Today’s smarter hoteliers are driving alpha through space optimisation strategies, harnessing amenities or turning to technology, delegates heard at the IHIF EMEA on Wednesday.
Speaking to moderator Joanne Dreyfus, a partner at Deloitte, three hotel investors, owners and operators shared ideas for boosting profitability, ranging from the rational to the innovative.
In a challenging cost environment, driving a hotel’s topline requires a suite of skills, Dreyfus said, drawing attention to an industry in flux which was experiencing unprecedented customer demand, but having to manage that amid environmental, social and geopolitical pressures.
Optimising space
Elena Ladisova, vice president at Brookfield Asset Management with a role in hospitality, said that a property acquired in the Selenta portfolio in Spain, the Don Carlos resort in Marbella, had required space optimisation to maximise its average daily rate (ADR) potential. “This is a unique asset enjoying a beachfront location with 25,000 square metre gardens and amenities including F&B, wellness, tennis and meeting rooms,” she said. She explained that what was hindering its repositioning to luxury was the room mix, with two blocks enjoying unparalleled sea views but lacking outdoor space.
“The assets had some unused buildability that wouldn’t require planning, so we decided to add space to 60 sea-view rooms, including some 10 square metres of internal space and 12 square metre terraces,” she said. This conversion to “junior suite” status “really unlocked the value”, she added, allowing the business to commercialise those rooms at rates 25 to 30 percent above previous rates.
Ronen Nissenbaum, CEO UK/Ireland, Benelux, Spain, Portugal and US development, Fattal Hotels, said that attention to space and planning had also helped unlock value at a recently acquired asset in Ireland. The g hotel and spa in Galway – a city offering higher RevPAR than Dublin – was purchased with 100 rooms, but Fattal saw the opportunity to add more keys. “We thought we could add another 10 or 15 rooms, but it ended up being 28, as we could also reorganise meeting spaces,” he explained. “When you add 28 rooms to a hotel where the lobby and other spaces stay the same it has a dramatic increase on your profitability – it was the most useful and biggest return on investment we could have executed.”
Céline Vercollier, CEO, B&B Hotels Group, said that space concerns had also sparked changes at a few properties, although with a slightly different approach. She explained that B&B Hotel in Nantes, with 75 rooms, had been let down by its small breakfast room, seating just 25 guests. “So, we converted a room that was next to the breakfast room to a large breakfast space and took out some of the lobby as well, increasing breakfast capacity to 45 seats.” This resulted in breakfast sales immediately increasing by 20 bps, while also “generating more satisfaction for customers”, she added. In another instance, large and underused breakfast rooms at B&B Hotel Paris Italie Porte de Choisy and B&B Hotel Brussels Airport had been successfully converted into co-working and dayroom spaces with little to no cost, simply by adding a self-service kiosk and a curtain to conceal the breakfast buffet.
Adding to revenue
Next, panellists shared the ways in which they were reducing costs or topping up revenue streams. Vercollier said that B&B Hotels was starting to roll out an “on-demand cleaning service” in Germany, which was currently in pilot mode. While B&B Hotel rooms are usually only cleaned after the third night, she explained that guests could request a towel change and clean from the first night if they wished, by scanning a QR code in their rooms. “The outcome is that the customer is happy for the environmental aspect, but can also take the decision whether or not their room will be cleaned, so we aren’t reducing the service offered.” She explained that this approach was creating a 7 percent saving on the balance sheet.
Nissenbaum said that the Fattal Group was exploring automated check-in for its four-star hotels, having just rolled out a major lobby refurbishment at the Leonardo Hotel Amsterdam Rembrandtpark. “After testing self-service kiosks, we took out the reception and reconfigured it into a self-service arrival space,” he said. This includes a self-service retail unit selling drinks and power adapters, “taking out a lot of the costs and manpower”, he added, “but in a way that is very intuitive for the customer”. He noted: “It changes the whole atmosphere of the hotel. When you have hundreds of check-ins per day, this has the ability to improve guest and staff satisfaction while driving alpha.” He said it actually resulted in staff being able to spend more time with guests.
Ladisova said that one Brookfield business, Generator Hostels, had found revenue success in its use of games. “The social experience aspect is a key value for the Generator brand,” she noted. Accordingly, a number of structures have for several years offered leisure amenities including shuffle boards, table tennis, table football and punching machines. “These help amenitize the offering and drive ancillary revenue,” she added. “Some of them break even within just a few months, and after a few years, as there are no associated costs, they drive sizeable revenue.” She explained that some sites also welcome in locals to use the games, or offer the possibility to groups to rent out the space, adding to revenues.