Brief review on factors affecting growth efficacy of hospitality industry

1. INSIGHT
ON
HOSPITALI
TY
BUSINESS
WAYS TO DECREASE COSTS
INCREASE REVENUES AND
BOOST SERVICE IN HOSPITALITY
INDUSTRY EMEKA
A REVIEW ON WAYSTO EFFICIENTLY IMPROVE HOSPITALITY BUSINESS
Emeka Nnaemezie
2018

2. INTRODUCTION
Running a successful hotel, lounge or restaurant is an ongoing challenge that requires the
combined forces of both management and staff. Policies and Standard Operational Procedures
must be in place to make sure that daily operations run smoothly and all guests are treated well
satisfied. It is fair to say that the primary goal of almost every owner and operator of hospitality
joint is to make as big a profit as possible. To achieve such a goal the focus needs to be on both
revenues and costs. Hospitality firms can boost their bottom line by increasing revenues or
decreasing costs.
Ideally, you want to increase your top line (sales) and decrease your expenses (variable and
sometimes fixed costs) to get the biggest increase in your joints bottom line. Reviewed in this
article are ways that hotels, lounges or restaurants can do better and boost their bottom line
(profit).
Strategies to Increase SalesRevenue andImprove Profit
Once you have identified and measured your key profit drivers, you should develop strategies to
grow them, without increasing costs. Making your business more profitable involves looking at
ways to increase sales revenue as well as decreasing your costs and benchmarking your business
to see where you can save money.
You should also prioritize the strategies you've chosen to improve your profit so you can focus
on the most important ones.
1. Total Quality Management: for an effective cash disbursements and revenue management,
there must be an efficient management system. The owners of hospitality firms should endeavor
to put into consideration those factors that attract customers from the very inception of the joint.
Quality management starts with the environmental outlook of the place, to staff hygiene.
2. Review your 4P's Every Day: Think back to your first marketing class in college when you
were introduced to the four “P’s” of marketing: Price, Product, Promotion and Placement. Take a
mental inventory of these traditional marketing pillars each day to determine what activities need
attention and which ones are already performing at their best:
3. Differentiate your 4P's from your Competitors: Give your guests a reason to choose your
Joint over a joint two blocks or two miles away. You can differentiate your lounge or restaurant
from your competitors on the basis of price, policy and services. Offering discount or promotion
are just a few possibilities. While you do not want to get into a losing battle by dropping your
meal and drink rates 25 percent below your competitor’s rates, you can have a policy where you
are always at or near the lowest rate in town.

3. 4. Make your Employees Happy: In the hospitality industry or any service-oriented industry, it
is particularly important that your employees project a friendly and outgoing attitude toward the
customer. If you make your employees happy by paying them fairly and recognizing them for
their achievements, there is no doubt that they will want to be good ambassadors for your place.
When your employees go above-and-beyond their official duties to help out a guest; that creates
tremendous goodwill and can lead to repeat visits and recommendations. One need be happy to
make another happy.
5. Make Your Guests Feel at Home: Whether your guests are in just for a bottle of water or for
special meals, you should always do your best to make them feel like your joint is their home
away from home. Soften the decor by adding comfortable furniture, flowers, nice scent and
pictures on the wall. Having a lobby and a dining area with comfortable seating areas makes
your joint feel more like a home and less like a sterile hospital room or nondescript office. When
your place is warm and welcoming, people want to come back.
6. Interact with Guests Personally: Guest will take notice when the person at the front desk
calls them by their name. If the manager takes the time to walk around the service area and asks
you how you are enjoying your stay, it makes a difference. It shows that you are important and
not just another face in the crowd.
7. Be Creative, Proactive and Productive: You do not have to always go by the book. If a
guest has an unusual problem, be creative to find a good solution. If you see something not quite
right, be proactive and fix it before it leads to a complaint. Whether it is engaging a customer or
sweeping the floor, a productive employee will help the hotel function more efficiently.
8. Switch from Incandescent to LED Lighting: Switching to LED lighting, which is almost 10
times more efficient than incandescent lighting can, in the long-run, save your joint thousands
and thousands of money in higher electric bills and the cost of buying and replacing burnt out
light bulbs. Investigate all of your lighting options and see which ones work best for you and
your place.
9. Offer Guests Holiday Treat: During the holidays, many guests would love to have a holiday
environment and service that will give them the feel of the festivity. You can charge extra for
special holiday treats with fully decorated serene or you might offer guests a family or group
bouquet or buffet service. When guests leave, they can take away to-go meals with customized
container and bag as advert.
10. Market Directly By Contacting Your Guest: Keeping in touch is always a good way to
reach out to past guests and encourage them to stay with you again. Today, social media sites,
smartphones and many other types of technology, make it easy to talk to your past and future
guests.
11. Focus on Added Value: Guests are usually willing to pay more if they feel like they are
getting more value. Actual value is not as important as perceived value. If a guest feels the
“extra” you are offering, they drop tips and patronize service charge. Free candies and nuts is a
way to start.

4. 12. Focus on Customer Satisfaction: Improve your customer service and develop a staff
training program. The customer is always right is not just a catchy phrase, but also, one of the
most fundamental rules of the hospitality business. If your guests are satisfied, it will pay
positive dividends. On the other hand, if you upset a guest, that will come back to haunt you
negatively and the loss of a paying customer. Getting the order rightly and serving chilled drinks
always keeps your customers glued and attract new guests.
13. Do an Energy and Utility Audit Periodically: Periodic energy and utility audit can identify
areas where you are overspending. Check everything that uses electricity, gas or other fuel; Use
of water. You will see where you are spending the most money and can make adjustments to
lower your overall expenses.
14. Host Business and Private Functions: If you have the space, put more emphasis on using it
to host business gatherings, reunions or other social events. You can do everything from hosting
group gathering to being the venue for a wedding or other social ceremony.
15. Focus Your Marketing on Your Most Important Customers: Statistics show that 20
percent of restaurant customers account for 80 percent of their revenues. An understanding of
your most spending and regular clients gives you direction to your marketing point. If you have
large corporate customers or do a lot of business with corporate organization, it makes sense to
give more direct attention in your marketing campaign to those very important customers.
16. Encourage Guests to Refer New Customers: When you have satisfied guests, they can be a
great source for new customers. Word of mouth has been regarded an efficient tool in marketing
hospitality joint. Encourage guests to refer friends and family to stay at visit your joint by giving
them various incentives like a meal discount, free dinner, or perhaps, a gift card.
17. Network with Other nearby Businesses: Networking with other area businesses that tend to
attract masses and tourists (amusement parks, museums, hotels, corporate offices…) increases
revenue for the joint and the business partner, and at the same time, benefits the customer.
18. Encourage All Employees to Be Salesmen: If your employees are happy, they will be
happy to talk positively about your joint. In addition to relating positively to guests they
encounter, you never know when they will encourage a friend or family member to visit and
patronize you. Don’t ignore your employees. They are your most valuable asset. They act as
benchmark ambassadors when get insensitive such as service charge.
19. Add Some Entertainment: Give your guests a little something extra to look forward to with
some free or inexpensive entertainment. You could have a local musician play his guitar or have
Bongo at 7:00 pm in the open.
20. Provide Outstanding Service: Always meet or exceed expectations and you will have
happy guests. Maintaining, and improving quality standards and implementing of standard
operating procedure would always place your joint on the standout and bespoke.

5. 21. Reward Employees for Good Contributions: If an employee comes up with a good idea
that will help generate more revenue or lower expenses for your hotel, recognize and reward that
employee. When employees know that they are appreciated, they will continue to work hard and
look for ways to improve the business.
22. Add and Refresh Your Menu Periodically: Develop new product lines - survey your
customers about new products. New things are always attractive.
CONCLUSION
If you remember to follow the rule of “people first, then money, then things,” you will be well on
your way to running a successful hospitality outfit. Your guests and employees come first. Then
you need to manage revenue and costs. Finally, you can reap the rewards of your hard work by
taking a nice vacation in an exotic hotel in the South Pacific and have your eligible staff manage
things.
Strategies to DecreaseCosts
1. Decrease inventory - stock control is a good way to streamline your business.
2. Decrease direct costs - make sure you have the right suppliers for your business and negotiate
for better prices or discounts for buying in bulk.
3. Decrease indirect costs - for example, try to minimize waste and errors in your business by
training staff, or reduce marketing costs by using low-cost marketing techniques
4. Decrease overheads - for example, save energy wherever possible or try find to a cheaper
energy supply system.
5. Benchmark key financials - benchmarking your business helps you compare your costs (like
rent and utilities etc.) to similar businesses in your industry to see if you are paying too much.
Summary
1. Focus on your more profitable items: Your products or services with the highest gross profit
margin are the most important to your business, as they generate more money. Once you have
identified your most profitable items you should concentrate on achieving higher sales targets for
them. This may require you to rethink aspects of your business or to devise strategies for
improvement. Consider using a business adviser to help you.
2. Managing cash flow: Your cash flow is the money you have coming in from revenue and
going out for expenses. Good cash flow management will ensure you always have money
available for paying your expenses when they are due. Even profitable businesses can fail if cash
flow is not managed properly. If you don't have enough money available to pay your lenders or
suppliers, banks may foreclose and suppliers could cut supplies.

6. There are many areas in your business that can impact on your cash flow. It is important to
understand how customer payment terms, supplier payment terms, loan payments, future
spending decisions and other items can affect your cash flow.
This guide will help you to manage your cash flow and understand how to use cash flow analysis
to inform business decisions.
3. Managing debtors: Debtors are people or businesses who owe you money. Proper
management of your debtors will help you get paid faster and prevent bad debts. Prompt
collection of debtors' accounts will also help you maintain a healthy cash flow.
Giving your customer an invoice or bill after they have supplied a product or service is a way of
offering credit, since you have to wait for the payment. By giving your customers time to pay for
goods or services already delivered, you are making it easier for them to make purchases. This
will increase sales, but will reduce the cash flow critical to your business.
Managing debtors is often referred to as credit management, and includes:
 collecting debts on time
 setting credit limits and payment terms
 making credit applications and credit checks
 enforcing a clear credit policy
 considering debtor finance.
Debt management also involves keeping debtor records - this is a legal tax requirement. There
are also laws governing how you are allowed to follow up debts with your customers.