“If you can’t measure it, you can’t improve it.”
While there is much debate among the business community as to whether renowned author and management consultant Peter Drucker ever said these famous words, there is little dispute regarding the truth behind them. In the all-inclusive model of decades past, measuring upsells and ancillary purchases were not typically a concern when it came to revenue management strategy.
Today is a different story.
The modern all-inclusive model has evolved to meet the demand of guests with increasing appetites for upgraded amenities and bespoke vacation experiences. Guests are more than willing to pay for experiences – above and beyond the initial package rates. Sophisticated revenue management solutions allow all-inclusive hoteliers to track metrics specific to their business model, driving revenue strategy and dramatically improving profitability. Consider focusing on these metrics for business success.
Revenue Per Guest
Guest segment data provides insight into the types of travelers that comprise an all-inclusive resort’s target audience and revenue base. Along with segmentation, it’s beneficial for all-inclusives to consider revenue per guest as well. In addition to accounting for package revenue, this metric also incorporates individual guest revenue across all resort profit centers, such as food & beverage, retail, and spa.
Ancillary Revenue Spend
Detailed analysis of guest spend on ancillaries such as upscale dining options, personalized amenities, entertainment, and activities is particularly valuable for the all-inclusive model. This allows hoteliers to more easily identify their most valuable guests and forecast revenue per guest rather than revenue per room.
An important but often overlooked area of revenue management is scrutinizing all costs associated with revenues. All-inclusive resorts typically have higher fixed costs due to maintaining multiple food-and-beverage venues and daily entertainment options. However, margins in the all-inclusive model are often more profitable than those at traditional hotels, because all-inclusive hoteliers can more easily forecast expenses and labor requirements based on occupancy levels. Key costs to consider include customer acquisition costs, cost per occupied room (COPR), and costs associated with each of the amenities and services a guest utilizes.
While net revenue per available room, or NetRevPAR goes beyond the ever-popular RevPAR, taking into account all distribution costs and expenses associated with the sale of a room, another KPI that runs along similar lines is gross operating profit per available room (GOPPAR). GOPPAR measures hotel performance by subtracting all of a resort’s operating expenses from revenues, drilling down to the true level of operational profitability, and effectively aligning top-line and bottom-line revenues.
Average Length of Stay
Even more so than in a traditional hotel model, understanding each guest’s length of stay is crucial for an all-inclusive resort’s success. In general, with an all-inclusive model, the longer a guest stays at your resort, the more likely they are to leave your property, lowering your costs and increasing your profits. By analyzing different guest segments, you may discover certain segments tend to book shorter lengths of stay. You can improve revenues by using targeted marketing efforts to entice those segments into booking longer stays.
Customer desire for the all-inclusive model shows no signs of diminishing, with travel suppliers and sellers forecasting growth with each new generation of travelers. And optimizing revenue at all-inclusives is no longer just about developing the best package rates. Through state-of-the-art technology solutions that take the right metrics into account, all-inclusive hotel revenue managers can now experience a holistic view of each guest’s total value – revenue spend along with their associated costs. With a focus on growing higher-end luxury offerings and authentic traveler experiences, revenue managers can now make informed pricing decisions and accurately forecast demand across multiple guest segments, ultimately adding more profit to the bottom line.