Sponsored by Amadeus.

It’s a well-known fact that today’s travelers are tech savvy, cost conscious, and come with high expectations compared to previous generations. In a rapidly changing industry that is increasingly focused on personalization, hoteliers are looking to stand out.

Where there was once a very clear distinction between limited service and full service hotels, today we see the lines starting to blur. Many limited service hotels are offering more amenities, outlets and conveniences at a budget-friendly price point to satisfy today’s travelers.

But a hotel can’t survive trying to cater to the guest alone. Managers and owners have to consider how all costs are contributing to their bottom line. In the limited service sector, this can become complicated when weighing lower ADRs, labor costs and a tighter IT budget. With such a limited margin to share, are hoteliers feeling the pinch?

Favorable factors

Actually, it’s quite the opposite! Industry growth trends show that many of today’s leading brands are eager to expand within this sector. Driven largely by an increase in traveler demand and favorable economics, owners are continuing to invest in the limited service sector as it drives profitable returns.

With competition fierce, hoteliers need to develop ways to differentiate their guest experience and stand out from the pack. While introducing additional services at the property can certainly pique traveler interest, they also introduce a new level of complexity to hotel operations. In turn, many hoteliers are finding themselves challenged to deliver on these elevated guest expectations.

In order to better understand the effects, we surveyed hundreds of industry professionals to gain their perspective on the top challenges facing their business.

Resource allocation

Interestingly, we found a high level of consistency across responses, indicating that the challenges appear to be global in nature and there is significant opportunity to enable properties to address guest needs more effectively.

And while some of the demands at a full service property might be similar to those at a limited service property, the available resources to address them are likely to be very different.

In this scenario, how can a limited service property be sure that the tools they use are the best fit for them based on their resources and needs? How can a property be sure that a new solution offered by a new vendor in the market has the financial backing, stability, and expertise to offer a long-term solution?

To answer this, let’s start with the major challenges. Many general managers in the limited service hotel sector are incentivized based on property profit margins.

• They focus on maximizing room revenue through occupancy and rates. Understanding the dynamic between transient, group, and volume contract business and identifying the right mix for an individual property is critical.
• They consider the costs associated with delivery of service. According to the 2017 edition of CBRE Hotels’ Trends in the Hotel Industry report, labor costs are by far the largest operating expense for US hotels.
• They care about the customer. According to Forrester, a 1 point increase in the Customer Experience index score generates $6.52 in annual revenue per guest.  A brand with 2 million guests can generate an impact of over $13M annually.

These topics directly correlate with what’s important to our survey respondents. Hoteliers have to understand how to analyze their business needs and match them with the resources available. You simply can’t address one without the other.

Fit for purpose tech

This is where technology can make a big impact in providing solutions to fit the limited service hotel sector which has been largely underserved in the past. Hoteliers want and need cost effective ways to leverage automation, for example:

• To identify new growth areas and increase revenue
• To improve staff productivity and lower operating costs
• To effectively deliver on guest requests to increase customer satisfaction and retention
• To make more effective data-driven decisions to enable the growth of their property

It’s only a matter of time before technology providers rise to the challenge and begin identifying solutions to support the limited service sector. Understanding that every guest engagement offers an opportunity to increase profitability, the time is now for hoteliers to identify new ways to ensure they’re differentiating from the competition and improving margin growth.

Register below to access the full report, outlining the results of this industry survey and areas of application for today’s discerning hospitality professionals.

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Sponsored by Amadeus.