Historically, hoteliers have been very tied to the room rate as the primary means of creating profit for their business. However, as the cost of running a hotel rises, hoteliers are now more open to generating revenue via alternative revenue streams. For this reason, Explore Alternative Revenue Streams, a session at HT-NEXT 2022, was very popular among attendees. During the session, hoteliers learned about a variety of ways they could begin driving additional revenue with a minimal lift. In fact, many times the speakers brought out that simply using technology to innovate or revitalize a current revenue stream could turn it into a major money maker.
Employ Tech to Create Efficient, Profitable Processes
Brian McConnell, VP of Food and Beverage, RC Hospitality Solutions discussed how his Edgewater Beach & Golf Resort in Panama City, Fla., has offered the same beach service solution for the last 30 years: a beach attendant, a clip board, a pencil and cash.
“In this day and age, cash can be very limiting, so we wanted to look for ways to improve that service,” he explained.
They partnered with Beachy, a mobile point-of-sale software solution that gave guests of the resort the ability to book beach or pool chairs from any mobile device at any time before or during their stay. As guests booked their chair rentals, they were also asked if they’d like to add on a bonfire, smore kit, paddle board, etc.
By making this simple change – leveraging technology to improve a rental service the company already provided – Edgewater Beach and Golf Resort saw it’s chair rental revenue increase from $350k in 2017 to more than $1M in 2022.
“Not only did we make more money on chair rentals (and ancillary products) but we were also able to save money when it came to wear and tear on our chairs,” McConnell notes. “We used to have to put our all our chairs every day and then put them all away every night. But now we only put out what we need.”
Additionally, the company leveraged Beachy to improve its outdoor F&B service. The company’s previous POS worked only on Wi-Fi which forced servers to run indoors frequently to input orders, run payments, pick up food, and more. This created a poor customer experience. By upgrading to Beachy’s mobile POS that runs over a cellular network, the resort was able to significantly improve the guest experience and increased F&B revenue from $25k in 2017 to $300k in 2022.
Offer a Hotel Retail Experience
For RC Hospitality, technology was able to improve operations so that it could drive more revenue. However, for Mint House, technology opened the door to creating a brand new hotel shopping experience for guests and a truly new form of revenue for hoteliers.
At HT-NEXT, Kent Hatcher, Director of Product for Mint House explained how the company knew its guests often suffered from “food anxiety.” Mint House wanted to be the solution for the question: “Where will I find my food necessities while staying in a strange place?” Because the Mint Hose brand offers full kitchens to its guests, it came up with the idea of offering guests the option to preorder food from a curated list of grocery items which would then be stocked in the refrigerator or pantry upon their arrival.
“Everyone who uses it, loves it,” Hatcher says. “And it then led us to renting out kitchen appliances for guests such as air fryers and blenders and even non-kitchen items like laptop chargers.”
As the company continued to look for ways to generate revenue, it decided to partner with Minoan to strategically place QR codes around each guest room that would link guests to a marketplace where they could purchase items such as the bathroom soaps, sofa, painting, or bed linens that Mint House provided.
Make Room Service Profitable
Kevin Rohani, Founder and CEO of CAMO Hospitality is also interested in alleviating food anxiety for hotel guests. However, his approach is to revolutionize the traditional room service model with the help of technology.
“Before COVID, I read two statistics from two different publications that came out within a week of each other,” he said. “The first was that less than 25% of hotels offer room service. The second was that DoorDash room service orders had gone up 900%. We’ve allowed these third-party delivery companies to take away revenue that belongs to the hospitality industry!”
However, there’s a good reason why room service has become so unpopular among guests AND hoteliers. It’s often a point of friction. For instance, many brand standards for room service require guests to write their room service order on a door hanger.
“These standards need to evolve and allow tech to seep in and improve the experience,” Rohani said. “Room service should be a central revenue stream for hotels but for some reason we consider it to be ancillary.”
To help overcome this, CAMO Hospitality has created a fully integrated technology stack that works with hotels to provide a complete room service marketplace. Using just one hotel kitchen and mobile technology, CAMO can offer guests access to 10 different restaurant brands – which operate as ghost kitchens out of the hotel’s physical onsite kitchen. The guests order and pay via their mobile device, the kitchen prepares it, and hotel staff deliver the food.
[Find out how some hotels are partnering with famous restaurant brands to drive revenue: Hotel Debuts Pizzeria Uno Franchise.]
What about hotels that don’t have a kitchen onsite? CAMO claims it operates so efficiently, it can actually handle the room service orders for up to ten different hotels from a single hotel kitchen. This means, hoteliers that would never even consider having room service revenue as a possibility – could now offer it to guests.
As an added benefit, the company has worked very hard to create a menu that streamlines inventory management and allows cross utilization of ingredients across the 10 restaurant brands – making it not only eco-friendly but a very affordable F&B operation. Plus, since 100% of the orders are coming from hotel guests, there aren’t any sales or marketing or delivery expenses. It’s all handled in house, helping to create a highly profitable bottom line.
Create Sister Businesses to Drive Revenue
For hotels that really want to think outside the box, Sam Khazary, SVP, Global Head of Corporate Development, Selina, recommends looking at how you can build or acquire sister businesses that will drive alternative revenue.
Selina is a brand built around creating community. Within their hotel space, they partner with local businesses such as F&B outlets, tattoo parlors, barber shops, and more to bring in community members where both Selina and the local business can enjoy a mutually beneficial relationship. They also provide services to the community such as libraries, cinema rooms, community kitchens and more to draw in locals.
“We have a traditional rooms business, but for us, the rooms business is ancillary,” he explains. “In fact, during the first half of 2022, 57% of our revenue came from our rooms business and we’re really hoping to lower that significantly.”
One way Selina is engaging with the community is by bringing in businesses to use hotel space that generally sits empty during the day. For example, it recently partnered with 305 Fitness to host fitness classes on property using rooms/spaces that sit empty at 10 or 11am in the morning.
“We recently held one of these classes at our Miami property,” Khazary said. “Of the 60 people who attended, 59 had never been in a Selina before. By partnering with 305 Fitness, we are being introduced to more people and creating brand awareness. As a bonus, they may stay after class and purchase products or interact with our other businesses, which means we make money.”
To further diversify its revenue, the company recently began building/acquiring sister companies to drive business during the slow season. For example, it recently acquired Remote Year, an extended stay platform that allows individuals to “work and play” anywhere in the world for up to a full year at a time.
“The average age of a Selina user is 32,” Khazary says. “We thought Remote Year would cater to that same age group. But instead the average age of a Remote Year user is 50+. It introduced a completely new customer to us!”
Selina also create a music festival brand called SIMS (Selina International Music Summit) to drive traffic in low season to places that are expecting lower occupancy.
“We create a reason for people to travel to our properties,” Khazary explains. “If there’s no reason for people to visit our Paris property in December, we give them one.”
Want to watch this session as it happened? Check out the video below!