Alternate Revenue Sources for Hotels

How Australian hotels are adapting during coronavirus


With the bushfires and then covid-19, the start of 2020 has been anything but easy for the hotel industry.

Bookings have fallen, cancellation rates are at a record high and some hotels are seeing utilisation rates in the single digits. Sadly, some hotels are facing the difficult decision of having to close their doors without knowing when they can reopen.

Share with Oscar works closely with many hotel brands and it has been heartbreaking to see the impact of COVID-19 on the sector. As such, our founders have been engaging with the industry to understand how to get through this difficult time.

Understandably, many hotels we’ve spoken to are focussed on cutting costs. Those that have multiple sites are closing off their branches and funneling all bookings to a cornerstone hotel. Others are reducing staff hours or front-desk operating hours to reduce costs. There are grants and support schemes (e.g. the Jobkeeper) and concessions made by landlords on leases and rent.

With the downturn in tourism, the industry is looking at new customer segments for room bookings and ancillary revenue sources from their assets. We’ve seen hotels use this quiet period as an opportunity to optimise operations, streamline processes, become contactless, and consider other revenue sources from hotel assets. These hotels have made the decision to future-proof their hotels for a post-COVID-19 world.

There is opportunity to consider alternative revenue sources that may have previously been overlooked.

Some of these include:

Renting out rooms for meetings and offices – With more people working from home, there will be a need for on-demand offices for a day and meeting rooms. We’ve heard that faster wifi and readily available meals, and a quieter environment to think as reasons why people are opting to work out of a hotel.

Add-ons for guests that are staying with you – Consider what other additional services or products you could offer, for example, the Old Clare Hotel offers delivery of three meals directly to a guest’s suite for $50 per person per day. Guests can also purchase access to unlimited movies and daily entertainment snacks and drinks for a flat fee.

Long-term stay rates for guests such as essential workers who are wanting to distance themselves from their families due to their line of work or business travellers in town for critical business.

Pay Now Stay Later vouchers – offer vouchers to loyal guests that provide them with a significant saving if they pay now and stay later. This enables hotels to recoup some cashflow earlier.
Meal delivery from hotel restaurants – if your hotel restaurant is usually visited by non-guests, there’s a good chance these visitors could also be continued customers via meal deliveries. Pick some unique dishes to offer.

Parking revenue – many hotels currently have low utilisation of their car park. However, there will be increased demand for parking as Australians return to work and opt to drive over public transport. Your car park could be your biggest and easiest source of ancillary revenue. Learn more here.

18 May 2020