The recent few weeks have certainly been the toughest ever seen for the tourism and hospitality industry, thousands of employees are furloughed, hotels are closed, and strong revenue OTB for 2020 has been wiped out in a matter of weeks.
As the proverb says, “Calm seas never made a good sailor”. This is a time where you will see people and leaders differentiate themselves in how they deal with the crisis.
From a revenue perspective, let’s consider how hoteliers can work creatively to unlock new revenue streams.
Understand What You Can Offer
You should start by reviewing your resources to understand what products or services you’re able to offer.
Furloughed staff cannot continue to work. This is something you need to bear in mind when considering your options. Likewise, if you are making insurance claims or applying for business interruption loans, you need to be careful not to blur the lines with what is being claimed.
The good news, however, is that there has never been a better time to move aspects of your business online. Not only is the technology widely available, but you have a huge captive audience who are looking for online services, entertainment and education to keep them occupied.
According to Twitter, 37% of users in the UK are spending more time on social media, 22% are doing more online shopping and 30% of users are streaming more. Now is definitely the time to be more creative with your revenue streams.
7 Ways To Generate Revenue During Lockdown
1. Dark Kitchens & Meal Delivery
While restaurants have been forced to close in many countries, the demand for online food orders has never been higher. This represents two distinct opportunities for hotels.
Firstly, you can turn your restaurant’s kitchen into a ‘Dark Kitchen’, which serves customers exclusively through online or phone orders. Most dark kitchens use third-party services such as UberEats and Deliveroo, which combine instant local reach with order fulfilment.
The second option is to reach out to local restaurants who are already established on these platforms. Some will be experiencing a surge in demand and may wish to outsource production to larger kitchens.
With the savings from having no dining room or waitstaff, dark kitchens have significantly lower overheads and higher profitability. An approach you can start at this time of crisis but continue afterwards.
2. Beverage Delivery Services
Depending on your licensing laws, you may also be able to expand your deliveries to include alcohol. Let’s call it the ‘dark bar’ where you offer cocktails, wines and spirits. These could be high-value exclusive bottles or a general offering to liquidate your bar stock.
You will need to promote this on your social media, website and guest newsletter. Orders can be taken over the phone or online.
3. Future Bookings
With the first glimpse of light at the end of the tunnel, many guests may be persuaded to keep their bookings. Some will even be ready to make new reservations.
Changing your booking terms can help make the most of the green shoots. You may offer vouchers which can be redeemed over the next 6-12 months. Alternatively, you can provide flexible date changes and payment options.
For these options, focus on the domestic market and staycations first. National travel restrictions will likely be lifted far sooner than borders being reopened.
Diversify your segments and channels. Open your hotel to the NHS and key workers who need to stay closer to hospitals and care facilities. You can provide special offers and discounts, generating income and helping to support the community.
You should also focus on corporate and group bookings - particularly for conferences and events. Many will be postponed, offering new business opportunities while competitors are still reacting day by day.
5. Partner with Suppliers To Sell Online
Online shopping has never been more in demand. You may consider working with your trade suppliers to provide their products to your customers.
Products could include cooking ingredients and groceries, cosmetics and toiletries, or even cleaning products - with sensitivity. These could all be sold online with secure card payments taken through your website.
One risk-free opportunity is using your empty car park for residential and commercial parking. Many people are now forced to leave their cars at home all day - often incurring huge fees if they don’t have a permit. Similarly, businesses will need to store fleet vehicles which are no longer in use.
7. Virtual Health, Beauty & Wellness Packages
It’s easy to overlook the more luxurious aspects of life at the moment. But there is a spike in demand for online fitness, health, beauty and wellness.
Yoga teachers, personal trainers, golf and tennis coaches can all provide online courses or one-on-one coaching. Similarly, your spa staff may be able to provide online beauty tips, relaxation techniques and guided meditations.
8. Get Commercially Proactive
The commercially proactive hotels will undoubtedly weather this storm best. By being flexible and creative, you can find new sources of revenue which will support your business not only in the short-term but also for years to come.
Here at Catala Consulting, we focus on growing revenue strategically and sustainably. That means thinking about short term wins and long term growth. In their acclaimed study, ‘The Long and the Short of It’, Les Binet and Peter Field found that spending more of your marketing budget on brand-building delivers the greatest returns in the long run.
With the world watching from the side-lines, it is now more important than ever to position your brand for the future. Done well, this will give you a huge head start when business returns to normal. Which it will!
Thibault Catala, Founder and Managing Director of Catala Consulting