How VoIP Influences Hotel Finances
The US hotel industry employs 1.9 million people in 53,432 properties and generated some $176 billion dollars in revenue from around 5 million guestrooms in 2014. The average occupancy rate was 64.4 p...
The US hotel industry employs 1.9 million people in 53,432 properties and generated some $176 billion dollars in revenue from around 5 million guestrooms in 2014. The average occupancy rate was 64.4 percent and revenue per room averaged more than 74 dollars. Later figures from Statista indicate that 2015 revenue topped $189.5 billion, highlighting a significant rise since 2013’s figure of $163 billion.
Despite the growth, the market is extremely competitive and cost control remains a priority. One area where hotels can make significant savings is telecommunications. A solution like VoIP (Voice over Internet Protocol) can reduce infrastructure and calling costs, as well as improve staff productivity and efficiency. It can also contribute to revenue by enabling new chargeable services and building repeat business through increased customer satisfaction.
How VoIP influences hotel finances
Cut infrastructure costs
Telephone infrastructure is a key target for cost savings. Hotels with legacy phone systems require separate networks for phones and data. As well as the capital costs of installing and upgrading legacy cabling, they incur management and maintenance costs for each network. VoIP solutions utilize an existing local or wide area data network, eliminating the need for separate networks.
Even greater savings are possible for hotels that move to a hosted VoIP solution. Here, a service provider takes responsibility for owning, operating and maintaining the infrastructure in the cloud. The hotel requires no infrastructure on site, reducing costs further and freeing space for revenue-generating activities.
From CAPEX to OPEX
Hosted VoIP solutions help hotels protect their capital. Instead of funding the telephone infrastructure through a capital budget, hotels pay a service provider a monthly fee. That makes communication costs a predictable operating expense, simplifying budget and increasing control.
Hotels don’t have to budget for planned maintenance, unexpected repairs or system upgrades because these costs are covered by the service provider’s fee.
Reduce expansion costs
VoIP solutions can reach any location with an Internet connection and that can reduce the cost of extending the hotel network. If a hotel opens a new fitness center, lodge, or a restaurant in another part of the site, for example, it no longer needs to install and maintain additional cabling. VoIP can link the new facilities with no delay or disruption to disturb guests.
If hotels merge or open new sites within a group, they can use VoIP to link all sites, eliminating duplicate infrastructure and providing the same services throughout the group.
Lower multi-site communication costs
Hotels with multiple sites don’t just save on infrastructure costs; they can also centralize communications management and control staff costs. VoIP enables a group to manage all its communications from a single source with no need to keep dedicated teams at each site.
There are also important savings on call charges for multi-site groups. With VoIP, internal calls and calls between connected sites are free, regardless of distance.
Outsource call center services
Call centers are essential to hotel operations, handling inquiries, reservations, and other services. However, setting up and maintaining an internal call center can represent significant costs. With hosted VoIP in place, hotels can set up virtual call centers or outsource their call center operations to reduce infrastructure and operating costs.
Setting up a virtual call center also gives hotels the flexibility to scale their resources cost effectively in line with traffic. They can link part-time home-based or remote agents to the call center team to handle overflow traffic. The remote agents can access the same services as their colleagues in the main center, reducing the need to maintain a large team of full-time agents.
Only pay for essential capacity
Many smaller hotels, particularly those outside cities, face the cost of maintaining phone capacity that is only needed at peak times, during the vacation season or at busy reservation times.
With VoIP, hotels can quickly and easily increase their capacity when they need it and return to a basic service during quiet periods. Service providers increase or decrease the number of virtual circuits, with no delay or disruption for installing physical cabling. Instead of paying for surplus capacity, hotels fund their variable line costs on a ‘pay-as-you-need’ basis, reducing the overall cost of operations.
Reduce front desk costs
VoIP solutions can help front desk staff improve their productivity and reduce overall reception costs. For example, by integrating VoIP with a customer relationship management (CRM) system, hotels can give staff immediate access to essential guest information. CRM systems can provide information on departure and arrival times, wake-up calls, and special requirements. This speeds up routine check-in and check-out and provides a basis for automating those processes.
Integration with CRM systems also enables hotels to automate guests’ wake-up and reminder calls and provide an automated acknowledgment of incoming requests for food, taxis or other services.
While automating front desk services through CRM integration improves productivity and reduces costs, it also helps hotels provide a more efficient and personalized service, which can boost customer satisfaction.
Manage mobile staff cost effectively
Managing mobile hotel staff can be expensive. Setting up two-way radio systems and equipping duty managers, cleaners, maintenance staff and customer staff with handsets incurs capital costs and provides limited functionality. Mobile phones provide a greater range of features and facilities, but calling charges may make their wider use prohibitive.
Equipping mobile phones with VoIP softphone apps provides a cost-effective alternative. Calls travel over the VoIP data network at a tariff that is lower than standard mobile calling plans.
VoIP softphone apps also provide many useful features that can improve productivity and reduce the cost of monitoring and managing mobile staff. Both parties can send or receive texts and Instant Messages with work instructions or reports. Managers can use features such as Follow Me or Presence to check availability or forward calls to various phones if it is difficult to reach a member of the team urgently.
Meet guest service demands
The JD Power 2016 North America Hotel Guest Satisfaction Index Study found that the three most important amenities cited by guests are free Wi-Fi, breakfast, and parking. According to the study, 71 percent of guests reported that they received complimentary Wi-Fi.
With business travelers representing over 40 percent of hotel guests, according to AHLA, providing communication facilities for this sector is a priority. That means investing in an efficient wireless infrastructure to support the bandwidth requirements of guests’ laptops, smartphones, and tablets.
Hosted VoIP solutions provide the scalable infrastructure and bandwidth to meet those demands cost effectively without additional capital investment.
VoIP can also meet the demand for smaller conference and meeting facilities on hotel sites. By providing VoIP-enabled conference phones or providing guest access to VoIP’s web, audio or video conferencing services, hotels can supplement their existing conference facilities and increase revenue without investing in dedicated meeting room equipment.
Increase guest phone revenue opportunities
The guest room phone traditionally provided a useful source of revenue for hotels through charges for outbound calls. But, with more guests using their mobiles and smartphones for calling, this revenue stream has decreased. Replacing analog room phones with IP models enables hotels to provide an increasing range of chargeable services through the room phone.
These services could include guest voicemail, access to weather forecasts, inter-room calling or messaging, as well as outbound calling at preferential rates. Overseas guests, for example, could use VoIP room phones to call international destinations at Internet rates, rather than incur roaming charges and high call costs on their mobiles.
Maintain satisfaction by adding value
The VoIP room phone makes an indirect contribution to revenue by increasing satisfaction and long-term loyalty. Offering guests a wide range of services via function buttons on the keypad, such as one-touch access to the restaurant, room service, night porter or the front desk, improves convenience for guests.
Hotels can also provide recorded information on hotel services, such as restaurant opening times, dry cleaning or sports facilities, as well as local tourist information. By enabling fast, automated services such as booking wake-up and reminder calls, ordering taxis, or settling check-out bills, hotels can improve convenience even further.
These added-value services are important because they represent an important element of a hotel’s value proposition. According to the JD Power study, customers have responded well to the enhanced offerings provided by some hotel brands to create value, but as those perks become standard, customers are quick to ask what more the hotel can offer them.
Build repeat business
Building and maintaining customer satisfaction and loyalty is critical to a hotel’s long-term success and its ability to grow revenue through increased repeat business. However, the JD Power 2016 study found that satisfaction increased by just two points over the previous year, and loyalty was less important to younger travelers who favored value over loyalty rewards.
VoIP can support twin-track initiatives to build satisfaction and add value, in addition to reducing the costs of operating communications and delivering hotel services more efficiently. By providing a service that influences the cost and scope of a wide range of hotel operations, VoIP can make a significant contribution to hotel finances.