The hospitality industry is a multibillion-dollar industry with lots of career opportunities in hotels, theme parks, restaurants, country clubs, etc. It is one of the fastest-growing sectors as a lot of industries are involved in it.
Though it can be very profitable for aspiring and established entrepreneurs, it can get challenging as it requires charisma, drive, and innovation to ensure you can meet your customers’ demands. Growing a hospitality business for profit requires a lot of thought and innovation. In this article, we’ll look at some practical ways to grow a profitable hospitality business.
1. Yield Management
Yield management refers to anticipating, understanding, and influencing your customers’ behavior to increase your business revenue to the max. This principle was first used in the hospitality industry in the late 80s. The main objective of yield management is not just to increase your rates or occupancy; instead, it involves forecasting your business’ supply and demand through different key factors to maximize your revenue. Let us consider some yield management examples. If you have a hotel, yield management will allow you to maximize the profit you can make from a specific number of rooms that must be sold on a deadline.
Another example is if you have a hotel located next to an event center or stadium, you will charge more for rooms than you do on a typical weekday or weekend during a conference or sporting event. Yield management involves targeting the right customer at the right time and selling for the right price.
It involves using gathered data to understand your customers and their sensitivity to pricing and combining that with seasonal demand. High demand, seasonality, and special events can allow you to alter your rates to increase revenue. Though the idea isn’t to increase rates only, it also involves attracting the right customer at the right time.
Yield management allows you to make more profit from your existing inventory.
2. Create a Website
Your hospitality business should have a well-maintained website as it adds to the first impression prospective customers have when they check out your business. For example, if you have a vacation rental, you can hire a competent web designer or a web design company to help you build a vacation rental website. Also, customers can make bookings through your website if you have one, and this will help you save more money as you will not have to rely on listing channels to gain customers.
Though listing channels can help you get bookings, you’d have to pay a commission and follow the transaction terms, which you will not det. When you have your website, you’ll have more control over how you present your business to customers. You can display a photo slideshow with high-resolution images of the property or add other enticing features that will help you gain more customers. A professional website helps to give your business a professional image while making it more visible online.
3. Maintain and Improve the Quality of Your Service
The hospitality industry is a highly competitive one, so it is important to stay on top of your game to gain more revenue. If your business is reputable for providing quality service, then you should maintain that standard. You can check out your competitors to get ideas on how to improve your service and set your business apart. This is very important as the reputation of your hospitality business is primarily determined and affected by your quality of service.
If your customers are satisfied with your quality of service, they are more likely to recommend you to prospective clients. To get more ideas on how to improve your service, you can check the online reviews about your business. Check what your past clients have said about their experience, what they like, what they dislike, and any improvement they might suggest. Once you improve your service quality, new and old customers will be willing to pay more even if you increase your rates as they will get enough value for their money. To grow a profitable hospitality business, you should be ready to offer more value than your competitors.
4. Have an Active Social Media Presence
This is a great way of making your hospitality business more visible online. It is also a means of reaching prospective clients. Apart from creating and maintaining a website, you should have an active presence on Facebook, Twitter, and Instagram.
These are where a bulk of your prospective clients are, and most brands take advantage of this. Nowadays, brands and businesses employ social media handlers that stay in charge of their social media pages. They are responsible for creating content and interacting with customers and prospective clients on social media.
You can post images and videos of your property on social media to attract new customers. Another way you can grow your business on social media is through sponsored ads. Most social media platforms offer various forms of advertisements at a reasonable price.
With sponsored ads, you have a higher chance of getting new customers or driving traffic to your website as you’d be able to reach a wider audience.
5. Create a Rental Agreement
If you are fully managing your business, then oral agreements with customers may not be enough. Your clients may have some assumptions about the terms and conditions or interpret the rules and regulations differently.
Sites like Airbnb can take care of this for you if you are not fully managing your rentals. For example, you can easily create an Airbnb house manual visible to prospective clients once they click on your property.
To avoid misconceptions and misunderstandings, you should create an agreement that will be visible on your website or any booking medium you prefer. Your guests will sign this agreement and protect both you and the guest if there is a dispute.
Though the terms and conditions may vary depending on the type of hospitality business, you can consult a business attorney for verification before using the agreement for your business.
A rental agreement should include information about the property, rental party details, occupancy limitations, the minimum stay requirements, house rules, rates and additional fees, cancellation policy, payment details, and the customer’s signature.
You can add other details and terms depending on your type of business. Creating a rental agreement is an excellent way to ensure your hospitality business runs smoothly as it makes it easier to prevent and resolve disputes between you and your customers.
6. Make the Booking Process Easy
A complicated or strenuous booking process is likely to discourage new clients from patronizing your business. Firstly, your hospitality business should have an online booking and buying platform.
A large percentage of people prefer to make bookings online. If your business does not have an online booking platform, you are bound to lose a lot of customers. If you choose to use listing sites or booking platforms, make sure the platform is reputable and offer good customer service.
If you use your website for reservations, then customers should be able to make a booking with simple steps. The required information boxes should not be excessive.
The less time your guests spend booking, the better. You should include additional informational text to help your guests through the booking process. Before your booking system goes live, ensure you pre-test it to make sure it’s hitch-free. Also, you can create a mobile app that allows your guests to make bookings and other transactions.
7. Keep in Touch with Your Customers
Apart from gaining new customers, a good way to grow a profitable hospitality business is retaining valuable customers. Guests will value a company that can offer a personalized experience.
If your guests can get a personalized experience, they are more likely to make more bookings or refer your business to others. Always interact with your guests on a personal basis. You can send emails or appreciation messages after a successful booking.
You can also refer your customers to your social media pages or ask them to sign up for your newsletter if they prefer to. Though you shouldn’t spam your customers with ads or emails, ensure you send information periodically about new offers, promotions, or other relevant details.
This will help keep your business on your customers’ minds, thereby increasing the chances of having repeat bookings. Once you identify your most valuable customers, you should try to keep the communication lines open. Also, you can ask for referrals or recommendations from your long-term customers.
As we have previously stated, the hospitality industry is very competitive. You need to come up with creative ways to market your business. To ensure you get a steady flow of revenue from your hospitality business, ensure you follow these tips we have given above. Apart from these, always be on the lookout for new trends and innovations in the hospitality industry to help you stay on top of your game.
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Why and how a modern marketing strategy should put customer experience first
By Jim Preston, VP EMEA, Showpad
In 2004, the Leading Edge Forum coined the term ‘consumerisation of IT’, defining a trend in usability and customer experience that would be confirmed by the launch of the iPhone three years later. Long gone are the days of trawling through esoteric and poorly-written manuals, the trend said – if technology isn’t usable off the bat, it’s out of the question.
This trend gradually permeated all of IT, before making its way through customer and buyer experiences, regardless of sector. In fact, research has shown that a staggering 81% of B2B buyers purchase based on the buying experience alone, well ahead of either price or product. Of course, price and product are important, but with markets becoming increasingly commoditised, buyer experience, including the trust and relationships that are built, is fast becoming central to the equation.
However, this experience begins long before a customer meets with a salesperson, hits send on an enquiry email, or calls the sales team. According to studies, B2B buyers will spend an average of 20 hours doing research before they contact someone in sales – and if they’re not finding your content online, you can be sure that they’re finding your competitor’s content.
In short, this means that your marketing strategy needs to be much broader than just a Gantt chart of campaigns – a real marketing strategy encompasses all aspects of the customer experience, before, during and after a sale. It doesn’t matter if you’re in Regtech, payment processing or retail banking, it must be easy (and even pleasant) to find, understand and engage with your content and brand.
Where to begin
Sun Tzu wisely said, ‘know yourself and know the enemy’, and the same is absolutely true for your marketing strategy. Providing a good customer experience and consequently, good marketing, is impossible if you don’t know the market that you’re serving.
For example, if you’re in Regtech, make sure you know the exact ins and outs of the compliance headaches that you’re solving. Regulation is highly nuanced and will vary from country to country and sector to sector – so make sure you understand what problem your company solves and for whom! Regtech often relies on algorithms and big data to make life easier, which isn’t always easy to communicate clearly. Consequently, it’s worth spending time immersing yourself from the outset and fighting through the jargon until you’ve got it clear, so that you can brief teams and create marketing content that will really resonate rather than repel.
Similarly, if you’re working for a business bank, know the particular kind of businesses that you’re targeting – do they work in one country or multiple countries? Are they in particular vertical markets, or are they a generalist? What pressures are they facing at the moment?
Once you have a good understanding of your prospects, how they’re segmented, their challenges and how they work, as well as the respective strengths and focus areas of your own brand, you need a few more things – content, the means of communicating that content, and the means of measuring the success or failure of that content.
Clearly, if we were talking about historic marketing, we’d limit this discussion to just direct mail or events, but today, it needs to encompass all of that, as well as ongoing content that goes to existing customers – and even former customers! This means communicating better with teams like sales, customer success and product development. In fact, there is anecdotal evidence of companies pausing outbound campaigns to focus purely on marketing to current customers, in an effort to delight and retain during the pandemic.
This article won’t go into detail about how to draw up content at a tactical level – this is different for every single organisation – but there are a few very pertinent elements that apply to all companies.
The components of a great connected marketing strategy
First and foremost, don’t do less well, do less, well. Every buyer is almost drowning in content today. Producing infrequent but regular content that is excellent – whether that means being surprising, informative, thought-provoking or just plain useful – is much more appreciated than weekly drivel. In fact, research suggests that buyers often feel overwhelmed when presented with more than five pieces of content, so less is definitely more. Quality content is good for your brand equity, and it keeps you engaged with prospects.
Closely aligned to quality is specificity. In many financial areas, products are strictly controlled and how they are sold and advertised can differ or be limited by regulation. Consequently, it’s important to have a way of segmenting which marketing content goes to which audience – and ensure that this is consistent across your organisation!
Secondly, have analytics in place that can show what content is being consumed. As John Wanamaker said, “half the money I spend on advertising is wasted; the trouble is I don’t know which half” – and the same is true for marketing. You wouldn’t run an event and not solicit feedback, so don’t create content where you can’t measure its success once it’s been distributed. Being able to tell other teams which content is working really well also helps them – and not just by bringing in new customers. If you can tell the sales team that prospects were really engaged with a webinar on the ePrivacy directive, for example, then that also gives them a conversation starter for their next interaction with a prospect.
Similarly, getting feedback from broader teams is important, either to reinforce that you’re taking the right marketing approach, or to use their insights to fuel your next marketing campaign. Most large organisations will store and generate a large amount of data every single day, so mining this data to create meaningful insights and translating that into content and approaches that are impactful is extremely important.
Finally, unless you’re working in a startup, you’re probably not going it alone, so you also need mechanisms to make sure that the content is being communicated and followed-up effectively by all members of the team. This means that tracking what’s been distributed, how it’s been received, as well as providing good training, coaching and performance management of staff, is key.
This also ensures that you can not only do more of what’s been working, but that you can improve things that aren’t. In some ways, it doesn’t matter whether you’re dealing with an underperforming marketing asset or a member of staff – either way, you need to change something and then make sure that it’s improved!
Into the Future
With most western economies drawing a large proportion of their revenue from the service sector (in Germany, for example, this figure stands at around 70%, with the UK at 80%) it’s unsurprising that experience, above price and product, has become a central differentiator. It may have been slower to permeate through B2B organisations in the financial services sector, compared to B2C firms and retail banks, but as budgets tighten through the pandemic and recession, it’s crucial that marketers step up to take on the mantle of being experience champions.
Clearly, this will manifest itself in different ways, but whether it’s better enabling the sales team by producing highly specific content for one prospect, helping a CSM promote a product change because of customer feedback, or simply promoting a new service, the central tenet holds: experience has never been more important.
Business first, not compliance only is the future for accountants
By Peter Bracey, MD at Bracey’s Accountants.
The past few months have underlined the need for better business insight to reduce risk, improve decision making and exploit new opportunities. Businesses have needed rapid access to advice, support and information – yet in too many cases the obvious ‘go to’ resource has failed.
Accounting firms with a compliance only approach have been unable to step up and support businesses that need more than the basics of profit & loss; balance sheets; and cash flow. What they require is business support, from using corporate structure to mitigate risk to undertaking robust forecasting to inform investment plans and helping to maximise business value for a company looking to sell.
From providing essential advice to protect business assets – such as property – to R&D tax incentives and VAT consultancy, whether a business requires a fully outsourced FD or support for the existing management team, Peter Bracey, MD, Bracey’s Accountants, outlines the opportunity for progressive accountants to support constantly changing business.
Whether a winner or loser during the Covid-19 crisis, businesses across every industry have had to adapt to extraordinary change. Gyms were shut but companies selling gym equipment, bikes and paddleboards couldn’t keep pace with demand. Garden centres and nurseries were trying to keep alive tonnes of bedding plants – while seeds sold out online and everyone bought a greenhouse.
For some business owners the focus was on managing job retention schemes and accessing the life-line of government finance – but now they are worrying about the repayments of deferred VAT and government loans that will be due early in 2021; about closing premises or making redundancies. For others, the challenge was in responding to customer demand for home delivery; working out new finance models and overcoming supply chain glitches. Now they are looking to build on new customer relationships and embed expansion plans.
At every step, these businesses have needed advice, support and insight. But this was uncharted territory. Forecasting is tough at the best of times. Little if any of the business’ activity pre-Covid appeared to offer any relevance during the past six months. So where could businesses turn for help?
These are decisions that require not only excellent financial and business understanding, but also excellent financial and business data. Which is where many traditional accountancy firms fall down. The majority have, of course, made the shift to cloud based software which provides shared, real-time access to business data. As yet, however, many remain committed to a service model that is predicated solely on meeting compliance requirements, not supporting critical business decisions.
Proactive firms are taking a very different approach, one that takes a business first rather than compliance only approach. Rather than attempting to mitigate risks and reduce tax liabilities after the fact, this model is about constant communication with clients to support change. By encouraging businesses to discuss plans in advance, accountants can provide vital support and insight – either working with the existing CFO or FD or providing an outsourced FD resource to those companies that cannot justify this dedicated role.
These firms are looking beyond annual accounts data to provide business insight and advice based on current, not historic – and now irrelevant, financial data. Whether the business is worrying about repaying its deferred VAT and Bounce Back loans next year, searching to minimise risk or building on new customer awareness to add revenue streams, there is a pressing need to understand the business as well as financial implications of change.
Today, that means supporting companies through a line by line approach to every item on the balance sheet. From cutting costs and chasing debts without jeopardising important business relationships; to identifying and funding new revenue streams – even creating local supply chains to mitigate the potential disruptions caused by Brexit – understanding, analysing and interpreting this data is key to making the right decisions today to support immediate goals.
But what about tomorrow? Covid-19 may have been a once in a century event but the pace of change affecting business in a digitally disrupted global economy demands this continuous level of proactive support. Few business owners or management teams have the time, resources or expertise to unravel the complexities of 21st century operations – and can become exposed to significant risk as a result.
Is it worth developing talent in house or more effective to recruit? Does the government’s latest apprenticeship scheme really work financially? What about tax incentives – such as R&D tax credits or the potential to cut corporation tax for sales of patented goods? How can the business safeguard its intellectual property?
Providing the right answers to these questions is about far more than the mainstays of accountancy: the P&L and balance sheet. It is about leveraging business understanding and knowledge to support clients through every change; about helping companies to take every possible step to build a strong foundation, maximise tax incentives, minimise risk and realise business goals.
Take the retailer that has spent 50 years building up not only a successful customer base but also a valuable property portfolio and cash reserves. At first glance, a robust business. But the company structure revealed a significant risk: the entire operation was held within one limited company. There was no separation of assets. Should the business be accused of copying a product and face a legal claim, the entire company’s assets would be at risk. The simple step of creating a group structure and transferring some of the assets to a holding company draws a line in the sand and limits a creditor’s ability to attack the entire corporate asset holding.
Or consider the business that was investing circa £1million year on year in a new software product – yet had no idea that it could claim R&D tax credits and was due a £500,000 rebate. Or the businesses that have never considered applying for a patent on a product because of the up-front costs – and are, as a result, missing out on the long term financial benefits of patent tax relief. Any company with a patent pending can apply for Patent Box relief which can reduce corporation tax on the profit generated from the part of the product that is patented from 19% to 10%.
This level of proactive support and advice is invaluable but for many companies, and accountancy firms, it has taken a global pandemic to drive a change in expectations. As the firefighting phase draws a close, businesses will continue to face extraordinary, unprecedented change – not only as a result of Covid but also Brexit. Throw in the implications of a post Covid budget, evolving environmental legislation and technology enabled disruption and the ability to adapt and respond is now prerequisite for business success.
Business owners have never had more issues to consider – or more need for rapid, trusted business advice and support.
Why Continuity and Succession Planning is Crucial for Businesses Right Now
By Chris Allen, a Chartered Wealth Planner at Arbuthnot Latham explains why it is crucial for businesses to review continuity and succession plans at this current time.
Coronavirus has created many challenges for businesses and an area of discussion that has rapidly escalated in importance is around protection. Protection should always be an area of priority for a business, but the situation we find ourselves in has understandably brought this topic to the fore.
When reviewing continuity and succession plans, you need to consider:
- How would your business cope with the death of a key person that has a direct influence on the profitability of the company?
- What would happen to the business should a director, shareholder or owner pass away?
Key Person’s Protection
53% of businesses cease trading in under a year after the loss of a key person. Why? Often the effect the deceased individual had on turnover or profit was so great, that the business can no longer continue without them. There could also be litigation, brand damage and liquidation issues to contend with which can ultimately lead to business failure.
So what can we do to help? We can help you:
- identify: key people in your business,
- quantify the financial risks of an individual passing away
- create a solution and implement it.
The typical result here is a life assurance plan, where the business receives the sum assured on a specific individual passing away.
Another area of great importance is relevant life cover. This is a tax efficient policy that allows an employer to offer a death in service benefit to their employees. Life cover policies are applicable to small businesses who do not have the scale to qualify for group schemes. This offering helps businesses offer competitive employee packages to attract and retain the right employees.
Similarly to personal life cover, the pay-out would go to the employee’s family of financial dependents, however, it is important to note that this is an employer funded policy and the premiums paid by the employer allows the company to benefit from corporation or income tax relief. This is a key area of planning for employers to protect their employees or indeed directors who are paid on PAYE.
Six out of ten business owners state that they have no protection in place to cover the cost of purchasing shares should a business owner die.
Simply put, a shareholder protection arrangement allows the surviving shareholder(s) to have the funds available to purchase the shares of the deceased shareholder from their estate and maintain control of the business and the direction they want to take it.
When discussing shareholder protection, it is important to think about the following:
- What happens if you or one of the shareholders were to pass away?
- What is the succession plan for the business?
- Would the deceased estate/spouse inherit these shares and what does that mean for the future direction of the business?
A good wealth planner can assist you by assessing current agreements you have in place, the type of business you are operating and also understand if any shareholders have medical conditions which will need to be considered.
From there they can help with the valuation of each member’s shares, work with other professional advisers to get the correct agreement in place, and structure the plan properly to accommodate the different % ownership of various shareholders.
Recent events have shown us the future is unpredictable and we should all think about getting our house in order should the worst happen. A lack of planning could have a huge impact on your business and loved ones. Having the correct advice and solutions in place is always important, but even more so in these uncertain times.
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