How to Measure ROI for Hotel Software

Every technology investment needs to ultimately convert into positive financial outcomes. Otherwise, what’s the point? Aside from building or acquiring the hotel itself, obtaining hotel technology is one of the most expensive investment a hotelier has to make. Without efficient all-in-one hotel software, you will not be able to automate and streamline all hotel operations, boost revenue, ensure maximum output from hotel staff to attain guest satisfaction. After evaluating the hotel software on cost-effectiveness and features, the next big factor in selecting the right hotel software is its Return on Investment (ROI).

Hotel software’s have a lot to make it easy for both guests and hoteliers. In order to get an estimated return on investment, the net gain from the investment and the total cost of investment needs to be measured.

Reduction in Cost of Staff

  • Reduction in man-hours spent on the front desk for check-ins and check-outs
  • Reduction in man-hours spent on amalgamating the accounts for rooms and other POS terminals like restaurant etc
  • Reduction in man hours and number of staff required for managing rates and availability across multiple distribution channels (OTA, GDS, Web, Travel Agents etc)

Improved Sales Numbers

  • Increase in number of bookings through Web Booking Engine
  • Increase in occupancy through no blocking
  • Increase in occupancy through real-time updation of inventory across multiple distribution channels

Reduction in Losses & Human Errors

  • Elimination of losses due to errors in manual entering and updations
  • Elimination of losses due to mistakes in consolidations
  • Reduction in losses sustained due to guest denials
  • Reduction in revenue loss due to overbooking

Better Revenues

  • Increase in average daily rate through integrated revenue management systems
  • Increase in revenue due to report analysis and tools

Long Term Revenue generating factors

  • Repeated customers because of an improved guest experience
  • Increase in reservations due to positive guest feedback because of an enhanced guest experience
  • Savings due to easy integration with other hardware and software systems used by hotels
  • Savings due to the adaptability of hotel software to change in market trends eliminating the need for multiple future investments

The above points are some of the benefits from the hotel management software that can be used for measuring the profit from the investment. For getting a measure of the total cost of ownership both the direct and indirect costs need to be represented.

Cost of Purchase

Maintenance Cost

Cost of Staff required for the software

Cost of training staff on software

Cost of software upgrades and updates

Customer Support Cost

Cost of reengineering your hotel processes to adapt to the software system

Cost of data security, data backup and infrastructure for maintaining the software

 

The above list contains some of the primary expenses associated with the hotel software. Having a low cost of ownership verses the gains from the hotel software is one of the noteworthy measures for making an investment in hotel management software. This is one of the main reasons why Hybrid Cloud-based hotel management software are becoming popular with the small and mid-size hotel segment.

In all cases, it is important not to ignore the invisible benefits of having hotel software while calculating the ROI on hotel software to be able to achieve improved bottom line now and in the future. Stick to what works best for you and deliver what your guests seek from you.

Boost Hotel’s Revenue through Effective Pricing Strategy

A smart pricing strategy is the best way to increase revenue. What is important is how you derive at the appropriate pricing and what kind of strategy is to be chosen. Big and multi-chain hotels have an advantage with their revenue managers and software specialists who help plan out the right pricing for the rooms. But what about small and mid-size hotels? What can they do?

Here are few tips on how hotels can use smart pricing strategies and increase their market share against other hotels nearby.

Do extensive researches on the competition – Hotels when looking at their competitor must always remember to recognize their similar comparable properties. The base classification rooms of all hotels can be very different, so look at the room size, amenities offered, and facilities available at the hotel.  Few hotels may also offer an assorted rate for the same room category on what the cancellation policy of the room is i.e. refundable or non-refundable tariffs.

Pricing should be at par with the competition – Hotels should ensure that their room rates are at par with their competitors and should also make sure that they don’t undersell because the hotel’s revenue can be impacted. At least one room category should have a similar price point as of the competitor. The hotel can earn revenue by selling another room category at a slightly higher rate. This allows hoteliers to attract deal seekers without sacrificing the opportunity to make a considerably bigger profit and increase guest satisfaction.

Psychological Pricing – Did you ever ask why a hotel room costs $199 and not $200? If you felt there’s something at play here, you are definitely right! This odd pricing is simple, yet effective making it the most common pricing strategy used around the world. Studies show that 60% of consumers are drawn towards the product which ends with a 9. This technique is psychologically proven to work, therefore it is advised to implement it to boost room sales.

Upsell your property – As obvious as it is, all hotels need to increase their revenue, but if the competitor’s room rates are low then it can be a complete dilemma. Be a smart seller! Don’t hesitate in increasing the tariff of the room, offer some more extras instead so that the price can be justified. For example, offer late checkout facility, special discount on spa or F&B, or even discount for an additional or extended night.

Monitor historical data – Historical data is essential for setting the right pricing strategy for hotels. Through historical data, hotels can sense which seasons are the busiest and which are not. The hotels can raise their room rates higher during peak seasons since demand would be higher than the supply whereas on slower seasons the rates can be slightly lower.

Each hotel is different, so modifying your pricing which will suit is instrumental for the hotel’s success. As a hotel owner, you will have to decide on what you want to achieve the most with your pricing and then implement a strategy which will work best. Choose the right Hotel Management Software that will draw up essential reports to get the correct pricing strategy.

Significance of Revenue Management for Hoteliers

Revenue management has always been the least understood part of an independent hotel’s operations. Though many hoteliers accept its importance and acknowledge the fact that it can boost occupancy, but they don’t consider it crucial for the hotel’s success. However, today with the rapid change of guest trends and booking patterns, revenue management strategy is totally imperative.

Helps Lower Hotel Costs

Booking patterns today are dependent on a number of factors such as the economy, season, average age of travelers etc. Thus, the best rate to sell your room today might be different from the optimal rate tomorrow. Having a revenue management strategy set up in your hotel not just helps determine the best rate to sell the room at, but also enables the hotel to plan ahead by optimizing manpower for times of higher demand and avoiding overstaffing during periods of lower demand.

Eliminates Human Errors

Another great advantage of Revenue Management System is that once the tool pulls out the right hotel prices, the hoteliers can update the prices across all the channels in real-time hence decreasing the chances of any manual errors. Any kind of error in terms of pricing can affect the hotel’s credibility. But with revenue management suite, there will be a drastic reduction in errors and higher efficiency.

Attract Potential Guests

Not every business hotel gets cannot be termed ‘good business’. While ensuring the importance of maximal occupancy, repeat customers are significantly more profitable than new ones – it costs more to reach out to new guests every time. A fully occupied hotel may not always be profitable. Bad revenue management like selling rooms at low rate or paying out heavy commissions can leave hotels losing money even during maximum occupancy.

Automated revenue managers help hotels better in identifying the right customers who can provide the best long-term value for the hotel’s future.

Revenue Management Improves Branding

Proper usage of revenue management strategies can play a huge role in increasing a hotel’s bottom line. Not just better pricing improves the hotel’s occupancy but also ensure that the hotel is selling all its rooms at its best price possible and generating maximum RevPAR at all times regardless of the size of the hotel.

Delivering powerful insight on pricing and demand through Hybrid Cloud-based software, QiK Circle’s Hotel Management Software generates maximum overall revenue. Take a free demo and see how it benefits your hotel.