Hotel SWOT

8/13/2019 Hotel SWOT

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Top non-room Revenue Sources

Raynah Coutinho,December 1st, 2010

Indian hoteliers have only begun focusing on non-room

revenue streams. From banqueting to spas Hotelier India

finds out which areas rake in the big bucks.

While non-room revenue is no brainwave, in the context

of Indian properties, non-room revenue opportunities

such as banquets, spa and F&B from the local market

emerged as focus areas only when the recession adversely affected ARRs.

Jaideep Anand, general manager, Ista Hyderabad estimates that the contribution of rooms to

revenue over the past two years has slid by approximately 10 percent. On a positive notehowever, he points out that another key factor contributing to this trend is a growth spurt in

consumer spending, which means that hoteliers at least have their eye on the right target.

On a similar note, Vivek Kumar, CEO, Sahara Star says, Sahara Star has recognised that

while the guest is very conscious of the cost of accommodation and could shift preferences

for a few hundred rupees, he will willingly shell out a few thousands on just one evening at a

bar, discotheque or restaurant.

So once you ensure that he spends within the property, you can still earn from him. This can

be achieved by innovative F&B arrangements that also work as a draw for the local market

which has many restaurants to choose from.

Nischint Vaid, director of rooms, Courtyard by Marriott, Mumbai International Airport

estimates that non-room revenue at their property, for instance, hovers between 30% and

40%.

Chief operating officer of Tajs Gateway hotels, P K Mohankumar explains their focus on

non-room revenue saying, When a person says that he is visiting the Taj, it could be a

housewife who is visiting the salon, a teenager going to the discotheque or a local business

person attending a conference or meeting at the hotel or even someone visiting the cake shop

to purchase a birthday cakeall of these are our opportunities to earn non-room revenue.

Banquets and meeting roomsBanquet revenues have seen an aggressive growth primarily from the MICE segment,

Anand continues. The Westin in Hyderabad also shares this experience.

We have a lot of staff working on targeting and servicing the conference market, shares

Amarinder Sadana, revenue manager at the Westin Hyderabad Mindspace.

In Mumbai, the JW Marriott, which is currently renovating its eight year old product, is

counting on their renovated meeting rooms to attract corporates considering the increased

demand from corporates despite the increased number of hotels (and therefore more

banqueting space available) in the north Mumbai belt.


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More corporate business directly corresponds to more revenue. While we cannot

accommodate the larger conferences as we have smaller banqueting spaces, we trust that the

new meeting rooms to be ready by April will allow us more corporate business, informs Guy

Godet, general manager, JW Marriott, Mumbai.

According to Sadana and Anand there is also immense scope for high end social events.Sadana says that Hyderabadi weddings have huge budgets therefore presenting another

lucrative market, which most hotels in Hyderabad thrive on.

Food and BeverageHoteliers say that F&B earnings too are on the rise from both the corporate segment as well

as due to the local social scene. With the spending power and salaries among the locals

back on track, eating out is a big component of the new spend pattern, comments Sadana.

He elaborates that especially for hotels located in lucrative areas; there is the benefit of

people preferring to use hotels even for small get-togethers. Particularly in Hyderabad, we

have noticed a trend in people coming into the hotel even for small parties versus using theirhomesto avoid any hassle, since they can afford it, he adds.

Anand says that corporate dining too has seen an increase, thus welcoming a good chunk of

corporate business in F&B. Company get-togethers and team get-togethers are often at

hotels and mid to senior level staff are regular diners at our property. Putting enough focus onthe F&B component in banqueting is also a good idea, Sadana shares.

Vaid comments that positive indicators from the market have led many hotels to offer

packages designed with the specifics of the demand in mind.

For instance, Ista Hyderabad had recently launched an Express Lunch programme targetted at

corporates in the vicinity, which was a package that included buffet lunch and transfers

between their workplace and Ista Hyderabad.

Anand informs that efforts such as these, pay dividends. Today non-resident business

contributes to almost 50% of F&B revenue, he says, adding that today, the overall

contribution of F&B to revenue is at almost 30% (against 60% revenue from rooms)

compared to a few years ago where rooms contributed to 75-80% of revenue.

Similarly, Sadana says that they have managed to very recently accelerate their F&B earnings

to 41 % of revenue with rooms contributing to 55 %.

Packaging F&B creatively is imperative for the local market. ITC Grand Central hosts a food

festival once a month where they focus on a specific cuisine. Similarly The Westin Pune

Koregaon Park has an Asian dinner concept for Wednesday nights with the aim of targetting

the local market.

Food festivals are also an increasing practiceJW Marriott in Mumbai was part of a Thai

food festival centered on one Thai menu, which was served at 3400 properties across 69

countries while Sahara Star in Mumbai held a Malaysian food festival recently.


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Especially for hotels in Mumbai, your guest will most likely not want to step out into the

citys infamous traffic so you already have the upper hand, says Kumar.

But to get that extra edge and provide guests with a unique experience that differentiates

them from the competition, they have also taken the extra step and innovated with mermaids,

belly-dancers and a street food festival.

If you look at the concept of the street food festival, it is targeted at guests who would crave

for that food but either havent the time to stop at a street food vendor or have concerns about

the hygiene. They would jump at the opportunity of having access to it within their comfort

zone, in a branded five star hotel, adds Kumar.

Spa and GymnasiumThis area of a hotels revenue received the lowest rating on our online poll. For many hotels,

this remains a service extended to in-house guests rather than a revenue spinner. The

reasoning is that a hotels spa and gymnasium should provide a sense of exclusivity to the in-

house guest.

However, for those who have opened their doors to the local market, wellness and fitness are

healthy contributors to revenue indeed! The ratio of contribution of these segments has

increased to a certain extent in the past few years due to an increase in the awareness of

wellness, says Vaid.

Sadana agrees with this saying that today people do not see spas as a once-a-year thing but

like to frequent them often. Offers play a big role in ensuring a property a piece of this pie

since targeting the local market presents the need for a good retail strategy.

The key to tapping non-revenue streams is not being very exorbitant in terms of pricing. We

offer very competitive deals so as to draw the local market, Sadana shares.

Also acknowledging a sharp increase in spa usage, Anand says, With the surge in interest

that wellness has seen today, our spa contributes to between 5-8% of the hotels total

revenue. Fifty percent of this comes from the

local market.

Branded shops

Branded shops within the hotel may have polled the lowest but some industry experts beg to

differ. Shopping is a convenience that many travellers still look for.

There is a boom in demand that has shifted to The Leela in Mumbai simply because there is a

shopping centre attached to it, says Subhash Goyal, founder Chairman of STIC Travel

Group of Companies. He pointed out that often when Indians travel abroad, they opt for

hotels which have shopping centres attached to them indicating that the same logic should be

applied for inbound travellers.

Even when the going is bad it will help you in keeping your bottomline, he comments.

Goyals point holds weight especially when juxtaposed with the argument that international

brands put forth when it comes to including F&B options in their brands, which would

otherwise not have restaurants within the propertysimply because of the maddening trafficin Indian metros.


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Mohankumar opines that there are also related alternatives to branded shops that hoteliers

could be focused on, when hotels feel that branded shops are not finding takers. Many hotels

prefer not to have shops because the high rent tends to put off brands from opting for them.

But you can have show windows, says Mohankumar.

A world of unexplored non-room revenue streamsWhile these are the obvious spinners for non-room revenue, hoteliers have less experimented

options as well.

There is a world of opportunities that hotels can explore. For instance if hotels could set up

medical health desk in your hotel allowing your guests a service like blood pressure checks

and medical x rays, suggests Goyal.

With the huge buzz that medical tourism in India is generating due to cost-effectiveness this

could present a viable option to hoteliers even if the actual process is outsourced. It will also

result in customer satisfaction, Goyal underlines.

Having the concierge work towards medical tourism alternatives is another option that

hoteliers could undertakesome concierges have even been approached by doctors with

requests to establish medical tourism circuits so the opportunity definitely exists.

In addition, having the hotels concierge churn out updated and interesting itineraries isanother area that hotels could do with additional focus area on.

There are some products, like Bollywood Tourism in Mumbai that focus specifically on

concierges to attract travellers to their productwhich consists of half or full day tours of

Mumbais Bollywood hubs coupled with grooming tips and dance classes a-la-Bollywood

so here again, the opportunity is just waiting to be explored.

Pools could be an additional area for hotels to earn revenueparticularly business hotels

where a large chunk of their core audience is too busy working to take a dip. Pools can be

planned in such a way to allow direct access from outside and the management can choose an

appropriate time to allow outsiders its use, says Mohankumar.

Non room revenue attracted focus because of

Increased focus on fitness, wellness Everyday dining-out culture Convenience of not hosting get-togethers at home Employee bonding/ team building More lavish weddings

Tipping scales:

Contribution of rooms to revenue plummeted by 10% Spas contribution rose from negligible to 5-8% F&B increased from some 20% to 30-41% Domestic travelers contribution increased from 10-30% to 35-50% Local market (in some cases) now contributes to 50% of revenue


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A different view to room-sales

In addition to a new focus on non-room revenue streams, hoteliers are retaining their focus on

the domestic travellerwho only invited attention during the economic meltdown when

numbers from the Europe and US began to dwindle.

The average rate we received from international guests was far higher so those markets were

a focus area for us. Earlier our mix was a 70:30 international versus domestic traffic which

today stands at 60:40, says Sadana.

Vaid informs that for their property the ratio is highly variable and can sometimes even be at

50:50 international versus domestic.

Some key non-room revenue initiatives

1. ITC Marathas Sunday Brunch

2. ITC Grand Central holds food festivals once a month3. The Westin Pune Koregaon Parks Bubblicious brunch is a hit with local Puneites

4. The Westin Mumbai Garden Citys Heavenly Spa

5. Sunday Brunch at Hyatt Regencys (Mumbai) Glass House

6. Sunday Brunch at The Claridges Garden New Delhi

7. Champagne lunch at Fenix at The Oberoi, Mumbai8. Sahara Stars (Mumbai) Mermaids and belly-dancers at Ocean

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Hotel SWOT