The hotel and leisure industry is a sector that’s more susceptible than most to the peaks and troughs of seasonality.
Whether you’re running a guest house or a large-scale hotel, your challenge is always to make the maximum profit from the rooms you have available – and to work with the seasonal changes in room utilisation to make sure you generate the best possible income from your paying customers.
One way to improve your hotel’s efficiency – and to place more focus on profitability – is to make use of the latest in online, cloud-based booking systems, and to integrate your booking software into your financial systems.
Here’s our breakdown of how getting the most from software can help you to really focus on making a great profit from your guest house or hotel.
Measuring your hotel’s profitability
In the hotel trade, the fundamental goal is to make sure you’re getting plenty of room bookings. Rooms contribute most to your profits as the direct costs per room are low and selling a room leads to sales in other areas of the hotel; e.g. food and beverages etc.
To really understand the profit you’re making from your rooms, it’s helpful to put key performance indicators (KPIs) in place that show you exactly what level of income each room is making over the course of the season.
One basic metric that’s commonly used is ‘revenue per available room’, or revPAR as it’s known in the trade. It’s calculated by dividing your hotel’s total room revenue by the room count and the number of days in the period you’re looking to measure.
RevPar = RoomsRevenue/ RoomsAvailable
You can also look at KPIs that measure your average room rate, your occupancy levels or your average overhead costs etc. By setting up your systems to record and code your transactions, it’s very simple to produce these kinds of KPIs in your monthly reporting and management accounts and to see exactly how well the hotel is faring financially.
When you’re informed about your profit and cost numbers, you can start being more proactive about making changes that will boost profits. Simple changes can have a big impact on your income and spending, for example:
- Tweak your room tariffs at key times, such a bank holidays, to increase profit from rooms.
- Reduce your costs by sourcing more cost-effective suppliers or minimising your utility bills.
- Streamline the number of waiting and cleaning staff you use to reduce your payroll bill and boost your underlying margins.
The benefits of a cloud-based booking system
One straightforward change you can make is to modernise your room booking systems and get more control over the usage of your rooms. Moving your bookings to the cloud bring a number of advantages to even the smallest hotel.
- Integrate your booking systems – Modern booking systems are cloud based and can be linked to the online booking systems that customers use to book a room from your website. These cloud-booking solutions contain rate-management tools linked to occupancy – and this is a huge help when you’re trying to maximise your profits from each room.
- Get control of your occupancy – Room or bed occupancy should be monitored each day so you know exactly how much of the hotel’s capacity is being used. When you’re in control of your occupancy numbers, you’re in a much better position to decide whether to offer late booking discounts to help fill up the hotel and reduce any wastage.
- A better view of pricing – Pricing is a key decision for any hotel manager and having an up-to-date booking system allows you to pull off reports and breakdowns that keep you on top of your revenues, budgets and give you forecasting projections on future business.
- Improved marketing and customer management – A booking system also keeps a database of guests for future marketing purposes. This helps cut down on expensive marketing costs and lets you contact customers directly with deals and discounts. You’ll also get the detailed analysis of types of guest, most popular rooms and most profitable periods etc.
Managing your hotel accounts
A fundamental advantage of a cloud-based booking system is the potential for integrating your bookings and sales with your accounting software.
The new breed of online booking software will help you manage your back office accounts and can even incorporate things like a sales ledger, to help account for the revenues from your bookings.
There’s a great level of compatibility with the leading accounting packages – including Xero online accounting software – and this integration means it’s extremely easy to download your figures straight into your accounting package.
It’s important to review your numbers first – to avoid any troublesome errors creeping through into your accounts – but once you’re happy with your figures, it’s extremely easy to download your sales data straight into your accounting software.
It’s simple, it’s fast and it saves you a significant amount of time in admin and data entry – meaning you have more time to focus on running your hotel.
We can help you improve your hotel profits
Saints Tourism & Leisure team specialise in working with local hotels and guest houses. And our chief goal is always to help you streamline and improve your hotel business to maximise your profits and improve long-term prospects.
We can help you find the best possible combination of cloud-based booking and online accounting software. And we’ll help you set up your finances and management reporting so you’re in complete control of your numbers, your KPIs and the financial management of the hotel.
Contact Saint Tourism & Leisure to arrange a session to arrange a session to show you how we can help you get better profits from your hotel.