In a recent survey of hotel owners, more than one third of respondents considered hotel deflagging because they wanted to maximize their profit. Among branded hotels, some owners are seeing franchise fees and expenses erode profitability, causing them to question the benefits of their chain affiliation. In our previous post we looked at deflagging and its impact on sales, here we focus on hotel deflagging and profits, exploring specific ways new indies can boost profit margins.
Flaunt Your Assets
Determine what it is that attracts visitors to your hotel, then capitalize on it. To illustrate, one hotelier deflagged his branded property that was within walking distance of New York City’s Times Square. He renamed it, incorporating “Times Square” into the new title. He not only saved on franchise fees, but saw an increase in revenue per available room (RevPAR) of 20 percent. The SEO of the new property name more than compensated for the loss of brand recognition.
Explore New Ancillary Advantages
Does your deflagged hotel play host to more business travelers? Couples? Young families? As a new independent hotel, you can increase profits by creating customized ancillary offers that speak to the needs and wishes of your target audience. Once you’ve performed a deep analysis of your customer segments, create local experiential events and attractive packages that speak to your high-value guests, while boosting the revenue you earn per booking.
Partner for Profits
Free from the constraints of brand oversight, you can now create lucrative alliances with local businesses that complement your new brand. For example, if your hotel doesn’t have an on-site restaurant or fitness center, team up with local providers for mutually beneficial partnerships. You can also improve your bottom line through commissions from point-of-sale opportunities, such as selling car rentals and tickets to local events from your front desk.
Try New Distribution Strategies
Now that you’re no longer locked into national contracts, you can benefit from new distribution opportunities. Airbnb is offering their massive marketing power to indies for only a fraction of the cost of OTAs. And gatekeeper Google has entered the game with a cost-effective fixed rate of around 10 percent, allowing prospective guests to book hotels right from their search page.
Choose the Right Technology
As a chain, you probably used brand-required technology systems. Lower costs, improve operational efficiencies, and increase profit margins by investing in a cloud-based business intelligence solution that quickly aggregates and analyzes data from multiple sources to improve decision making.
And finally, to ensure that your profit margins continue to grow, you must maintain an entrepreneurial mindset, with a strong focus on sales and marketing. So, in response to that critical question about hotel deflagging and profits: Will deflagging boost my profits? The answer is yes! When handled strategically, it most certainly can.
Contact us for a free assessment to see whether deflagging may be right for you!