Hotel service comes under the category of hospitality industry. There are wide range of services provided in hotel industries, some of them are lodging, event planning, theme parks, etc. Hotels can be classified as business hotels and resort hotels. The functionalities and the strategies used for generating revenue vary widely, depending whether it is a business hotel or resort hotel. Hotels located in city are ideal for investing as business hotels.
The main source of revenue generation comes from room rentals, food and beverage sales, meeting room rentals. Revenue generation is not completely dependent on sales and marketing. The price is always determined by the market.
It is important to emphasise on reducing the cost, as the market determines the price. The margin of profit depends on managing the cost and keeping it low or competent for the products and services. Hotel industries survival depends completely on customer. For a good revenue generation, it is very important to keep the customer happy by giving them the Aha movement. It is being observed, that by focusing on small details can create a major impact for increasing profitability.
Factors contributing for revenue generation:
Hotel industries always aim to have complete occupancy of the hotel rooms. If a room is not occupied for a period or a day, the chance of renting it out is missed and the revenue that can be earned is never recovered. It is important to calculate the occupancy percentage of the hotel rooms every night to keep track of loss of revenue and a develop strategy to maximise the occupancy. Occupancy percentage is the percentage of number of rooms occupied and total number of rooms in the hotel.
Room rate varies depending on the demand for the rooms. Room rates are charged high during the on season and room rates are charged less in off seasons. Average room rate is calculated to understand the total revenue and develop a strategy in increasing or decrease the room rates.
Strategy to generate high revenue:
·Giving discount is one of the strategy in generating revenue. This helps in increasing the occupancy percentage. Any increase in the occupancy during the off season is considered as additional revenue for the business.
·Advertising by use of social media is the powerful strategy of reaching customer. With the increase in number of social media in current generation, its has become the most powerful medium to attract customers. Creating account and use of social media such as twitter, Facebook, google+, linkedin etc, has become indispensable to generate a boost for the business. Regular post in social media about the offers, special discount, local events conducted, and restaurant scene attract customers looking for service in hotel industries.
·Designing attractive package is a strategy for attracting the customer. Including the available amenities in the package is a smart way to attract customers. Package can include free breakfast or dinner, arranging tickets for sporting event, champagne and chocolates in the rooms etc.