Without further ado, we are going to analyse 8 reasons that can help you to identify why your hotel is not profitable and resolve it immediately. In other words, we are taking a look at the hotel business profit.
What is a good hotel business profit?
As a general rule of thumb, we can say that the hotel industry is one of the lowest profit industries, because it has a lot of costs in order to have a hotel fully functioning daily.
With that being said, we can say that, on average, a hotel business profit margin is around 10%. So, if your hotel is making lower numbers, we can say that it’s not profitable.
Is a small hotel business profitable?
Yes, a small hotel business can be profitable. Some small hotels have a high RevPAR and profit margin, which in turn means they have a better ROI than those with lower numbers, even if they are bigger hotels. Small hotels with a high ROI are able to invest in improvements to the hotel, like renovations or new amenities, which can further improve their ROI, and make them profitable.
Why your hotel is not profitable?
Errors in choosing staff
If you do not choose your staff correctly, the hotel may not run as you would expect. The staff searching methods or those related to a choice of profile may be incorrect. Before making a decision regarding the new person we are going to hire, we must think twice.
Not taking into account customer needs
The customer is everything, so we must always analyse their needs and determine how we are going to satisfy them. If the customer feels abandoned, it is likely that they will not hesitate in choosing a hotel chain that is competition to us.
Not monitoring online reviews regarding our hotel
Almost 9 out of every 10 people read online reviews about a hotel before deciding to stay there. If we do not monitor these, trying to learn from the negative reviews, we will soon be left without customers and not even know the reason for it.
Not knowing how to “sell” the hotel
The owner must know how to manage the hotel’s different sales channels, thoroughly analysing the potential of each channel, how to find the audience that best suits the business, how to segment this audience, monitor the competition, etc.
Dedicating too much time to administrative bureaucracy
Whilst it is true that a hotel’s paperworktakes too much time, it can never take up the time required by other processes (such as customer service). If this does take up too much time, we should hire someone to take care of it.
Not having the ability to solve problems will damage your hotel business profit
Running a hotel involves constantly identifying and solving problems. The manager must find a way of dealing with all of these problems before they get bigger.
Bad organisation in the command post
In each link of the employee chain, there must be people prepared with the right skills. If this is not the case, the entire chain will break.
Not hiring a hotel consultant
A hotel consultantwill help you to consult the health of your business, establishing a strategy to resolve any problem that arises and the best ways to implement them. They have experience, a great work methodology, they adapt to new technologies and will give the hotel the attention it deserves. We must never see it as an expense, but rather an investment that will ensure us that everything will run as expected.
Avoid these errors and your hotel will run on the right track. If you need more information, please contact us.