Positioning today’s limited service hotels for success

Sponsored by Amadeus.

Over the past few years, we’ve seen limited service hotels grow in popularity among travelers and investors alike. There’s been a steady uptick in demand, the economics are ideal, and owners are quick to build these properties based on anticipated returns. Brands in this space have seen an increase in group RevPAR throughout 2017, based on strong group attendance as well as last minute additions on food, beverage, and ancillary spend.

Changing landscape

But running a limited service hotel is a balancing act. With competition fierce, hoteliers are offering more amenities and conveniences at a budget friendly price point to satisfy today’s travelers than in generations past, blurring the line between limited service and full service properties. General managers need to carefully calculate earnings against expenses to ensure that tight profit margins are maintained, or ideally, increased.

This is where technology can provide tremendous value. However, limited service hotels have been largely underserved by technology providers under the assumption that limited service properties and full service properties have similar needs. And while that may be true, resource availability differs greatly between the two segments, requiring a different approach for each.

This distinction is key as we look at technology as an enabler to increase revenue, lower operational costs, and drive guest satisfaction. Research shows that general managers at limited service hotels are eager to address these pain points when identifying growth strategies:

  • They focus on maximizing room revenue through occupancy and rates. Understanding the dynamic between transient, group, and volume contract business and identifying the right mix for an individual property is critical.
  • They consider the costs associated with delivery of service. According to the 2017 edition of CBRE Hotels’ Trends in the Hotel Industry report, labor costs are by far the largest operating expense for US hotels.
  • They care about the customer. According to Forrester, a 1 point increase in the Customer Experience index score generates $6.52 in annual revenue per guest.  A brand with two million guests can generate an impact of over $13 million annually.

Once hoteliers identify their top concerns and align them with the resources available, they have an ideal starting point to select the accompanying tools to address their business challenges. A tool built to accommodate a full service property with a broad selection of resources is likely not the right fit in a limited service property with staffing and budget constraints.

Demands on suppliers

But selecting a technology solution is easier said than done. Hoteliers need to not only choose a product that fits their needs but also carefully vet the supplier. Do they have the experience and ability to address the in-depth needs of the industry? Do they have the financial backing to be a long term partner? These factors should be critically examined when making a decision of who to work with for your technology needs.

In 2017, Amadeus completed a survey of hospitality professionals to gain greater insight into the needs of the market and how they align at a property level. We compared the findings of full service and limited service properties to identify the overall top business priorities. We also investigated the top priorities as it relates to group sales, operations, and property management. What we found not only supports the above data points, but suggests that many challenges are global in nature. Today’s hoteliers are looking for technology solutions that will help them continue to grow and stand out from the competition.

Register your details below to access a report, which outlines the results of this industry survey and highlights areas of application for today’s savvy hospitality professionals.

Sponsored by Amadeus.

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