September 24 2013
Posted in: Self service

ROI on your Guest App Investment!

It is a known fact! Most guests especially the business traveler would be very interested in accessing hotel services from his or her smartphone. Last week IHG reported that the average guest looks at least 5 times at their hotel reservation on their smartphone. Take those 2 facts together and with a well defined but simple offer and service strategy a hotels investment in a functional rich guest service app can drive a quick ROI.

“There is a need to understand that hotels are not only providing rooms and restaurants but an experience. We have to find new ways and be creative in developing ancillary revenue streams, keeping in mind the overall guest experience” (eyefortravel.com, September 20th 2013). The smartphone guest app can be such a creative solution, the device provides for great opportunities to show the guest ancillary products through creative text and media such as photos and video. Through opportunities such as room up-sell at check in, breakfast offerings when the guest is setting a wake up call and an increased “digital” connection with the guest by keeping them informed on events and happenings in the hotel throughout their stay, should enable hotels to generate at least an additional 60k to 100k in revenue (depending on the number of rooms and average occupancy). How does this off set against the initial cost of implementing such a guest service app?

Let’s assume for a moment that the cost of implementing the app over the first 12 months will cost the hotel about 25k (200 rooms), this would include the monthly SaaS fee for the guest service app, the hardware device needed to dispense the hotel room key and the cost of integrating with the hotels PMS, in year 2 the cost drops to roughly 18k annually. Many hotels have a simple up-sell strategy in place, mostly manual and relying heavily on the front desk staff to sell. Keep it as simple but automate the up-sell offering, if the guest app at checkin offers the next available suite for $35-$50 p/night, by showing a nice picture of that room, it is likely that 1 in 5 guests will take the offer at which point it will only take 1.5 room up-sell per day to generate 25k in annual revenue and generate a full ROI for the guest service app.

So with 1.5 room up-sell p/day the hotels investment is paid off in 12 months, if the hotel can get to 3 upgrades per day on average, a nice additional 40k margin is made quickly. In addition the guest service app can help promoting breakfast, room service and other paid services in the hotel, creating further ROI opportunities. And as an increased connection with the guest is often resulting in a returning guest, there is much more soft revenue (loyalty and additional room nights) that can be attributed to a well implemented guest service app strategy! Hotels… it is time to act!

By Jos Schaap, CEO-Founder at StayNTouch