: This is a viewpoint by Joerg Happel, senior product manager for IDeaS Revenue Solutions.
Annual room revenues for extended stay properties in North America exceeded $13 billion – up more than $1 billion from 2014 – and occupancies continued at the high rate of 76.4%.
The profile of extended stay guests is also changing, with leisure travelers, couples and families joining the mix of business travelers.
As the extended stay market and guest demand continue to grow, hoteliers are turning to their revenue management teams to help monitor and predict the needs of their long-term guests. Even though there are fewer long stay decisions to be made, they have a greater impact on the bottom line. These unique risk and uncertainty factors can be overcome by establishing the right internal team and focusing on a customized revenue management strategy.
Whether you are planning to enter the extended stay market or aiming to maintain the success of a current extended stay property, keep the following tips in mind to help differentiate your hotel from the competition and ensure revenue growth:
1. Build the right team that will thrive in the extended stay market
Finding and maintaining an internal team for extended stay hotels may have become more difficult than in the past – the travel and hospitality industry has the highest amount of staff turnover, according to the U.S. Bureau of Labor – but it’s not an impossible feat.
Start by developing a strong sales force that will drive results and create a solid occupancy base across all aspects of extended stay opportunities including project business, corporate contracts or relocations.
Ensure that the sales team doesn’t act in isolation. Pricing and evaluation requires data-driven analysis that is best supported by an effective revenue management team, who must also work with the marketing team to create the right demand at the right price. This needs to be done in close co-operation with the operation and finance teams, as inventory decisions will impact staffing needs, planning and costs.
Additionally, with all of these moving pieces, the revenue manager often serves as the link between all departments, making it vital that this role be filled by a savvy individual who focuses on the right data, possesses strong analytical abilities and demonstrates interactive internal communication skills.
2. Set your team up for long-term success
Focusing on business mix optimization and the analytics involved around this are key for the overall success of your extended stay property and team.
Extended stay revenue managers will find themselves responsible for more data points and inventory and pricing decisions than their shorter stay counterparts, as they look to balance the peaks and valleys of long stay demand with shorter stay business.
The dual analysis of these factors is key to effectively manage an extended stay property. Luckily tools and resources are available which can help all team members better understand the analytics behind extended stay revenue optimization.
Collaborative learning is essential, and the entire team should have a foundational knowledge of revenue management. Building a revenue and pricing culture throughout the organization will lead to effective communication and strong long-term results.
Additionally, it’s important to set overall goals for your team to hold themselves accountable to and measure their success against. Three important categories include:
- Financial: Are you meeting your RevPAR, ROI, GOP and EBITA targets and delivering to your owners, shareholders and asset managers?
- Competitive: How are you doing compared to your competition and overall market performance in terms of market share?
- Capabilities: Are you growing your revenue management team and capabilities for long-term effectiveness and sustainability?
3. Support your team with the right tools and technology For extended stay revenue management teams, the right analytical tools are essential to understanding guest data and determining the right business mix and pricing of every reservation.
Begin building this toolbox by selecting and implementing a nimble, scalable revenue management technology. Don’t be limited to rule-based pricing or off-the-cuff recommendations. Instead, utilize advanced revenue solutions that offer dynamic and customizable analytics that automatically send input to your reservation system.
For extended stay properties, these solutions are particularly helpful for doing the heavy lifting and making sense of all the forecasting, price and guest data, allowing the revenue team to focus on strategic decisions that drive results to the next level.
Additionally, combining revenue management with change management may help differentiate your strategy from the competition. Change management refers to how hotels transition their individuals and teams and align their resources, processes and technology to meaningfully restructure their organization toward a common goal.
This includes asking what changes in analytical revenue strategies mean for your hotel revenue manager, the general manager, the owner and the franchise. It will lead to a more effective and sustainable management of the changes your extended stay hotel faces on a continual basis.
An extended stay property is only as strong as its internal team
In a time of immense growth across the entire extended stay market, establishing the right team will help differentiate your hotel from the competition. If all team members – from sales to revenue management to marketing and operations – are set up for success with strong, attainable organizational goals and the right technology and tools, the revenues and long-term profit for the entire property will follow.
NB: This is a viewpoint by Joerg Happel, senior product manager for IDeaS Revenue Solutions. It appears here as part of Tnooz's sponsored content initiative.
NB2: Image by Jakub Jirsak/BigStock.