Hotels and restaurants can improve their revenues through this one simple technique

re-discover-barbados-dining

Adrian Loveridge - tourism expert, hotel owner

Adrian Loveridge – tourism expert, hotel owner

Over the years, airlines, most cruise ship and train operators together with many hotel brands have understood and in the main applied the concept of ‘revenue control’ very effectively.

It’s almost a given that when you board a plane, even when you are in the same designated seating class, that passengers have paid different levels of fares, for in many cases an identical level of service.

Hotels too, especially with 100 rooms or more, constantly battle with the dilemma of using more creating marketing ways to attract a higher percentage of direct rack rate paying guests or entrust tour operators to fill contracted allocations of rooms at heavily discounted prices.

Other options include online-websites like Expedia among the several others, but again these also attract a lower net rate.

A very simple equation is to fill 100 rooms at US$100 would bring you $70,000 through direct bookings, while the same number would probably realise only $49,000 per week through a wholesaler or tour operator.

The question then to ask is, by spending a proportion of the differential, could you drive more higher direct revenue income?

In many cases I believe the answer would be yes!   

I will be the first to admit that I have dismally failed in persuading some of our restaurants to see the potential benefits of revenue control. It was never our intention of bullying a single establishment to participate in the re-DISCOVER dining programme.

Even though they know a greater choice would make it an even more enticing offering to our visitors and locals and a very much more powerful marketing tool to differentiate us as a destination.

Knowing what the actual costs are, I can fully understand that some restaurants could not sustain a three course dinner, half bottle of wine, VAT and service at $99 for every paying customer. However, by encouraging early diners to allow multiple table sittings, limiting the numbers at that price to say ten per night, it provides an additional revenue stream of almost $6,000 per week based on a 6 days opening, which goes a long way in paying standing costs like insurance, electricity, land taxes, municipal solid waste tax, liquor licence etc.

To further assist in reducing costs we negotiated with wine distributors to offer a range of wines to re-DISCOVER partners at a substantial reduction.

Other hospitality suppliers were invited to target ‘specials’ to the more than 50 restaurants now part of the promotion.

And pray tell me where could a single restaurant generate a potential additional turnover of $312,000 per year at absolutely no participation cost whatsoever, as in the case of the dinner menu offering, subject to meeting a sign-up deadline?

Every major restaurant on Barbados has been given the opportunity of join this promotion entirely free of cost and we applaud those with the vision who can see the objective behind the initiative and have seized the day.

Mention also has to be made of all those in the background who have volunteered their precious time to make the project work and to the Barbados Tourism Marketing Inc (BTMI) for adopting re-DISCOVER as the national restaurant component of the recently launched www.brilliantbarbados.com campaign.

2 Comments

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2 responses to “Hotels and restaurants can improve their revenues through this one simple technique

  1. Sean Chandler

    FINALLY a decent looking website to promote Barbados.

  2. Adrian Loveridge

    Thank you Sean, but all the credit must go to an incredible lady called Kathy at Axses Web Communications.