Hotel revenue management: Breakfast included?

Breakfast is the first and the most important meal of the day - not least for hotel guests. And hotel managers shouldn’t forget it. According to countless surveys, guests consider breakfast to be the most important amenity offered by a hotel and the one they most look forward to.

Text: Lois Hoyal // FOTOS: iStock

Let’s not forget that a good breakfast is a clever and cost-effective means for hotels to differentiate themselves from the competition: cooking a few extra omelettes costs far less than promising flat screen TVs in each room. In addition, breakfast is often the last touchpoint with guests before they check out, allowing hotels to add a final personal signature to their guests’ experience.

It’s easy to get carried away though. A sumptuous breakfast buffet can become cost prohibitive for hotels, particularly if guests don’t eat all of it or realistically only have time for a quick cup of coffee and a croissant before their morning meeting.

Price lining your hotel breakfast

At the same time, breakfast costs, particularly in city centres, are soaring and often exceed executives’ travel expenses. Indeed, according to HRS Group analysis, breakfast in German city centre hotels costs up to 40% more than the national average: business travellers have to pay an average of 12 euros for breakfast in a three-star hotel, rising to 20 euros for a four-star hotel and 38 euros for a five-star hotel. This contrasts starkly with the statutory food allowance of 4.80 euros for breakfast.

That’s why, in these budget-crunching times, guests are often tempted to reject the option of breakfast if it isn’t included in the room rates and if costs are outside the daily travel budget provided by their company. The advent of coffee shops means it’s all too easy for guests to grab a quick breakfast on the way to a meeting.

On the other hand, excluding breakfast from the room rate naturally encourages guests to eat and spend money outside the premises that they could be spending within the doors of the hotel. And not eating breakfast within the hotel could also persuade them to eat out at other mealtimes.

Upsell or complimentary breakfast – be flexible to succeed

Flexibility seems to be the best all round approach: some guests know they want breakfast and are prepared to pay for it in the room rate, others don’t want it or don’t know when they make the booking whether they will have time for breakfast. In response, savvy hotel managers should present different options. After all, standard yield management theory tells you to sell the right product to the right customer at the right time. And this certainly applies to whether breakfast is included or excluded from the room rate.

For more price-sensitive guests it is worth offering a budget option, namely a room rate excluding breakfast. For the majority of guests who want good value but are prepared to pay a little bit more, offer your standard rate, including breakfast. This will be the most popular option, particularly among midscale category hotels, and will allow you to make money on breakfast. Some guests, meanwhile, refuse to stay at a hotel that doesn’t offer a breakfast inclusive rate and expect to dine like a king, feasting on a lavish breakfast buffet. You can target your higher rates at these customers.

Innovative approaches can meet differing guest requirements. For example, a guest with an early business appointment can ask for lower-priced “early bird” snack option, a quick continental breakfast or breakfast on the go from the hotel, excluded from the room rate. Small hotels could partner with a local bakery or café to cater for breakfast for guests willing to pay for breakfast included in the room rate.

At the end of the day, breakfast is an easy upsell that can be added to your guest’s tab and is a useful means of generating additional revenue. Getting a free breakfast included with the room rate can be very influential in business travellers’ choice of hotel. Breakfast is big and smart hotel managers know it.

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