Before we start, something you need to know about me. I like to keep things simple. Keeping it simple makes things easier to implement and judge. Occam's razor is a theory that says that the simplest solution is often the best and my aim with this series is to do just that offer simple solutions that will give you the best chance of success.

Five years ago your hotel (like most other businesses) was valued on its net profit, its ability to generate a return and the certainty of that return. Then it all changed - the value of a hotel could be based on the number of gaming machines.

Now we have come full circle and are back with net profits. So now it's time to get back to basics, it's time to get back to the fundamentals - how do I increase my net profit?

This series of articles will concentrate on the key ways to increase your net profit. Specifically looking at:

1. Sales
2. Operating Margins
3. Staff

This issue will focus on Sales.

All else being equal increasing your total sales will increase your gross and therefore your net profit. So how do you increase your sales?

In very simple terms your sales is determined by 3 things:

1. The number of patrons you have,
2. How often they buy from you and
3. How much they buy from you.

Now honestly answer the following question. Hand on heart; for the last month do you know:

1. How many patrons walked through the door?
2. How many times did they visit during the month?
3. How much did they buy from you?

Be honest now, do you have a report or something concrete that will give you this information? Remember you can't fix what you don't measure. Having an estimate or educated guess isn't enough. So if you don't have an accurate measure let's put one in place. Focus on these simple suggestions for each area:

The number of patrons you have: Try to break these down as much as possible:

- Number of patrons who enter your bottle shop

- Number of patrons who enter the hotel and if possible, where they are spending their time (i.e. the number buying from the gaming bar, restaurant bar, or dance floor bar).

How often they buy from you: This involves how many times your patrons walk through the door or visit the bottle shop.

- Do they visit once a month or once a week?

How much do they buy from you?

- During each visit how much does your patron spend?*

*A simple way to work this out would be to divide your total sales by the number of patrons - this is an average and the more accuracy you can achieve with this the better the decisions you can make.

Once you can accurately measure each of these areas you can then make the best decision of which area you want to target and how to target the area.

One of the best examples of collecting the above information is Woolworths with their Everyday Rewards Card. I'm going to detail an experience of mine to give you a real life example of how they use this information.

I recently purchased an electric razor so I no longer needed to use normal razors. After a cleanup I found that I still had some unused Mach 3 razors. Now because of how expensive these razors are, I decided to use them up – but unfortunately I couldn’t find the handle for them. I went to Woolworths bought the old Mach 3 handle and used the Rewards card. 2 weeks after my purchase I received a gift from Gillette. It was a new Fusion Razor!

Based on the information they received from the Reward Card Gillette sent me this free razor to get me to convert to the newer model Fusion razor (obviously to make them more money in the long term). There is no way they would have been able to do this without collecting the data first.

Once you have this information you can then analyse it and target them as needed. I have listed some generic examples of each of the areas but please understand that you need to develop a specific strategy that meets your hotel.

How to increase the number of patrons:

Marketing

There are many different types of marketing all of which have different aims. Your specific aim is to get more people through the door. So make sure your marketing meets this aim - for example, do you want more 18 - 30 year olds? Connect to them via social media (Facebook, Twitter etc). Don't forget to track the success of your marketing.

How to increase the number of visits:

Because you now know why your patrons visit your hotel and when you can tailor your schedule to take advantage of this:

- Which bands play on which nights
- Meal deals
- Types of functions, etc

How to increase purchases:

Real life example: I was in Sydney recently on a training seminar. It was Monday night and a group of us went out for drinks and dinner. We initially intended only to have a drink before finding a second place to eat. What actually happened was that we spent most of the night there. How did the business achieve this result?

- Unprompted they offered to setup a bar tab (as I handed by credit card over to pay for the first round). Even though I declined the tab it was a great strategy and asking unprompted was a great service.

- They also had meal specials which made the decision to stay or go an easy one.

If you understand why your patrons are there you can have strategies to increase how much they spend:

The simple conclusion:

You can't fix what you don’t know. Look at the information you are currently from you patrons. If you can get more (and quality) information you can provide more of what they want which in turn will increase your sales and profits!

- Ravi Sharma, Business Advisor