The 5 most common hotel problems and how to solve them

A low occupancy rate is one of the main alarm bells for a hotel, as it indicates inefficient use of resources and potential management problems. Indeed, empty rooms are not only synonymous with lost revenue but also with uncovered fixed costs, poor pricing & promotional strategies, limited planning capacity and potential damage to the hotel's reputation. 

Here are some of the main reasons for low occupancy and the strategies that can be deployed.

A frequent cause of low occupancy can be the presence of numerous competitors in the target market, offering similar or superior services at competitive prices. To remedy this, it is necessary to reposition the hotel in a less crowded market segment. 

Similarly, those who have chosen too narrow a niche may find it difficult to maintain the hotel in the long term. In both cases, it’s necessary to carefully analyze the market and competitors' offerings in order to optimize services and reduce or broaden the target clientele.

Another frequent cause of low occupancy rates can be an inaccurate pricing strategy that scares off potential customers with prices perceived as too high. In this case, the solution is to adopt a dynamic pricing strategy capable of adapting to market fluctuations and demand in real time. 

Using revenue management tools, the hotel can analyze historical data and make market forecasts to proactively adjust prices, attract more guests and maximize revenue from each available room.

Since the pandemic, the hospitality industry has seen a steady increase in operating costs. This increase has affected many areas, from the need to comply with health regulations, to personnel expenses, to the cost of energy and consumables. 

Many hoteliers had to navigate an environment marked by high inflation and rapid changes in consumer behavior, further complicating financial management. To remain competitive and sustainable, it has become crucial to adopt effective cost control and reduction strategies. Here's how!

Implementing a management control system (MCS) within the hotel is a proactive approach to solving this problem. Such a system enables effective control of all expenses, providing accurate and timely data that facilitates financial planning and rapid corrective action. With structured management control, it’s possible to identify areas of significant waste or sub-optimal expenditure and take swift action to optimize operating costs.

A better way to control costs is to reduce them in a preventive way. For example, investing in technologies that reduce energy or water consumption not only cuts bills but also has a positive impact on environmental sustainability and the hotel's reputation. What's more, transforming certain fixed costs into variable costs can offer greater flexibility in expense management.

An example might be revising distribution contracts to make them more adaptable to market fluctuations. Investing in long-term direct sales strategies can also significantly reduce intermediation costs, consolidate direct customer relationships and improve profit margins.

To find out more on this subject, you can read our article on how to optimize your hotel's revenues by focusing on environmental sustainability.

Although online travel agencies (OTAs) can increase visibility and lead to more bookings, they often chip away at profit margins and reduce the hotel's direct control over the customer relationship. In addition, high commissions and aggressive competition on these platforms can limit hotels' ability to effectively manage their pricing and promotional strategies. How to limit dependency?

One of the first steps you can take to reduce dependence on OTAs is to invest in direct marketing activities that bring potential customers to your website. Advertising campaigns on Google and social media are particularly effective in achieving this goal: these channels enable hotels to target ads at specific market segments, improving the visibility and attractiveness of direct offers over those of OTAs.

An effective disintermediation strategy includes offering tangible incentives that encourage customers to book directly. Ensuring that the price offered on the hotel's official website is the most competitive is critical. Adding value to direct booking with exclusive perks, such as welcome cocktails, free parking, room upgrade options, and late check-out, can further convince customers to bypass OTAs.

If you’d like to explore this topic further, we suggest reading our latest article with the 4 basic strategies to reduce OTAs' commissions.

A longer-term strategy for reducing intermediation is to invest in customer loyalty. Ideally, you should set up your own loyalty program; according to a recent study by Skift, loyalty program members contribute between 30% and 60% of RevPAR, and tend to pay a higher ADR than other guests.

In this article, we explain how to determine whether your hotel needs a loyalty program, but if you don't feel ready to create one, you can start with simpler activities. An example? Implement an e-mail marketing strategy aimed at guests who have already stayed at your establishment, offering them exclusive offers to encourage them to book again.

The problem of finding qualified staff (and keeping them) skyrocketed with the pandemic, and it looks like this trend will continue in the years to come. 

According to joint surveys, the UK hospitality sector is still grappling with the effects not only of the COVID-19 pandemic but also of Brexit. According to survey findings from the UK's hospitality trade bodies, a labor shortage is currently affecting around 10% of the sector.

Meanwhile, the American Hotel & Lodging Association (AHLA) reports that over two-thirds of hotels continue to be understaffed. This shortage translates into historic career opportunities for hotel employees. Indeed reported that more than 70,000 hotel jobs were available in the U.S. in December 2023.

Here are some ideas to address this problem.

For personnel, as for marketing or revenue management, a strategic and structured approach covering all aspects is necessary: from the search for and selection of personnel to their training, assessment, and professional development. Systematically organizing these activities will enable you to attract the best candidates and develop the skills of existing staff, ensuring that they are always aligned with the hotel's objectives and values.

When devising your strategy, don't overlook the competition: a regular analysis of working conditions, remuneration packages and benefits offered by competitors will enable you to adapt your offer so that it remains competitive and attractive.

The strategy described above must include a bonus system based on production results. These rewards must be well structured, objective and clearly communicated to staff. It's important that rewards value not only effectiveness and efficiency, but also individual skills and contribution to the hotel's success. This will not only help to motivate existing employees, but also act as a point of attraction for potential new recruits.

To find out more about the risks of high staff turnover and how to prevent them, you can read our article on strategies for avoiding seasonal staff shortages in hotels.

High season is a crucial period for any hotel, during which the increased flow of guests can lead to disruptions. To avoid having to deal with these "emergency" problems, preventive strategies can be implemented to minimize their negative impact. Here are some ideas for dealing with three common types of disruption during peak season:

Staff training plays a key role in preventing malfunctions. It’s essential that all staff receive comprehensive instructions, not only on day-to-day operations but also on how to deal with unforeseen situations and common problems. A detailed procedures manual, describing the most frequent cases and their solutions, can be an excellent tool for ensuring that every member of the team knows how to act effectively and in a timely manner.

Preventive maintenance is essential to avoid structural problems (plumbing, electricity or structural work). Organizing regular, systematic checks during the low season helps to identify and solve these problems before they become urgent. What's more, keeping a detailed log of all problems encountered is a valuable reference to ensure that any necessary repairs are carried out efficiently and that they don't recur in the future.

Room cleanliness always tops the list of causes of negative reviews from guests. To avoid this risk, it’s essential to adopt a strict quality control system for cleanliness, for example by adopting a daily routine of random inspections of rooms and common areas. It's important that these inspections are followed by immediate and constructive feedback to staff, even better if they are accompanied by a clear procedure that your staff can follow to ensure compliance with your quality standard.

Don't have the time to prepare it? In this article, you'll find a ready-to-use guide and checklist for cleaning your establishment's rooms more effectively.

The above are just some of the potential problems that hoteliers face on a daily basis.

Adopting a preventive strategy is important, but how do you deal with unexpected critical issues and prevent them from turning into financial losses? Equipping yourself with a dynamic pricing and revenue management software like Smartpricing could be the right choice.

With its high level of automation and real-time market analysis capabilities, Smartpricing can help you react quickly to any fluctuation in demand and make better pricing decisions to maximize your revenue without the need to be a revenue manager.

Want to see how Smartpricing works and how it can help you? Request a free personalized demo!