Here’s How Your Hotel Can Keep A Positive Revenue Despite Inflation

While hoteliers and those in the hospitality industry have always been able to keep up with rising costs due to Inflation, the current COVID pandemic has severely crippled most hotels’ ability to cover operation costs. 

The Asian Development Bank projects at least a 2.1% inflation in 2022. The emergence of a new COVID variant and the slow recovery of most industries, plus the increasing demand of goods are expected to hamper growth in Asia.

While travel has slowly come back in the beginning of 2021 with the vaccine rollouts, it wasn’t enough for most hoteliers to recover financial losses or operate at full capacity. 

So, with a 2.1% inflation on the horizon, how is the hospitality industry expected to stay afloat? 


Adopt a Dynamic Daily Room Pricing to Increase Occupancy and Revenue

Dynamic pricing is the continuous adjustment of room prices to offer more flexible and attractive options to hotel guests. Through Dynamic Pricing, balancing out costs from inflation will mostly be done by increasing Average Daily Rates (ADR) and Revenue Per Available Room (RevPAR). Increasing prices on rooms while still maintaining competitiveness will be a top priority for revenue managers.

Read more: Should Hoteliers Start Increasing Prices Again?

Having a flexible and responsive pricing strategy and a revenue management system can make it easier for hoteliers to instantly adjust room prices and reflect changes in the market to increase their occupancy rate and revenue. 

Read more: Hotel Revenue Management Systems 101 with ZEN


Negotiate with Suppliers on How You Can Lower Costs

COO of Asset Management in revPAR International Chris Cylke comments “While we can push the envelope with room pricing, there are static parts of our business—such as parking, resort fees and retail—that you can’t reprice.” 

Rethinking your supply chain and how you can lower costs as much as you can will help you maximize your budget. For example, ask food and beverage suppliers if you can decrease monthly orders, or decide if you can cut down on in-room toiletries and freebies. And because most hotels aren’t operating at 100% capacity, there’s no need for you to keep supplies at 100% either. 


Market Other Hotel Facilities 

Comfortable and inviting hotel rooms aren’t the only draws to your business. If you have a spa, gym, restaurant, bar and lounge, offer these amenities to non-guests as well. People can enjoy your services without having to stay the night and you increase your revenue streams.

You can also partner with other local businesses to lower operating costs and increase revenue for both parties. Plus, working together means you can market your services to each other’s customers. 


Downsize On-site Employees

Wage inflation is also becoming a problem for hoteliers with limited operating capacity and budget. To be able to pay your hotel staff livable wages, it may be necessary for you to space out employee shifts to maximize their capacity. 

Seasonal rotation of staff members can also mitigate costs without having to permanently lay-off people. It’s a difficult decision to make and accept so consult with your staff and work together on how best to tackle this problem. 


Preparing for Inflation Is Part of the Job

Inflation is a normal and expected eventuality in all economies. Being able to maximize your budget and be strategic with hotel revenue management can help you capitalize on opportunities and reduce losses when prices start rising. 


If you’re uncertain how to best prepare for inflation, talk to one of our hotel revenue management experts at ZEN Hospitality Solutions. We’ll help you find the right approach to increase revenue and occupancy during the most difficult times. Talk to an expert today. 


Article by Ayna Gonzales