Not sending the LOBBYLetter at 6.30am anymore as we now have a daughter sleeping way better, so here I am, finishing this letter at 6.48am.
And this week I want to talk about why every hotel owner wants a stronger ADR (Average daily rate).
And that sentence alone could probably fill half the meetings happening in hospitality this week.
From we need to push the rate to we need a better guest mix to we need less dependency on OTAs.
All true.
But very often, when people talk about ADR, they talk about it like it’s only a revenue management topic, a spreadsheet topic. Something you solve with compsets, distribution channels, seasonality, demand curves, and someone in the room saying YYYYYYeeeeeeild with enough confidence that everyone stops asking questions.
And of course, all of that matters, but I think there’s another layer. A more emotional one and a more brand one.
Because at the end of the day, ADR is not just the price you put on a room, but it’s also the price people are willing to believe.
That’s the part we don’t talk about enough. And also because I know that a lot of readers here don’t own hotels, but they use them, very often. And sometime we don’t understand how the pricing works.
You can decide tomorrow morning that your room is worth 280€. It’s cool, bold. Congratulations to the room. But if the guest doesn’t understand why, if the promise is unclear, if the place looks like ten other places, if the story doesn’t create desire, if the experience doesn’t feel specific, then 280€ is not a strategy.
It’s a number with confidence issues, but brands can empower ADR.
But not because the logo is beautiful. Not because the font is elegant. Not because someone wrote timeless sanctuary on the website and then went for lunch.
Brand empowers ADR when it gives people a reason to pay more before they even arrive.
The thing with the brand globally in hospitality is that it reduces doubt, creates desire, makes the promise legible. Let’s keep in mind that out of Instagram, it helps the guest understand what world they are entering, what feeling they are buying, what kind of stay they can expect, and why this place deserves to be chosen instead of the cheaper one three tabs away.
That’s where brand becomes financial. As what I call the permission, the permission to charge more.
And this is where it gets interesting for independent hospitality. Because the answer is not always to join a big brand, even if affiliation can bring a tons of stuff from distribution, loyalty, bookings, and sometimes financing comfort. The answer is also not to stay independent and hope that authenticity will magically pay the bills, which is adorable but not always accepted by banks.
The real question is simpler. Have you built enough clarity for people to accept your price?
Because keep in mind that guests pay more only when the place makes sense.
