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Revenue Generation for Hospitality: Definition & Overview Video

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  • 0:03 Reinvigorating Revenue
  • 0:43 What Is Revenue Generation?
  • 1:57 Strategies for Revenue…
  • 4:38 Lesson Summary
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Lesson Transcript
Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Generating revenue in a hospitality setting involves creating new strategies and tactics to impact the bottom line. In this lesson, you'll learn more about revenue generation for hospitality and new ways to create growth.

Reinvigorating Revenue

Jamie is a hotel manager in Atlantic City. This city is one of the most sought-after travel destinations in the United States thanks to its hotels, casinos, and restaurants. Jamie's hotel has been doing things the same way for years now, and it's starting to show in declining customer numbers and decreased revenue.

Jamie could raise the rates for the hotel rooms or start charging extra for resort amenities, but she is certain there are other tactics for generating revenue that will enhance a customer's experience and build her hotel's bank account. Jamie needs to implement some revenue generation tactics for her hotel. But, what should she implement?

What Is Revenue Generation?

Quite simply, revenue generation is the manner in which a company sells itself and its products to make money. Revenue generation is not simply sales or marketing; it's an operating strategy that touches every part of an organization. It's a plan that allows a business, in this case a hotel, to utilize strategies and tactics that allow for increased revenue.

Typically, revenue in the hospitality industry is generated through hotel room rentals, meeting space occupancy, and the sale of food or beverages. All of these produce profitable revenue for a hotel or other hospitality industry business such as a food and beverage operation, a theme park, or a cruise line.

Like any business, the hospitality industry faces periods of growth and decline. One thing is certain: the hospitality industry lives and dies by its customers. Good customer service can be a revenue-generator for a hotel or restaurant. Focusing on even small details can mean the difference between remaining stagnant or increasing profitability. Small things add up!

A good hotel manager like Jamie understands that there are many ways to boost revenue. Let's take a look at some strategies for revenue generation that Jamie might consider implementing.

Strategies for Revenue Generation

There are many strategies Jamie can choose to try. One of these is improving customer service. It's a simple idea, but providing superior customer service can be the difference between a customer who returns and one who chooses to stay elsewhere on their next trip. This can be achieved through asking guests for their feedback, providing better training for hotel employees, and going the extra mile to handle guests' concerns.

Another strategy is yield management, which involves finding the formula for achieving the greatest profit from a good or service by coordinating consumer, price, timing, and buying patterns. To implement this, Jamie could use different rates, such as promotional or group pricing, or increased pricing when there is high demand and reduced pricing when demand is low.

Another option is adding new revenue sources. New revenue can come from a variety of sources, limited only by your creativity! Jamie could make branded hotel products available for purchase, including bath robes, bath and shower products, or towels and linens. Maybe she could lease the roof space of her hotel to a mobile phone provider for a cell tower location.

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