In tourism, just like many other businesses we talk frequently about the bottom line but do we really pay enough attention to the subject. For instance, how many hotels have sat down and calculated what difference a ten per cent increase in average annual occupancy and a net rise of US$10 or US$20 per occupied room night would make to their turnover and viability.
To use a simple example of a lower end 100 room hotel with a normal nightly rate of US$100 and currently achieving an annual occupancy level of 50 per cent which is pretty typical of many of our properties. In accommodation revenue alone that would generate US$1.825 million a year. Take that occupancy level to 60 per cent at an average of US$110 per room and immediately turnover climbs to US$2.409 million. That’s an income differential of US$584,000. Or US$830,000 if the price rise is US$20 per room per night. Of course, it is not quite that straightforward. There would be higher operational costs, but the net result is a greater overall level of profit and the additional margins can be used to achieve the initial objective, allowing any residue to be employed in product upgrade.
To a certain degree many of our larger hotels are dependent on tour operators to fill at least a critical mass of their overall room stock, but I am convinced through creative marketing this percentage can be reduced to ensure a greater return on investment. As we enter week six since the re-launch of the re-DISCOVER restaurant initiative I would like to use this column to publicly thank the Barbados Tourism Authority for their whole-hearted support. It has been a refreshing revelation and a model example of how the private and public sector can work successfully together to drive additional business.
Every key market office has played a significant role and while I do not want to single out particular individuals, because it has been a collective effort, the culmination has to be the airing or a Crop-Over feature highlighting the dine-around programme on The Daily Buzz which was syndicated to 175 television stations throughout the United States. This type of publicity would ordinarily be cost inhibitive if paid for at commercial rates.
We set a goal of attracting an average of ten re-DISCOVER diners per night for six days of each week for every participating restaurant until the 15th December. Some establishments have already exceeded this number with a few patrons returning for a second or third time. The concept was always intended to reach out to both locals and visitors.
If revenue is controlled by the business owners, the program can go a long way to help protect employment and business viability during the long softer summer months. Certain overhead costs are fixed, regardless of the number of customers served and what this promotion achieves is to cover at least part of these expenses, thus ensuring full price paying patrons make a larger contribution to profit.
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