Revenue Leakage and its prevention

Revenue Leakage is the unintended loss of revenue due to some incidents or mistakes that were evitable.

The hotel industry is becoming competitive each day. Hoteliers have to do a lot of tantrums to achieve the desired occupancy rate. And then from that occupancy, generating the desired revenue is a difficult task on its own.

On one hand, we are trying too hard to generate more and more revenue and on the other, we losing it in the form of leakage.

So let us try to understand what is revenue leakage and how we can prevent it.

Definition

Revenue Leakage is the term given to unnoticed revenue loss due to issues in revenue generation campaign or over expenditure.

So when there was a chance to generate more revenue than you did or there was a chance to save some resources and you went extravagant, in both cases you are leaving money on the table.

There can be several reasons behind the revenue leakage. The first can be customers spending less money than they should due to a lack of cross and up-selling practices.

Then it can be human errors like billing mistakes and updating incorrect prices. And the third can be unchecked very generous discounts.

How to Prevent Revenue Leakage

So let us check out some practices by which we can keep a check on revenue leakage.

Implement Green Practices

There is a myth that going green is more cost incurring. But as a matter of fact, it is a money saver.

So when we come to the practices we can embrace, the list is long.

We can use the dual flush toilets that are affordable and saves 20 $ a year with 20% of water.

Then we can improve our laundry techniques. Washing the clothes in cold water will save approx 90% of the electricity. Further for drying the clothes natural air techniques are very helpful.

At last, we can use a powerstrip which conserves electricity.

So you can save money and the environment with a single shot. What else do you need?

Limit the labor cost

If you can curb the labor cost then you can save a lot of money at your hotel.

Labor cost takes up to 40% of your day to day operational costs. So it has the scope of getting trimmed. You have to analyze that to run your hotel how much manpower you need.

If you can run your hotel with a certain number of employees without hampering the guest experience then why you hire more.

Have an optimum number of employees in your hotel and run the day to day operations efficiently. It will save a lot of revenue for you.

Capture the Guests Stay cycle

From check-in to checkout there a lot of activities a guest does. And you have to trap them all in a system so that you do not forget to bill any of them.

So for example, if a guest comes to your hotel and he makes check-in. Then he orders room service and due to miss managed operations you forget to bill him at the time of check out then you are going to face loss.

For this, you can deploy a property management system with an integrated ERP so that you do not have to face these losses.

Keep a check Maintainance cost

Clogged HVAC filters can increase energy consumption by 15%. So if you think that procrastinating the maintenance will save you money then you are wrong.

Keep a schedule of maintenance. And keep a check that your engineers are following them strictly.

With timely maintenance, your appliances will have a prolonged life and consume less energy. And this will save you a lot of money.

Sell value not price

We all know that most of the guests in the industry are willing to pay more for better services. So going overgenerous in terms of discounts and loyalty programs is not a good idea.

Try to justify your prices. Nothing can beat you if you have the best in market services. If you are giving the right value for money then you will be the first choice of the guests.

Try to understand your guests what are their needs and what can be done to fulfill them. If there is an issue then be quick to resolve them.

Conclusion

Revenue Leakage is an unnecessary burden we are carrying on our solders. The question that we have to ask is why.

No business is perfect and there is always a thing that we are overlooking or not noticing at all. To resolve an issue the first step is to recognize it.

So take look deep into your hotel to get the leakage points and stop them.

I hope I was able to bring the topic efficiently in front of you. Please let me know if you liked and your suggestions are most important and most welcomed.

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Thanks for the read!!!