External Presentation
When a potential guest drives into a town
he usually has a fair idea of the type of motel in which he
wishes to stay. He
may be on a tight budget, and will only look at one or two star
properties. He may
be in the middle range and will look at three star properties,
or he may be willing to pay more to stay in a four or 4½ star
motel. If there are
three or four properties in his tariff range he will probably
drive past all of them before making up his mind.
So the first rule for improving a motel is improve the
external presentation.
A well painted three star motel with lush gardens and a
tariff of $100 will always attract more guests than a poorly
presented three star motel with an $80 tariff.
Potential guests will not always choose the cheapest
accommodation. They
often feel that if the motel is charging more, it is offering
more.
Reception Area
Once the guest enters the motel he will
begin to think about whether or not the external presentation
matches the internal presentation.
Therefore it is important to have a well presented
reception area. If the
reception area is dingy, untidy, and filled with unhappy motel
staff the potential guest will assume his room will be a
reflection of the reception area.
Guest Room
Once the guest reaches his room he is
fairly unlikely to turn back, and the motelier has secured the
guest for the night.
However, if the guest’s room does not live up to expectations
the motelier will never see that guest again.
In most businesses the best customer is the repeat
customer. It is the
same in the motel industry.
A one off guest might be worth $100, but a repeat guest
might be worth 2, 3, 5 or 10 times that amount over a year.
To keep a guest it is therefore essential
to have guest rooms that offer a superior presentation, a better
quality of furnishings etc.
Small things such as noisy refrigerators, air
conditioners that are hard to operate, faulty televisions,
dripping taps etc will annoy guests.
If a guest does not tell the motelier about these
problems they may never be fixed.
Therefore it is a good idea to have a guest feedback
sheet in each room.
A guest who cannot be bothered telling a motelier to his face
that his property is a disgrace may be willing to note defects
on an anonymous form.
You should consider ways to improve the
motel on your first inspection.
If a motel with overgrown gardens, peeling paint, a dull
reception area and dingy rooms is running at 40% occupancy think
about the occupancy rate you could achieve with a little money
invested in repairs and maintenance and a little time devoted to
improvements. When
you inspect a motel for sale you should note your first
impressions, list defects, calculate the cost of making
improvements and the anticipated profit benefits.
Website
Most motel guests use the Internet to find
accommodation.
Therefore, a well presented website is as important as a well
presented motel.
Your website should have photographs taken by a professional
photographer, an easy to use booking engine, and will be more
successful if it publishes the motel’s tariffs.
A motel that does not have a website and is
not linked to the main booking engines such as www.wotif.com.au
and www.quickbeds.com.au is missing out on a substantial
quantity of business.
Weddings and Conferences
If you have a conference centre in the
motel then promoting weddings and conferences
will improve your bottom line.
Catering for these functions is relatively easy because
you have set menus, a prepaid number of guests and therefore no
wastage.
Coach Companies
Many moteliers have improved their
businesses by contacting coach companies and offering dinner,
bed and breakfast at group rates.
Coach groups also have the advantages of set menus,
prepaid guests and repeat business.
Accounting
Motels and other businesses benefit from
good record keeping.
If you record your occupancy rates, average tariffs, revenue
from each section of your businesses and all costs then you will
always know how your motel is performing and whether it is
necessary to make any changes.
You will also find it much easier when, in the future,
you decide to sell your motel.
List of Potential Improvements
Many new moteliers tend to get overwhelmed
by the day to day running of their business and forget the need
to improve the performance of their motel.
So the last piece of advice on how to improve a motel is
don’t forget to improve the motel.
Keep a list of improvements close to hand, add to them
and implement them.
Upgrade the Motel
We have seen how higher star ratings
produce higher occupancy rates and higher tariffs.
Let us now look at the calculations a motelier might make
when deciding whether or not to upgrade.
Suppose the motelier is running a 3 star
property that has occupancy rates and tariffs that are the NSW
country average – 49.2% and $113.74.
The motelier assesses the demand for quality
accommodation in town, the competition and feedback from his
guests, and decides to spend $15,000 per room that will result
in an upgrade from 3 to 4 stars.
If the upgrade yields country average
results, each 4 star rooms should produce an occupancy rate of
61.1% and a tariff of $160.93.
Assuming the motelier owns a 25 room
property, the results of his upgrade should be as follows.
| Before Upgrade | |
| Rooms Available | 25 |
| Occupancy Rate | 49.20% |
| Rooms Occupied | 4,490 |
| Average Tariff | $113.74 |
| Accommodation Revenue | $510,636 |
| Cost of Room Service per Room | $25.00 |
| Total Cost of Service | $112,238 |
| Gross Profit | $398,398 |
| After Upgrade | |
| Rooms Available | 25 |
| Occupancy Rate | 61.10% |
| Rooms Occupied | 5,575 |
| Average Tariff | $160.93 |
| Accommodation Revenue | 8$97,245 |
| Cost of Room Service per Room | $25.00 |
| Total Cost of Service | $139,384 |
| Gross Profit | $757,861 |
| Gross Profit Increase | $359,462 |
| Gross Profit Increase % | 90.2% |
| Cost of Upgrade per Room | $15,000 |
| Total Cost of Upgrade | $375,000 |
| Return on Investment | 95.9% |
His return on a cash investment of $15,000
per room is 95.9%.
There are very few other businesses that can produce similar
figures.