Why Do Two Hotels in the Same Category and Location Have Different Bottom Lines?

Recently, I was on a work tour to Bangalore. And fortunately or unfortunately, I missed my return flight. But, instead of returning to the hotel, I booked a hotel near the airport itself.

In the evening, while strolling down the street, I noticed something that only hospitality enthusiasts would do. Compared to the hotel I was staying at, the other hotels were a little crowded and it seemed that they were making a good profit.

That’s when my curious blogging soul asked me to cancel my flight and check into another hotel after this stay. But, why would I do that?

Because I AM RICH!! Just kidding. Though I hope I was.

I wanted to see what’s the difference between them. So, I did exactly that. And trust me on this, the differences are significant. Even the tiniest hotel management strategy was bringing in a good amount of guests and revenue.

In this blog, I am penning down all the things I witnessed in both the hotels and also, what other factors are involved. Hoteliers like you can take a cue from this and improve your business.

Understanding the Landscape of Same Category Hotels in Same Location

There are various types of hotels and it is pretty common in the industry that hotels of a certain category are often established in the same vicinity.

But why is it so? Why would someone try to enter an arena where there’s already so much competition?

The reason is, certain places attract a certain type of travellers and to satisfy their needs, hotels opt for a concept.

Let me explain.

Kaziranga in Assam, India is not only popular for the world-renowned greater one-horned rhinos, but it also attracts people to experience nature. If we talk about the trends, hotels and resorts in Kaziranga offer a bundle of activities — jeep safari, elephant safari, camping, trekking, riverside activities etc.

I am from Assam, and I have seen the hotel landscape in this national park region upfront. Take it from me, despite the increasing competition, many new hospitality businesses are opening up with the same offerings. Because why not? The number of people travelling to Kaziranga is also increasing.

Why Some Hotels Fail While Some Make Hit Good Profit

Let’s address the elephant in the room. Here in this section, I will try to put down all the factors affecting a hotel’s bottom line and what makes a hotel get a competitive edge over its competitor in the same category and location.  

The marketing game

When you’re running a hotel, marketing should be one of your first and foremost strategies. Hands down!

During my stay at both the hotels, I did my part of the research. Be it their Facebook page, Instagram page, pamphlets, billboards and everything in between, I checked out all of it; just to get a glimpse of how their marketing game is.

From that, what I understood was having a huge follower base doesn’t mean you’re a popular brand. And that’s exactly what the second hotel was into.

They had a great number of followers on all their social channels but had major flaws.

• They didn’t define a target audience for their hotel. Meaning, their followers were just engaging with their posts/content but not buying any stay.
• The content wasn’t in line with the hotel’s end goal. It was good enough to make people hit that like and follow button; but again, it wasn’t selling anything.
• They were not betting big on traditional marketing strategies either. (I really don’t know why people underestimate traditional marketing these days.)

Now, talking about the first hotel I stayed at, their marketing game was on point. And the reason I booked that hotel explains it.

The hotel was mostly targeting people who would prefer to stay near the airport. So, when I missed my flight and was confused about my next move, I saw these pamphlets of the hotel at a cafe. That’s when I booked.

Not to mention, on my way to the hotel, I could also see a billboard of the hotel.

Do you see the difference? It’s all about the right hotel management strategy if you want to compete with hotels in the same location and other competitors.

Revenue management and pricing

Another significant difference that made one hotel count good bucks and other hope for it was their pricing and revenue management strategy.

This I am saying because I did have a conversation with the managers of both the hotels.

Before checking out from the first hotel, I talked to the manager and asked him certain things about their pricing strategy. He said that their pricing aspect is being handled by a revenue management services company. They use intelligent pricing strategies after a good amount of analysis.

When asked whether he’s witnessed any change, he said and I quote:

“To be honest, I never thought that such a good rise in revenue was possible. Without an inch of doubt, the changes are great. I do accept that initially, it took a little time to take off. But once we hit our revenue goal, there’s been no looking back.”

Now, it’s not that the other hotel wasn’t using revenue management, but there was still amiss. The revenue manager was doing a good job, but then there were limitations. Maybe he had limited data to run analysis on or was running short on manpower.

(Also, I am assuming, the final call regarding pricing was always from the hotel manager. I could sense it. Basically, the in-house revenue expert wasn’t getting the right atmosphere to work on.)

Bottom line? Outsourced revenue management was working much better than the in-house one.

Hotel management strategies and technology

To run a successful hotel business, you need to have top class hotel management skills. I am not talking about the ones you learn from traditional hospitality courses. Rather, the ones you learn from experience and from out-of-the-box thinking.

Now, management strategies aren’t limited to managing hotel front desk operations. It should rather focus on each and every aspect of a hotel.

While both the properties were fabulous in managing their hotel operations, the first one had an upper hand.

I will tell you why.

Both the properties had amazing managers and a fantastic hotel management system. But the first property had contactless hospitality. And I kid you not, despite little to no human interaction, I had a fabulous experience staying there.

I was able to choose my room, check into it, order food, avail other services, and check out without having to visit the frontdesk. Almost everything was touchless.

The hotel could achieve this level of seamlessness because of the right technology. Also, the manager told me they were sure from the beginning that integrated solutions for hotels like a touchless system is going to be a game-changer.

“We know our target audience or the guest who would stay with us. They are mostly corporates, just like you and always prefer safety over anything else; meaning, a top-class contactless hotel experience. And this is exactly what we offer at our property.”

– said the manager of the first hotel.

Moreover, the second hotel was also showing interest in integrated solutions like contactless technology. I am sure, they are soon going to have it on board in their property.

Amenities and facilities

Both the hotels where I stayed had all the required facilities and amenities. Then why am I putting this here?  So that I could help you all understand its importance.

You can take my example again. The manager of the first hotel near the airport said that their target audience is mostly corporates. Meaning, the amenities they need to have should be in line with the guests’ preferences.

So, what do corporate guests prefer? Good internet connection, a comfortable room, POS services like spa, conference hall, workspace etc.  If your hotel has all of it and more, then you’re absolutely ready to host guests from the corporate world.

Further, you have to run some sort of compset analysis where you could determine what all amenities and facilities your competitor has got. It is supremely important to know this because this will help you enhance the guest experience at your property.

Credibility

Building credibility is one of the top strategies to improve a hotel’s bottom line.

However, credibility is not a service to buy or something that you can achieve in a day.  If you want to be trusted, your hotel needs to speak for itself. And how can you make that happen? By providing a great experience to every single guest and making them drop some good reviews.

Now, when I say experience, I mean personalised experience. Because personalisation is something that connects your hotel with the guests.

And true personalisation lies in understanding the journey of your customers. Once you know their needs you can offer the right services at the right time.

Furthermore, there are a few more things to keep in mind when you want to be credible — your hotel website, social media pages, OTA presence, booking process, so and so forth.