Blog · Approx. 5 minute read
How Direct Billing Solutions can Help Increase Hotel RevPar
It’s fair to say, COVID-19 almost decimated the hotel industry. In the near absence of travel for more than a year, just about every hotel struggled and many even shuttered.
Now, in the wake of the pandemic, the hotel industry is scrambling to stay afloat and remain relevant. As travel once again opens back up, competition is fierce. Hotel operators are looking for ways to innovate to stay ahead of competitors. And an important opportunity may lie within how hotels accept payment from corporate customers.
To differentiate from the competition, hotel chains have an opportunity to focus on the corporate customer experience to keep existing customers and attract new ones. By offering direct seamless billing and invoicing, hotel operators can increase average occupancy rate (AOR), enhance revenue per available room (RevPar) and build loyalty with corporate customers.
What is RevPar and How do You Calculate It?
In fact, RevPAR is one of the most significant factors for building hotel revenue. There are two ways to calculate it:
RevPar = Rooms Revenue / Rooms Available
RevPar = Average Daily Room Rate x Occupancy Rate
Hotel operators usually calculate hotel RevPar daily, monthly or annually, and it serves as a key metric for tracking business performance. But in addition to being a key performance indicator, RevPar also helps hotels operate more efficiently through better room rate planning and strategizing.
Direct billing technology plays a critical role in increasing hotel RevPar by enabling hotels to issue invoices, allowing corporate guests to pay for their hotel stays just as easily as they would for any other business expense — by invoicing on terms.
To remain relevant and realize the benefits of increasing hotel RevPar within today’s competitive hotel industry, hotel operators should leverage direct billing solutions.
Boosting Hotel RevPar
Maintaining a healthy hotel RevPar and putting strategies in place to continuously increase it are essential to the profitability of any hotel. And while there are several steps hotel operators can take to optimize their RevPar, here are a few that can have a quick impact:
- Adjustable room price
When the average daily rate (ADR) is high, RevPar goes up. But hotels shouldn’t increase the price of rooms just to boost RevPar or substantially drop prices just to sell rooms. Instead, they should focus on pricing based on the demand climate for any given time. For example, adjust rates when demand is high, offer different rates for the different customer segments, and take a page from competitors’ books. Check out how they are pricing, and adjust your rates if it makes sense.
- Be open to a flexible ADR
While some hotel operators believe full occupancy with a consistent ADR will undoubtedly lead to higher RevPar, that’s not always the case. With a flexible ADR and when demand is high, hotels can charge a higher room rate for some rooms, maximizing profitability potential and hotel RevPar.
- Focus on hotel site sales
Online travel agencies, such as Expedia and Kayak, may book a lot of guests, but they take a chunk of the profits through service fees. By focusing on your own site for sales, you’re able to sidestep any extra fees and capture all the sales dollars.
These may be more commonly known strategies for boosting hotel RevPar, but there are others that can be just as effective but are less utilized, such as direct billing.
Direct Billing for Hospitality 101
Direct billing makes paying for and expensing accommodations easy and seamless for corporate customers staying in hotels — further providing a great experience for the customer and fostering brand loyalty.
The way it works is, a hotel partners with an outsourced technology supplier to implement a direct billing solution. With the solution in place, hotel chains can then offer their corporate clients a pay-on-terms solution with a line of credit. The supplier instantly assesses the client’s eligibility for credit and then underwrites the line of credit for approved applicants.
This process reduces the hotel chain’s risk, and from that point, the supplier pays the invoices directly rather than leaving it up to the business guests staying on the property. The supplier itemizes and bills the client, with flexible net terms — allowing the charges to be attributed to the appropriate account for payment and budgeting purposes.
Direct Billing’s Benefit on Hotel RevPar
Partnering with an outsourced technology supplier, such as TreviPay, to implement direct billing offers hotel operators several key benefits:
- TreviPay’s technology allows the traveler’s staying in hotels on behalf of corporate clients to select invoicing as their payment option, rather than making them hand over a personal or corporate credit card for payment.
- Businesses prefer to make purchases on terms. This solution provides hotels with instant decisioning and a dedicated credit line — helping to bring in more corporate travel clients and build lasting loyalty.
- With the hotel industry’s ongoing staffing shortage, TreviPay’s direct billing solution makes it is easy for hotel staff to administer guest stays from reservation through payment.
- The direct billing invoice is almost identical to a branded hotel folio, giving customers a consistent and familiar experience.
- Payment terms can be set at Net 15 or Net 30 and can be fixed across the entire hotel chain or adjusted for individual properties across a hotel network.
- The hotel doesn’t have to worry about disputes. TreviPay manages all dispute resolution through its seller portal within 30 days of the invoice date.
- Implementation is quick and easy. Depending on the implementation, hotels will be up-and-running with the direct billing technology in a matter of weeks.
With this option, hotels can save significantly on time spent servicing each guest, adding value back into their RevPar bottom line.
All of this leads back to providing your corporate clients and their travelers with a highly satisfying, seamless experience — all the way through to billing.
TreviPay’s direct billing solution makes expense management easy for companies by consolidating billing. In addition, it takes the burden off of travelers to pay for and expense their work stays. Direct billing is the key to a successful rebound for corporate travel.
Still curious about how direct billing for hotels works? Check out our Direct Billing Solution for Choice Hotels to learn more.