Waldin Duran, CHIA, Commercial Director of Cluster Peru Meliá Lima and INNSIDE by Meliá Lima Miraflores and member of the HSMAI Perú board, is known for his influence in the hotel industry and an expert in sales, marketing, and operations. His focus on innovation and the use of generative artificial intelligence make him a leading figure for industry professionals.
This article explores how sales decisions can affect both the daily operations and long-term positioning of a hotel, using an example based on an experience at a hotel located in the Miraflores district of Lima.
Dear reader, let's start by understanding that managing a hotel goes beyond simply filling rooms. Occupancy is a key indicator of success. However, when it comes to booking large groups at low rates, the reality is that a full hotel doesn't always mean profitability.
1. The Stage: Large Group, Low Fare
Imagine a hotel in Miraflores, a tourist area of Lima, accepts a reservation from 90 university students to attend a cultural festival in the city. To fill rooms during the off-season, the hotel decides to offer a significantly reduced rate. While this decision increases occupancy, the end result creates more challenges than benefits.
Additional Operating Costs
Large groups with low rates generally increase their use of resources such as water, electricity, and utilities. Additionally, common areas suffer greater wear and tear, and hotel staff must redouble their efforts on cleaning and maintenance. This not only increases daily operating costs but also increases the strain on human resources.
Opportunity Costs
By filling a large number of rooms at reduced rates, the hotel loses the opportunity to sell those rooms at higher rates to other customer segments willing to pay more. Strategically, attracting groups with low rates can alienate premium segments, compromising the hotel's perceived value.
2. Operational Challenges: The Miraflores Case
The student group spent most of their time at the hotel between activities, intensively using common areas such as the lobby and dining room. This not only increased cleaning costs but also affected the experience of other guests, who complained about noise and clutter.
Service Saturation and Overworked Staff
Congestion at the breakfast buffet and long lines to access hotel services affected regular guests, generating complaints and affecting the hotel's online reviews. The kitchen and service teams, overwhelmed by demand, were unable to maintain the expected level of service, resulting in a decline in guest satisfaction.
Impact on Reputation
As a result of these inconveniences, the hotel received negative reviews from other guests, particularly business travelers seeking peace of mind. These negative experiences not only affected the hotel's immediate perception but also damaged its long-term reputation, impacting customer loyalty.
3. Lessons Learned: Beyond the Occupation
Following this experience, the hotel conducted a post-mortem analysis and discovered that the revenue generated by the group did not offset the additional operating costs. Furthermore, the damage to the hotel's reputation had a long-term impact on occupancy in other, more profitable segments.
Review of Rate and Group Policies
The hotel decided to implement more adjusted group rates to reflect the intensive use of resources and associated costs. It also established clear policies regarding group behavior, staggered schedules for the use of common areas, and allocated more staff to manage the additional load without compromising the experience of other guests.
4. Strategies to Better Manage Group Reservations
Here are some practical steps for hoteliers to better manage group bookings:
– Detailed Profitability Analysis: Before accepting a group booking, it is essential to calculate not only direct revenue, but also additional operating costs and potential opportunity costs.
– Clear Policies and Adjusted Rates: Offer rates that cover additional operating costs and establish clear contract terms, such as security deposits and cancellation policies.
– Efficient Resource Allocation: Proactively plan staffing and stagger the use of common areas to avoid overcrowding and overload.
– Transparent Communication with Groups and Other Guests: Establish clear expectations with groups and communicate any potential issues to other guests to minimize complaints and problems.
5. Artificial Intelligence in Group Booking Management
The use of advanced artificial intelligence systems can help predict demand and dynamically adjust rates, optimizing profitability without compromising occupancy. Furthermore, AI enables predictive analytics to assess the operational impact of a large group, facilitating informed decision-making.
– Revenue Maximization: By analyzing market behavior in real time, AI can automatically adjust rates and help maximize RevPAR (Revenue per Available Room) and GOPPAR (Gross Operating Profit per Available Room).
– Risk Assessment and Group Behavior: Using data from past reservations, AI can predict potential challenges such as excessive noise or property damage, allowing hotel managers to implement preventative measures.
6. Conclusion: Sustainable Profitability as an Objective
This case illustrates that accepting large groups at reduced rates can be a double-edged sword. While it may increase occupancy in the short term, the negative effects on operating costs, customer satisfaction, and the hotel's reputation can outweigh the benefits.
Hotels that implement a well-balanced rate strategy, supported by technology and based on accurate data, can improve their profitability and ensure a long-term sustainable operation. It is crucial that sales and marketing managers focus not only on filling rooms, but also on understanding the real contribution of each rate and its impact on the business.
What are your thoughts on this topic? Have you had similar experiences managing large group bookings at your hotel? I'd love to read your comments and hear your ideas on how to balance occupancy and profitability more effectively.
