As the economy continues to spiral downward, concerns in the hospitality industry over the effect it will have on occupancy rates are at the top of every hotel's planning list. Tradavo recognizes the need to plan effectively to address these inevitable vacancies and to examine the alternative assets you have within your property to keep RevPAR at a healthy level wherever possible.

One of the best places to look for additional dollars look is your retail offering. Whether you have a market, pantry, or gift shop, this is an incredible opportunity to make a few adjustments to your assortment to increase revenue coming out of your retail sales.

Important facts to consider:
1 - Although we will certainly see a decrease in business travel as companies reconsider their travel budgets and reign in spending, business travel cannot come to a complete stop. For those travelers who still need to travel to conduct business, you will see a decrease in their overall spending - which means travelers who used to go out to eat and spend $20+/meal on their business trips will more likely be grabbing a quick meal from the pantry to reduce per diem cost of travel.

2 - Historically, in times of economic crisis, sales of comfort foods has shown substantial increases. This current decline is no different. Stock prices for companies such as Campbells, Kraft, and Procter & Gamble are actually overtaking stock giants as purchases of comfort foods are showing striking increases.

3 - Food prices are increasing and guests understand that as they are seeing the increases in their grocery bills at home. The price of cocoa, flour, rice, and corn have seen massive double digit increases in 2008. But many retailers have not responded to these market change, so they are actually losing money in their retail operations, because they are not priced according to these staggering cost increases.

How to effectively respond to these events:

1 - Increase the number and quality of your meal replacement options for your guests. Give them a reason to stay in, save money, and increase your revenue by providing them with a variety of healthy foods and comfort meals that are less than the cost of eating out. Going out to dinner for a mid-range meal and beverage now averages about $17.50. Pantries can now easily decrease their meal charges by offering quick meal options in the $5-8 range with a $2.50 beverage. That's a decrease to your guest of up to 60%.

2 - Increase your number of comfort items including chilies, soups, macaroni and cheese, pretzels, chips and salty snacks, cookies and chocolate. Be sure to stick with recognizable brands such as Kraft, Hormel, and Frito Lay as these are always the top sellers in times of crisis. These items will be incredibly popular for guests looking to stay in, reduce costs, and enjoy a tasty meal in the comfort of their room.

3 - Evaluate your pricing! Did you know chocolate manufacturers have increased their prices over 30% since January? Have you changed your pricing to absorb these additional costs? Many pantries and gift shops have not, so their margins are so low it is hardly worth using the retail space to sell the products. Many are even losing money, because the person who orders the products does not communicate the increased cost to the person who prices the products! For example, a King-Size Candy Bar with current inflation rates should sell for no less than $2.00-$2.25.

Take a good look at your pricing to be sure that you have adjusted your prices to maintain an average of 60% markup across your assortment - keeping in mind that products such as water and soda will have a 200%-300% markup.

To help our customers select an assortment that will increase retail sales and keep revenue numbers at your hotel to contribute to your property's bottom line, we recommend that every property offer the following products and pricing:

Products: Snickers, M&M's (plain and peanut), Butterfinger, KitKat, Twix, and Reese's Peanut Butter Cups
Pricing: $2.00-$2.50

Products: Stouffers Meals, Chef Boyardee Meals, Kraft Mac and Cheese Meals, Campbell's Soup at Hands, StarKist Lunch-to-Go
Pricing $3.50 - $6.00

Products: Grab Bag/King Size Salty Snacks - Doritos, Cheetos, Pretzels, Bakes Lays, Cracker Jack's
Pricing: $2.00-$2.50

We are in the midst of some troubling economic times - for some, the most staggering of our lifetime. Your hotel pantry is a tremendous asset to your bottom line. With the right approach and the proper and immediate application of a few basic retail principles, your Market can be a great value to both you and your guests!

 

A Few Tips to Avoid Giving Away Profits!

When running a retail operation of any kind, shoplifting is always a revenue issue that must be considered and effectively addressed. But how do you remain hospitable while trying to deter guests from walking out of your hotel pantry without paying for merchandise?

Try these useful tips for remaining polite while protecting your profits!

1. Have a price list in plain sight in front of the merchandise. Many hotels prefer not to price individual items. In this case, place a neatly typed price sheet in a frame to display on your merchandiser, so guests are clear that these are not free amenities.

2. Be aware of shoppers. Most pantries are located in the lobby and the majority are near the front desk. Be sure to maintain unobstructed views between the front desk and your retail operation. If you are under construction on considering adding a market or pantry, be sure to keep this in mind.

If someone enters the pantry, greet them by saying, "I'll be happy to check you out at the front desk whenever you are ready!" If you are not engaged with front desk activities, step into the pantry and ask if you can help them locate what they are looking for.

Door monitors that make a sound when guests enter or exit can be used if approved by your operations department. These serve as much to let the desk clerk know that there is a customer in the pantry as it does to let customers know that someone is aware they are shopping which can greatly reduce the inclination to sneak in and grab a free snack.

3. Avoid accusations or confrontations. Never speak confrontationally such as "Sir, you have to pay for those," or "Ma'am, that isn't free! If you see a guest take an item without paying for it, make eye contact and say, "Sir/Ma'am, May I ring that up for you?" or  "would you like me to charge that to your room for you?"

4. Never let a customer leave without paying in order to avoid an uncomfortable situation. It is a loss of revenue - and no one can afford those! Be polite, but be assertive.

5. Market your pantry! Let guests know at check-in that the pantry sells snacks and sundries for their convenience 24 hours a day. The clearer you make it to guests that these items are for sale, the less likely they will be to come down for a "free" midnight snack.

Other suggestions on ways to deter shoplifting? Please feel free to share!