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Technology Fuels Shift from Room-Centric to Guest-Centric Revenue Generation in Hotels – Image Credit Unsplash+
The hotel industry is shifting its focus from revenue per available room (RevPAR) to revenue per available guest (RevPAG), maximizing the use of technology to offer better experiences and increase revenue. The RevPAG measure considers the overall experience and services provided to the guest beyond just room inventory. As consumer behavior evolves towards more experience-driven travel, there is a growing opportunity for hotels to leverage technology to tap into revenue from ancillary services.
Shifting Metrics: RevPAR to RevPAG
The hospitality industry is moving towards RevPAG, which involves viewing the guest as a whole and understanding the hotel’s experiences beyond room inventory. This shift is a response to changing consumer behavior. Travelers, whether for leisure or business, are increasingly experience-driven, meaning they are willing to allocate a larger share of their budget to ancillary services, such as food, beverage, and spa services.
The Role of Technology in Revenue Generation
According to Leila Jiwnani, director and head of hospitality and leisure advisory for Deloitte, technology has the potential to help hotels leverage these new revenue streams. It can generate demand and fill capacity and, through dynamic pricing, help manage the peaks and troughs of demand. This allows hotels to offer a broader range of products to a wider audience, improving the bottom line.
Tech Progress in the Hotel Industry
Technology is playing a significant role in enabling the development of additional services and monetizing more of hotels’ available space. Richard Valtr, founder of Mews, stated that technology is “on its way” to offering a revenue management system that enables hotels to offer more and earn more.
The Retail Perspective
Bashar Wali, founder and CEO of This Assembly, pointed out that the hotel industry is lagging behind the retail sector regarding technology use. The retail industry, he said, has managed to leverage technology effectively due to the necessity to survive. Wali believes hotels need to view themselves as retailers with perishable inventory and embrace the possibilities of technology.
RevPAG Applicability Across Hotel Segments
The concept of RevPAG is applicable across all segments of the hotel industry, from large economy chains to luxury hotels. However, the way it is implemented may vary. Lower-end hotels may generate additional revenue by charging for extra amenities, while luxury hotels might focus on creating a 360-degree view of the customer to offer personalized experiences.
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