Would an Economic Downturn Impact Your Hotel?
The state of the hotel industry is strong. According to Hotel Management, hotel revenue in June of 2018 reached an all-time high, and deal volume was up 51 percent from the previous year. But the positive state of the industry and the economy at large may not last.
It seems likely that an economic downturn is on the way — no one knows exactly how severe it might be or when it will start, but 70 percent of American economists are predicting a recession by the end of 2021. If and when a downturn does occur, one of the first things that U.S. consumers are likely to cut down on is luxury expenses. Travel and hotel stays are high on that list.
How is a Downturn Likely to Affect Your Hotel?
The biggest impact will be that long trips and extravagant vacations give way to budget rooms and weekend stays. Occupancy will likely drop, so hoteliers will have to compensate by emphasizing weeknight stays, weekend packages, and other more affordable offerings.
You might also have to cut room rates to compensate for a reduction in occupancy. Hotel Management predicts a six-percent drop in rates per available room, though they’ll bounce back in 2020 and 2021.
How to Prepare Your Hotel for a Downturn
If you’re concerned about rough economic times in your near future, there are steps you can take to make sure that the impact on your hotel’s bottom line is mitigated as much as possible.
- Don’t panic. If a recession does occur in 2020 and 2021, the important thing is to think long-term. Occasionally, companies will overreact to a downturn, selling assets or cutting staff, only to have to re-acquire them when the storm passes.
Instead, focus on efficiency. Upgrading your hotel to a digital PBX system will make your staff more efficient and more flexible, allowing a smaller team to scale their duties up and down with demand. Repetitive tasks can be automated, multitasking gets easier, and staff can be more mobile, allowing them to focus on the person-to-person interactions that will make your hotel stand out above the crowd.
- Don’t cut marketing. In a recession, marketing and advertising budgets are often the first items to get cut from the budget; business owners see them as “non-essential” expenses. That couldn’t be further from the truth.
In a recession, marketing and advertising are more important than ever — after all, they’re the only way to let anyone know that your hotel exists! That said, there’s never a bad time to make sure you’re getting the best bang for your marketing buck with strategies like SEO, better photography, and content creation. The more groundwork you can build now, the better you’ll do if things turn sour.
Upgrade Now, Not Later
Upgrading your hotel’s communication technology to a digital PBX system can be an intimidating prospect — but it doesn’t have to be. With Phonesuite, you can bring your hotel’s communications into the 21st century with an all-new VoIP system that requires virtually no system downtime or new hardware — if you have an internet connection to your hotel, you’re already compatible with our systems.
An upgraded phone system will not only make your internal systems more efficient — front desk staff, maintenance, housekeeping, and others — it’ll also enable you to provide your guests with a more modern, convenient, and seamless hotel experience. If you’re ready to bring your hotel into the 21st century, give us a call! We’ll be happy to break down exactly what our system will cost to install — and, more importantly, how much it’ll save you.