In Search of a New Hotel Revenue Stream by Paul West

Jan 01,1970

Once upon a time in the hotel business, someone connected the coaxial cable from the new cable company to their guest room televisions and began promoting their HBO and Showtime amenity to guests. Sounds funny now; but, even funnier because you can still find hotel/motel entrance signs as you drive around the country that actually still promotes Free HBO and SHOWTIME. Those types of antiquated signs usually include a notice that also reads ALL UNITS AIR CONDITIONED.

 

There was also a time when call accounting systems added 25%–45% to the cost of guest local/long distance calls yielding a nice chunk of change from a captive audience -and increased revenue, even more, when those charges were posted automatically -resulting in an even greater profit margin from a very viable income stream. 
 

Not long after the VCR brought on-demand movies to homes, in-room hotel services like SpectraVision were introduced where control boxes on top of TV’s added movie charges as a folio posting. Just like that, another new guest revenue stream was formed, only this time there was the brilliant idea of revenue sharing to offset the implementation expense and movie licensing costs. The most interesting fact, of course, was just how much revenue came from the Adult Entertainment option of that service; so, those hotels that opted to exclude the adult show option back then really missed out on the quickest payout of extra income. No pun intended. 

The advent of the Internet was yet another revenue stream where guests would easily accept an extra fee for daily use or duration of their stay, especially while on business trips. Of course, once the home WiFi option was made widely available to everyone, guests began to expect Internet access on the property even during pleasure stays. Unfortunately, the idea of still having to pay was not well received, forcing most hotels to offer a slower option for free, which in turn cut into that once-promising revenue option.  

 

So here we are today, fighting OTA fees; competition from AirBnB; rising payrolls; increased room availability from an influx of boutique hotels and specialty properties -all that keep chipping away at revenues while expenses continue to mount. Consequently, profits become more difficult to increase while trying to maintain rates in line with a hotel’s competitive set. 

As well, not every hotel has the property environment or layout to slap on an annoying and somewhat mysterious “resort, amenity or destination fee” - something that has recently been labeled in a lawsuit as an unlawful trade practice called ‘drip pricing’ which may even someday remove that option.

 

So aside from a few hotels who have taken advantage of unusable space by creating pay-for-use Karaoke rooms, or added one of the many available in-room entertainment options that combine WiFi-VOIP-Screen Casting-Concierge Services, etc.; there have been few new ideas beyond something like “Service Fee” to add dollars to the guest folio.

As a technical/risk advisor, I have to ask if it is possible that the next revenue-generating item could come in the form of risk management? NOT the kind of risk related to hurricanes, floods or power outages -NOR even the kind of risk most talked about today that is data protection, security, and privacy.

 

First, consider that hotels have always been saddled with maintaining adequate property and casualty coverage to protect themselves and their guests from the endless list of possible risks associated with acting as one’s home away from home. 

 

Now consider that aside from those less frequent, catastrophic events mentioned above, it is even more common to see an allergic reaction or sickness to something mishandled in the restaurant; a slip on a wet floor near the steam room in the spa; a 30 LB dumbbell dropped on the big toe in the gym; a door slam on the little finger; or even a punch in the nose from an overly inebriated person in the bar. 

 

So I could not be more excited about what I see as the next best way to bring back that missing revenue-generating posting to the guest folio. Even better is that this is also a convenient way for a hotel to protect its guests, reduce its risk and generally change the playing field with no upfront investment at all

 

InsuraGuest has developed a way for hotels to offer its guests their own customized, individual insurance policy to cover them for theft of personal property up to $2,500 per item per registered guest, for accident medical expenses up to $25,000 per guest and for accidental death and dismemberment up to $5,000 per guest, while on property for the duration of their stay. InsuraGuest becomes the hotel's first line of defense, enabling the hotel to transfer certain exposures to the InsuraGuest carrier by offering a specialized hotel guest protection policy to each registered guest. 

 

Just like that, no more concerns for guests and their loved ones while away from home when they know they are covered beyond their own policies! Even better is what this means for hotels in the form of a new revenue stream! 

 

The best idea in a long time works like this: coverage is purchased by the hotel on behalf of each and every guest. A line item is automatically added to the folio of each registered guest per hotel bill per night via the hotel’s PMS system and InsuraGuest’s API. When an accident or medical event occurs, or the theft of guest personal property occurs, the hotel representative signs onto the InsuraGuest portal to begin the claim process. InsuraGuest’s insurance company then notifies the hotel or the guest if coverage is afforded under the policy terms. The insurance carrier continues to work directly with the hotel on the guest's personal property claim or directly with the registered guest on an accidental medical expense or AD&D claim. 

 

All of the above alone could represent a pretty good service for any hotel to offer its guests. However, this article is about finding that long dwindling, additional revenue stream opportunity for hotels to post on the guest folio. 

 

So, how about adding a projected annual hotel revenue stream of more than $32,000 per year for a 200 room hotel running at 90% occupancy, or more than $57,000 per year for a 400 room hotel running at 80%, or more than $75,000 per year for a 600 room hotel running 70% occupancy. Now we’re cooking with steam! 

 

In closing, I spent many of my hospitality technology years focusing on cutting labor expenses and securing profits through intelligent forecasting and budgeting. Unfortunately, one can only squeeze so much before effecting guest service and offerings in an effort to increase its profits. So, the time is right to return to the good old days when it was much easier to add revenue options to the bottom line. 

 

This is why I am excited to be working with InsuraGuest as a Relationship Manager to offer hotels this Software as a Service solution to help their manage risk, protect and please their guests and add additional income at the same time. At last, we can again add that long lost and much needed nightly posting to the guest folio while also adding some additional revenue to the business

For more information or a free demo, please contact Paul West at:

 917.309.6451 

pwest@gapspot.com

www.gapspot.com

 

OR 

 

Register your hotel directly with InsuraGuest at:

 https://www.insuraguest.com/landing-page/paulwest

 

Paul West 

Relationship Manager for InsuraGuest

Offering a proprietary SaaS solution to the hotel industry that yields another revenue stream to properties while also protecting guests with individual, personalized accident and loss coverage during their stay.  

 

Technical Counsel and Risk Management Advisor at GapSpot! Technical Solutions 

Providing cyber insurance/crisis resilience services, benefit management solutions and hospitality IT governance to companies to ensure business continuity, security, data privacy, and overall company elasticity.