Let our powers combine: Earth! Fire! Wind! Water! Revenue?
Okay, so linking revenue management to Captain’s Planet-esque environmentalism may be a bit of a stretch, but good planning and practices can help revenue managers reduce a hotel’s ecological footprint.
And while optimizing profits and protecting the environment may seem at odds, there are parallels and synergies between the two objectives. To that end, here are 10 steps for using revenue science to support eco-friendly practices.
1Recognize the Issue
Between 2003 and today, airline passenger numbers have doubled. In 2018, 1.4 billion people traveled internationally, and that number is estimated to increase to 1.8 billion by 2030, according to the U.N. World Tourism Organization.
While this rapid growth will be a boon to tourism, it doesn’t come without costs. Travel contributes to climate change, overtourism, pollution and resource depletion. The world’s air traffic currently melts 5,470 km2 of sea ice annually, which is equal to a landmass the size of Trinidad and Tobago disappearing every year. To mitigate the damages, travel must become more sustainable.
2Be Part of the Solution
According to a Booking.com report, an overwhelming majority of tourists now desire and seek out more sustainable travel options, and more than half are willing to spend more on their travel to ensure it has a lower impact on the environment.
Increasingly, businesses are taking a leadership role in responsible environmental practices. Recently, Prince Harry, the Duke of Sussex, launched Travalyst—a joint undertaking with Booking.com, Ctrip, Skyscanner, TripAdvisor, and Visa—to bring companies, consumers, and communities together to encourage sustainable travel.
Meanwhile, 181 CEOs of leading U.S. companies, including Marriott, Oracle, and the SAS Institute, the parent company of IDeaS, committed to leading their organizations for the benefit of not just shareholders but also customers, employees, communities, and the planet. And in recent months, IHG, Marriott, and the state of California all committed to eliminating the use of small plastic bottles of bath products.
3Plan for the Future
Environmentalists understand today’s actions affect tomorrow’s outcomes. The same can be said about revenue management. In recent years, the focus of the revenue manager has shifted from short-term and tactical to long-term and strategic.
A key part of this is forecasting—making predictions of future financial performance based on past and present data. By using forecast data to plan for the future, revenue managers can find ways to increase operational efficiency, trim expenditures, and better optimize resources, all of which can benefit the environment and strengthen the bottom line.
4Start With Rooms
As the primary driver of revenue, rooms receive the bulk of attention in forecasting. Here, too, lie ample opportunities to implement eco-friendly practices.
For instance, energy is one of the largest spending categories in hotels. When the forecast calls for low occupancy, shut down floors or wings to lower energy consumption and save on labor, cleaning supplies, and maintenance costs. Hotels can also use slow periods to schedule general cleaning and maintenance. After all, well-maintained rooms last longer and earn better reviews.
Finally, use pricing as a way to enable travelers to be part of the solution by optimizing price or packages to include eco-friendly incentives such as carbon offsets, reduced housekeeping, or investing a portion of rates back into the local community.
5Engage Guests
Hotels go through unimaginable amounts of laundry, water, detergent, and chemicals every day. By now, most hotels have green initiatives in place, allowing guests to opt-out of daily linen replacement and housekeeping services.
As noted earlier, travelers are more attuned to environmental issues these days and are looking for ways to reduce their footprint. Give them a nudge by reminding them to recycle, limit the use of plastics, and turn off the lights, thermostat, and electronics when they leave the room.
6Think Beyond Rooms
In recent years, sophisticated forecasting has evolved beyond rooms to encompass all revenue streams in a hotel, including food and beverage, meetings and events, spa, and recreation. Total revenue forecasting is about breaking down silos between departments and collaborating on ways to save costs, drive revenue, and increase profitability across the hotel.
A similar holistic approach can be taken with environmental goals, such as property-wide initiatives to reduce water and energy consumption for meeting space, recycle, eliminate single-use plastics, and switch to eco-friendly cleaning products.
7Reduce F&B Waste
A key focus of total revenue forecasting is F&B, where hoteliers are discovering previously untapped sources of cost savings and incremental revenue. About 25 percent of all food that passes through hotel kitchens is thrown out, according to Eco-Business. Reducing food waste can lower purchasing costs by three to five percent.
In addition to better managing food costs, supplies, and staffing, hotels can reduce the environmental impact of F&B operations with recycling, composting, planting a garden, eliminating disposable containers, and serving local and organic food.
8Optimize Resources
With revenue science, revenue managers can optimize underutilized spaces throughout the hotel. For example, some hotels are converting restaurant, lobby, and function space into coworking spaces.
Another area revenue managers can analyze is parking. Are there better ways to utilize the space? Moreover, attracting more short-haul business will bring the dual benefits of reducing carbon emissions and increasing parking revenue.
If running a hotel shuttle, are there ways to increase efficiency, reduce trips, and cut down on fossil fuels? The more revenue streams that are taken into account, the more opportunities for sustainability.
9Invest in Technology
Once a hotel has picked the low-hanging fruit, a commitment to long-term environmental practices will require investments in technology. This may include water filtration, energy-saving technology, or composting systems.
It also means investing in automated analytics tools to create accurate forecasts that consolidate data across departments and across a hoteliers’ portfolio.
10Stick with the Long Game
Hotels often start out with long-term strategies and ambitious goals, but when staff get busy or there’s a budget shortfall, initiatives are put on hold. To make a difference, properties must stick with the long game and honor commitments. Sometimes this means making short-term sacrifices for long-term gains.
By following these 10 steps, revenue managers can help ensure our world will remain hospitable and enjoyable for generations to come, while giving a boost to the bottom line. The power is yours—go, planet!
