Defining your hotel’s USP to maximise revenue
An underperforming space. The hoteliers and general managers amongst you know all too well the frustration of having unused and unwanted facilities within your hotel. Whether it be a meeting space which is never filled, an executive lounge minus the execs, or a gym not doing any of the heavy lifting; these spaces can cost a lot of money to maintain and if they’re not bringing in the revenue, you’ve got to wonder why they’re there.
If your venue has a space that you know is underperforming, establishing your USP and redesigning the layout or function to better suit that purpose could be the key to unlocking lost revenue. We’ve worked with plenty of fantastic owners, operators and asset managers over the years who have been quick off the mark when it comes to identifying these opportunities. We’ve worked with them on redesigning their spaces and have picked up a thing or two along the way. In this blog, we’ll get you thinking about your space and asking if it is functioning at its best to meet the needs of your guests.
How do you know a space is underperforming?
Aside from the gut instinct which every industry veteran has developed over the years, managers, owners, and asset managers in the hotel industry are no strangers to the expansive reporting metrics used to determine the success of your space. This is always a good place to start, and a good way to build the case for investment to turn the space into something worthwhile.
The importance of defining your USP
Before you do anything, it’s important to take some time to establish who your customers are, what makes you unique to them and what gives your venue stand out against the competition. Essentially – who are your guests and why do they stay with you?
If you’re not sure what your USP is you might have an opportunity to carve out a niche for yourself in the market. Think about the location of your property - what facilities are lacking in the local area or what is the competition missing to really strike a chord with customers? Identifying the gap in the market and providing this service is a great way to make your hotel stand out.
To do this well, it’s vital to be really clear on who your customers or hotel guests are likely to be. While you might hope to play host to tourists exploring the city, if your venue is placed in the financial district and you mainly wind up with corporate clients, there might be a good reason for that. Do your research into what the market is doing at any given time and where the commercial opportunities might be. This is an important first step to make sure you’re making constructive changes to your space. The last thing you want to do is go off in the wrong direction and wind up out of pocket with a space which still doesn’t make you any money.
Our team are well versed in this process, having worked closely with some great owners, operators and asset managers over the years. While it might be considered the less sexy side of commercial interior design, these types of planning and feasibility exercises are something we really enjoy and fundamentally, they help ensure the finished space is a success.
Our focus on these projects is always how to make the interior design stand out to enhance the guest experience. We take huge pride in our work and always want our designs to be creative, engaging, locally relevant and to tell a story. However, feasibility projects are essentially scoping exercises, we need to strike a delicate balance between crafting an inspiring design that the client can sell to investors while avoiding racking up any unnecessary design costs in case the project doesn’t go ahead. Our experience has allowed us to refine our approach to this, to make sure we’re commercially aware while always delivering on design.
Appraising what you already have
Once you’re clear on your target customer and the real reason they choose you above the rest, we start by taking a fresh look at how the space works for the customer. While guest needs are changing, we still tend to adapt our behaviour based on the experience we’re expecting. If your main market is business travellers, they might be interested in the meeting space and expect to use the gym, yet that same customer staying for leisure would be more interested in the spa facilities and the bar.
Another key focus for this stage is thinking about access to and awareness of the services you have on offer. That’s not just to say guests of the hotel, they’ll likely explore as part of their stay after they arrive. Foot traffic and customers from the local area can be a huge opportunity for revenue generation, but if they can’t find the entrance or the bar is on the second floor and not accessible from the street, you can probably forgive them for walking on by.
We worked on a project like this a few years back, with retail spaces available within the hotel. The problem was, you had to walk through the lobby to access them so foot traffic was almost non-existent. We had to look at how the layout was working and what could make it more effective. As part of the scoping and redesign, we moved the front-of-house services to the street facing side of the hotel and back of house services to the back, creating activation and giving easy access to paid facilities from the street and keeping hotel services well out the way.
A key revenue opportunity is to rent unused space to a third party. This can be a nice addition for guests of the hotel and it can entice new customers inside to see what else you have on offer. For arrangements like this, off the street access is vital so the appraisal part of the process is a great way to establish whether or not this could be an option.
Developing a strategy for design
This is the key part of the process – and where we get to add value for our clients through design. When you understand the audience and have a good grasp of what you’re working with, our team can start to develop a design strategy. This is where we get right down to the nuts and bolts of the revenue generating opportunities within the hotel and how we can really optimise them. It’s a case of reviewing the work we’ve done in the appraisal and asking ‘Do we need to use the space in this way?’.
A good example of this we’re experiencing at the moment in a feasibility study we’re doing for a client. The General Manager has established the venue’s USP as a hotel for business users; it has limited access by foot, plenty of conference and meeting facilities and sits in a part of the city where it’s surrounded by office space. A large part of the public space was taken up by the membership lounge, a public area providing complimentary food and drink services used by regular guests, with no revenue generating opportunities.
While in this case the lounge is a requirement as part of the brand standard, we were able to work with the hotel to locate a smaller, little used space elsewhere in the hotel. By shifting the location, we created the opportunity for an open plan, flexible meeting space. We then got to work on the designs, creating a concept to meet the core proposition – appealing to business users. In our designs we’ve taken on board insights from the team, e.g. the changing working patterns of the target market and need for flexibility, and built these into our design concept. We’ve designed the main area with the option to split into flexible work spaces, for hot desking and remote working – available for companies looking for some flexible desk space in the city and rented out to multiple users at once. Alternatively, it can be opened up to provide enough space for a conference or event – where one business can hire the full space and host employees or delegates for the day. The space will be on the ground floor with on street activation to make it more accessible and visible to the public. Raising awareness and generating interest.
This example is quite an extreme one in terms of impact and the remodel and renovation needed; however, our process is to typically present multiple options to clients to help inform their revenue planning and projected income modelling.
Depending on the results of the appraisal, we make recommendations for a complete design overhaul, and we provide something a little more light-touch. This gives the client the opportunity to enhance revenue opportunities by building in enticing extras to what already exists, and can be a good option if their asset manager has advised limiting the investment. For the design proposals, we work really closely with the Quantity Surveyor, to provide as accurate an idea of costings as possible. We highlight where we’ve included income generation opportunities in each design to help the asset manager or contact at the hotel with their financial modelling. The new opportunities need to be able to cover the cost of the investment to make it worthwhile.
From there it’s all down to the hotel team who pulls together the projections and presents to the investors to decide which – if either – option they want to go ahead with.
As with most things, really knowing and understanding your market is the key to optimising your USP and generating additional revenue, so make sure you’re working closely with your asset manager or taking a close look at what’s happening in your market. By focusing in on the service USP from the start and considering this within our designs, we can really help make sure you’re doing what you do really well and standing up against the competition.