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Tradavo Advice

The 5 Most Painful Mistakes Made by Hotel Retail Managers - Part 2

Posted by Bobby Martyna

Mon, Oct 04, 2010 @ 21:10 PM

Painful Mistake #2 - Pulling the Wrong Profitability Levers

Running a retail business within a hotel is no different from running a retail business outside a hotel.  But it differs in many ways from running a hotel.

To the point, many hotel managers are properly budget conscious.  Each month, a certain dollar amount is allocated to various hotel purchases, whether recurring, such as labor, or one time or irregular purchase, such as capital investments.  When the budget is exceeded, no further purchases are authorized in the category.  This tends to ensure a certain level of profitability, on the assumption that the revenue projections are correct.

For the retail side of your business -- your pantry, market or gift shop, budgeting is a bit different.  In order to sell goods, whether consumables or general merchandise, you must have the products available and your pantry must be well stocked.  But many hotel managers will stop buying wholesale products for their pantry once the monthly budgeted amount has been reached. 

In the case where occupancy exceeds expectations, say, for example, when a sports team unexpectedly books 50 rooms in the middle of the month and cleans out your pantry, does the fact that you have already exceeded your "pantry budget" mean you shouldn't purchase more stock?  Clearly not -- you will lose potential sales for the balance of the month and leave your guests unsatisfied.

Many hotel managers understand this -- but many do not.  Tradavo services 2,000 hotels and we see order volumes decline toward the end of the month, and then pick up again at the first of the next month.  This is evidence that some hotels are clamping down on purchases once the budgeted purchases for the pantry have been reached.

A well-run pantry is always well-stocked.  One key to profitability is to always be in stock and to manage your 'pantry budget' in a similar manner to the way you plan expeditures in other variable cost categories -- such as restaurant supplies. 

Failing to do so means you are pulling the wrong profitability lever, and are falling short of the true potential of your hotel pantry.

Contact Tradavo today -- we'd be happy to work through this profitability lever -- plus many of the others that will drive sales and profitability in your retail operation.  All our services are complimentary.

Hotel Pantry resized 600

Bobby Martyna
President and CEO
Tradavo, Inc.
Follow me on twitter - @bmartyna


Topics: hotel supplier, Tradavo CEO, retail advice