December—a time for family vacations and nationwide travel, creates a natural demand in the hospitality industry. Successful entrepreneurs plan to take advantage of this high demand, working hard to maximize profits and to capture business when it literally walks in the door. From our clients to you, the following are some best practices during these busy holiday months.
Keep Accurate, Timely Financial Records of Previous Holiday Seasons
It’s really important for you to know how busy you truly are during the holidays. In your mind, you’ll remember the previous holidays as “busy,” but exactly how busy were they and what were the specific components of this frenetic time?
• What was your occupancy rate?
• How did your guests find you? Through your website or through third party sites?
• How profitable were you during this time?
• What other revenue items were higher and lower, including sales in the in-hotel market, room service if available, rentals of cribs and extra beds and sales of meeting rooms?
• How long did your busy season last? For locations in warm climates as well as for those whose guests come to take advantage of winter sports, the busy season may extend far beyond Christmas to New Year’s week.
Plan Properly for the High Season
Once you have a clear picture of how busy you’ve been in past holidays, you can make better plans for this year. Consider past experience as you decide on staffing patterns, rate structures and listings on third-party sites as well as your own website.
It’s important to investigate if you left money on the table last year. For instance, if you didn’t offer room service on Christmas Day but there was a demand for dinner or snacks, you may want to consider adding this as a revenue source.
Finding Ways to Increase Profits Next Year
Would capital improvements allow you to increase sales or occupancy?
Some of our clients have found that certain amenities differentiate their properties from their competition. Spending money on creating these distinctions may pay for themselves in short order. Capital improvements that can maximize holiday revenue include:
• Changing franchise affiliation
• Adding or renovating guest rooms
• Updating common areas
• Upgrading meal service
• Creating upscale spas and fitness centers
• Providing transportation to area attractions, in both warm and cold climates
The Arrowhead Treetop Lodge in Lake Arrowhead, California showcases some of the best practices in order to capitalize on holiday business. Our client, whom we know well as we had arranged previous financing for him, was an experienced hotel owner and operator in the vicinity. He knew the subject property well and saw the potential for increased revenue with capital expenses and new management ideas.
Arrowhead Treetop Lodge is uniquely situated near the shores of Lake Arrowhead. It is surrounded by natural pristine beauty, but is not so remote from large metropolitan areas, making it a perfect getaway for travelers and tourists. Our client also saw the huge potential for group rentals and increased wedding business, which the current management was not taking advantage of.
We were able to match our client with a Small Business loan, which served three purposes. It allowed him to purchase the new property, it included funds for improvements and it also rolled in a refinance of his current nearby property. This multi-pronged approach enabled our client to not only take possession of this holiday destination, but to also make the changes needed to increase occupancy and profitability. Our client is ready for the holiday season in this beautiful locale and will be able to make the most of his excellent management experience.
Utilizing loans to maximize future profits
If you believe that capital improvements would allow you to increase occupancy and profitability, talk to our GRP associates about obtaining financing to meet your goals. We will evaluate the marketplace and your property’s revenue potential. We will help you determine ways to finance your dreams that are the most beneficial for your current cash flow as well as future revenue streams.
Merry Christmas, and Happy Holidays to all.
Whether you are expanding your existing portfolio or investing in your first business, GRP Capital has the resources to help you meet your required capital needs. Our services include divisions of Real Estate Capital Markets, Small Business Financing, Construction Lending, GRP Capital Debt Fund, and Consulting and Advisory. Learn more at grpcapital.com.