New Ways to Hold ADR During Recovery - Amadeus Hospitality

New Ways to Hold ADR During Recovery

Mark Bedard

Support your recovery efforts with the industry’s first promotions engine enabled to discount services and enhancements.

Managing revenue strategy in the face of the global COVID-19 crisis has become a complex undertaking for hoteliers. Greatly reduced demand, increased pressure from competitive sets pivoting towards new market segments, and mounting competition across distribution channels are just some of the dynamics that hoteliers are working to address as part of their recovery efforts. Meanwhile, hoteliers must also determine effective ways of maximizing revenue and maintaining Average Daily Rate (ADR) as much as possible to avoid long-term revenue repercussions.

Luckily for hoteliers, there is a singular revenue management tactic that can help accomplish these goals all at once. Discounting non-rate outlets, such as services and enhancements (free Wi-Fi, free parking, complimentary appetizer, off-site excursions, romance packages, family getaways, etc.), can play a significant role in making Brand.com more enticing when compared against a property or chain’s competitive sets and distribution channels (such as OTAs), while also helping to maintain ADR and long-term revenue strategy. At the same time, guests are offered greater value for their stay and receive a more enjoyable on-property experience.

Let’s explore the role of Service Promotions and present some hypothetical situations to uncover the true value and potential of this revenue management tactic.

The Power of Service Promotions

First, discounted services and enhancements are an effective “set it and forget it” revenue management tactic that can drive significant ancillary revenue, while protecting overall rate strategy. Consider this: If your property gains only one $50 service upgrade or enhancement per day, you can yield $18,250 a year in extra revenue. Scale the number of upgrades significantly and you can quickly reach six-figure levels of ancillary revenue. And when the recommended add-ons, enhancements, and packages are personalized for the guest, there is a much greater likelihood of conversion. In a study by Amadeus and Intercontinental Hotels Group (IHG), some 61% of global travelers prefer hotels to be priced in a way that allows them to add additional options. Delivering this capability can be both a competitive differentiator and a revenue generator.

Global Preference for Add-Ons and Enhancements Source: Drivers of Change in Hospitality, Amadeus and IHG

Second, discounted services and enhancements elevate the guest experience. Guests that do book at your property will enjoy greater satisfaction and perceived value from the additional services and enhancements you offer, which can boost repeat business and long-term loyalty.

Impact of the Guest Experience

Let’s look at a hypothetical example to demonstrate the value of service promotions from a guest’s perspective. A guest is looking to surprise their partner with a night out at a hotel following a long quarantine due to the COVID-19 crisis. During the booking process, the guest is presented with a romance package that includes a wine and chocolate tasting at an onsite food and beverage establishment and a discounted spa visit. The guest also discovers this property offers complimentary WiFi, which will be handy when video chatting with the kids before bedtime. Positive perception of the stay is enhanced through the opportunity to have a more personalized (and romantic) experience, and the hotel has avoided discounting rates while adding ancillary revenue. The guest books their stay and looks forward to surprising their partner with an exciting night away from the kids. It’s a win-win for guest and hotelier alike.

And while there’s been a significant desire across the industry to run service promotions, today’s reservations and booking engine solutions have not provided the functionality to do so – until now.

First to Market with Service Promotions Discounting

While iHotelier’s industry-leading booking engine already offers more pricing variables than any other provider, we are now first to market with the ability to extend those same variables to services and enhancements in addition to rates. The iHotelier booking engine has a greater ability to adjust pricing for promotions enhancements, more levers to push, greater ability to personalize offers, and greater flexibility of promotions types than any other solution available today. And we’re continuously expanding on these capabilities, which unlock many benefits for hoteliers as they pivot towards crisis recovery:

  •  Maintain ADR to support long-term revenue strategy
    Offer discounted packaged services or various guest discounts on services that are packaged with rate plans to reward guests without sacrificing ADR. Holding ADR during a time of recovery ensures maximum revenue for your hotel while increasing guest satisfaction.
  • Deliver benefits that add value for both the hotelier and the guest
    Value-adds increase the likelihood of guest conversion to drive ancillary revenue and also increase guest satisfaction through enhanced booking value.
  • Leverage existing pricing engine variables for the add-on services
    iHotelier customers can leverage all of the same pricing engine variables (geo-targeted offers, travel date restrictions, mobile-only discounts, etc.) and workflows they are familiar with from our existing Pricing Engine and apply them to discounting services and enhancements as well.
  • Personalize rewards to different guest segments to increase customer satisfaction
    Discounted service and enhancements become even more powerful when you combine our Guest Management Solution (GMS) CRM solution with iHotelier. This unlocks the ability to leverage your centralized guest profile and loyalty data to ensure that guests are presented with the right offer at the right time, as well as the ability to differentiate the perks available to each loyalty tier.

Supporting Long-Term Revenue Strategy

Hoteliers can take inspiration for the viability of ancillary revenue as a long-term revenue management strategy from the airlines industry. With a focus on add-ons and enhancements, global airlines grew ancillary revenue from $28.5B in 2014 to $64.8B in 2018 (source: diggintravel). And with the opportunity to better personalize offers based on guest profile data (and the richer set of data captured by hoteliers vs. airlines), the ancillary revenue lift for the hospitality industry could potentially be even greater.

With the industry’s first-to-market comprehensive service promotions solution, iHotelier stands ready to help hoteliers of all shapes and sizes maximize the value of their bookings while maintaining ADR and long-term rate strategy. Discounted service and enhancement capabilities can deliver a more personalized and pleasant stay for guests and greater non-room revenue for the property. As part of an effective crisis recovery strategy, hoteliers can now add value in two critical areas and best position their properties to deliver exceptional customer value and greater yield without the long-term repercussions of room discounting.

Reach out to us today to learn how iHotelier can help support your recovery and revenue goals through service enhancement discounting.

Contact UsAlso discover more effective strategies and tactics to help develop and execute effective crisis recovery strategies at the Amadeus Recovery Center.

Planning for Hospitality Recovery

In partnership with global hospitality organizations HSMAI, IoH, and HOSPA, we developed a series of recovery eBooks to help hospitality professionals chart their course for recovery in the aftermath of COVID-19. Together, we conducted surveys and interviews with dozens of global industry experts and leveraged Amadeus’ internal expertise to compile specific, actionable ways to build and execute recovery plans across marketing, sales, revenue management, and operations.