By Triana O'Keefe, editor Australian Hotelier
Without a growing customer market, and with added regulatory and legislative pressures, the need for hoteliers to reinvest and remain relevant is more pressing than ever before.
The need to innovate and the ability to adapt to changing market conditions is what separates progressive operators with growth prospects from traditional operators whose only route to improved financial performance is through cost reduction.
According to Ferrier Hodgson's Morgan Kelly, in order to retain and grow market share, operators must entice customers to their venues over other offerings in a saturated market.
"Customers now have higher expectations than ever before," he said.
"Small bar atmospheres, point of difference themed venues, quality food and beverages, design decor – even all this is sometimes not enough."
Kelly urges operators to keep agile in a rapidly evolving market by constantly reinvesting in their venue. He told Australian Hotelier operators who can’t afford to compete are caught up in a downward spiral of reduced relevance, customers, revenue and prospects for longevity.
“General operating expenditure, including repairs and maintenance, facilitates the ongoing operations of a hotel,” he said.
“Capital expenditure represents an investment with returns forecast beyond the current financial year. A long term view must be kept in mind, otherwise operators risk becoming obsolete and losing their customer base.”
Pat Connolly of Colliers International suggests hoteliers should consider two markets when planning to make improvements to their properties.
"First, they must consider their own day to day customers – the eaters, drinkers and punters – or in other words, their income," he told Australian Hotelier.
"The second is the hotel property and business market – the person who will eventually purchase the hotel – or in other words, the value."
Connolly explains the positive effects of renovations and improvements will typically become apparent within the first market – income – well before it is noticeable in the value.
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