|Converting Vacant Hotel Rooms into New Business|
|Wednesday, 30 May 2007|
In today’s combative business environment, hoteliers should focus on how they can economically and efficiently trade unsold rooms for needed products and services.
Hotel occupancies have peaks and valleys, fluctuating according to demand that is driven by business and leisure travel, national events and trade exhibitions. This is the challenge to hoteliers, and bartering can provide a solution. Savvy hoteliers can work with a trade exchange to specially design a barter program to maximize business opportunities during slow periods, and increase the profits to their bottom line.
Every hotelier has sunk in a very substantial capital investment and considerable fixed costs such as amortization, insurance, staff salaries, administrative costs which remain fairly constant regardless of occupancy. Hotel rooms are “vanishing inventory”. Lost revenue from unsold rooms at the end of each day cannot be recovered, and vacant rooms do not contribute to the bottom line. The marginal cost of trading hotel rooms is very low and bartering empty rooms to cover a wide range of expenses, including marketing, printing, staff benefits can make a significant impact on profitability. Let’s look at some of the key business needs of hotels which can be covered by trade.
When hotels barter through a trade exchange, the integrity of their room rate structure stays protected. Rates are not discounted in the reselling of rooms in the barter market place. An added advantage is that trading brings new customers to the hotels, and because their rooms are on trade, have more disposable cash to spend in the restaurants, spas, gift shops. Over time, barter arrangements will create a substantial word-of-mouth following and develop brand loyalty.
Another area for hoteliers to look at would be function rooms which will not be completely filled every day, week after week. In this respect, the key would be to prepare a “Needs List” of products and services that can be purchased on trade, for example flowers, printing, signs, banners, audio visual equipment, and identify slow periods in their function room occupancy. As an example, flowers are used for every function and trading for flowers instead of paying hard cash will have a major positive impact on profitability.
Once we fully understand that barter is all about new business, conserving cash to improve cash flow, and increase profitability, we will realize its phenomenal power.
To enquire, please visit www.barterxchange.com or contact :
BarterXchange (S) Pte Ltd