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Tips to reducing guest acquisition costs



Now more than ever; it is important for hotels to look at ways through which they can reduce guest acquisition costs. Does it really make sense if a hotel has to spend 40$ per guest to get them to stay at their property? Hotels need to carefully gauge the practicality of what it costs them to acquire a guest and ways in which the costs can be reduced.

1. Understand what the costs are:

A hotel initially needs to clearly define and understand what their guest acquisition costs are. It’s not as simple as just looking at their OTA commissions. Hotels should calculate the cost of emails, commissions, website, taking reservations via a phone call, cost of the staff etc. All these add up to the guest acquisition costs. Once these have been clearly defined only then can hotels come up with strategies on how these expenditures can be limited to the bare minimum.

2. Effective Channel Management

Hotels should manage a mix of channels to get an optimal channel mix for their hotel. Hotels have to evaluate the costs and profits they are making from each channels and focus more on the ones that are most effective for them. A channel may be giving them a large number of bookings, but if their costs are also extremely high then the rev net par goes down.

3. Drive direct bookings

Direct bookings generally have the least guest acquisition costs, but once again we stress that the hotel evaluates the cost to them for driving direct bookings. Keep a cap on how much you plan to spend on direct marketing strategies so that it is profitable for the hotel. Direct bookings don’t have the added baggage of commissions so hotels should take this as an opportunity and entice guests to book directly with them.
Give extra perks like; complimentary breakfast, discount on spa or F&B services, free wifi etc to guests who directly book with the hotel.

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4. Guest Loyalty programs

Guest loyalty programs are an excellent way or rewarding the guests who stay with you regularly. Hotels can offer options such as special incentives, discounts on the tariff, special perks etc., to guests who are part of their loyalty program. This shall encourage guests to come back to them or their chain (if it’s a multi-property hotel).
Hotels can go a step and have different tier of awards for guests who frequently stay with them.

5. Understanding OTA’s

OTA’s are not the bad guys; they can generate incremental business for hotels. Hotels only have to pay commissions on confirmed bookings made by the OTA, no business then no commissions, so the risk factor is extremely low here. Real-time integration to OTAs also boosts exposure.

Hotels should just define the type of guests they want from the OTA’s and ensure that that is the business they are getting. A corporate rate guest booking via an OTA doesn’t make sense.

6. Being ‘Mobile’

Most consumers nowadays book their rooms via a mobile; the Smartphone generation has taken over the laptop and desktop guys. Hotels should truly consider having mobile enabled websites or preferable a mobile app for their hotel. This shall definitely drive direct bookings for their property.