As you may be aware, one of the Hoop's main products is the GoodStay service. We've designed it to boost hotel service sales. This innovative solution drives up sales and average order value (AOV). It also slashes room service costs. Furthermore, it enhances guest experiences by aligning with modern consumer habits.
In this article, we'll go into a detailed analysis of room service financial metrics. We'll explain how Hoop's GoodStay economy operates.
In this article, we'll go into a detailed analysis of room service financial metrics. We'll explain how Hoop's GoodStay economy operates.
Current Hotel Performance
Let's start with some baseline figures. Assume the room service handles about 20 orders daily. That totals 7,300 orders per year. The average order value stands at $18. In a 200-room hotel, the department rakes in $340 daily and $123,000 per year.
The room service department boasts a 50% margin. So, the daily profit from room service amounts to $170 daily and $56,500 per year.
The room service department boasts a 50% margin. So, the daily profit from room service amounts to $170 daily and $56,500 per year.
Indicators Post-Hoop Implementation
15% Increase in Order Volume
With the introduction of Hoop, order volumes see a notable increase. Millennials and Zoomers, who prefer online ordering over call-in ordering, drive this trend. Hotels that use Hoop see a 15% surge in order volumes compared to traditional call-in ordering. This converts to 23 orders daily instead of the previous 20, amounting to an extra 1,095 orders per year.
With the introduction of Hoop, order volumes see a notable increase. Millennials and Zoomers, who prefer online ordering over call-in ordering, drive this trend. Hotels that use Hoop see a 15% surge in order volumes compared to traditional call-in ordering. This converts to 23 orders daily instead of the previous 20, amounting to an extra 1,095 orders per year.
20% Boost in Average Order Value
The implementation of Hoop also leads to a 20% spike in average order values. By using recommendation systems, discounts, and personalized offers, the average order value climbs from $18 to $21.
The combined effect of increased orders and higher average check sizes results in an extra $46,800 in annual revenue.
Factoring in the high margin of room service service (up to 50% according to various estimates), the hotel stands to earn an extra $23,400 in annual profit. The product ownership cost hovers around only $3,500 per year.
In other words, by investing $3,500 the hotel gets 700% return per annum. Sounds like a scam. But this is digitalization in action. However, it should be noted that if the hotel has poor service quality, launching digital channels of interaction with customers will not have the desired effect, and in some cases will only exacerbate the problem.
The combined effect of increased orders and higher average check sizes results in an extra $46,800 in annual revenue.
Factoring in the high margin of room service service (up to 50% according to various estimates), the hotel stands to earn an extra $23,400 in annual profit. The product ownership cost hovers around only $3,500 per year.
In other words, by investing $3,500 the hotel gets 700% return per annum. Sounds like a scam. But this is digitalization in action. However, it should be noted that if the hotel has poor service quality, launching digital channels of interaction with customers will not have the desired effect, and in some cases will only exacerbate the problem.
Streamlining Staff Time
Traditional phone-based order processing consumes considerable staff time. Assuming 10 minutes per order and 200 orders daily, the hotel spends over 3 hours daily and 1,200 hours yearly on phone orders. This equates to $12,000 in lost wages per year.
Additionally, staff spend time checking in-room menus during guest arrivals. Even if it takes only 1 minute per room, it takes 1,200 hours per year, which is equivalent to $12,000 in extra salary costs per year.
Adopting the Hoop service streamlines team time by handling all menu updates and adjustments. This enables quick changes and the removal of irrelevant items. It allows staff to focus on personalized service for older guests. At the same time, they can cater to the preferences of younger generations.
Additionally, staff spend time checking in-room menus during guest arrivals. Even if it takes only 1 minute per room, it takes 1,200 hours per year, which is equivalent to $12,000 in extra salary costs per year.
Adopting the Hoop service streamlines team time by handling all menu updates and adjustments. This enables quick changes and the removal of irrelevant items. It allows staff to focus on personalized service for older guests. At the same time, they can cater to the preferences of younger generations.
Reducing Printing Costs
Traditional menu printing can be costly. Designing and updating menus costs $1,400 per year. There's an extra $140 (10%) for reprinting broken copies. And Hoop can replace all the printed materials in the rooms: the minibar rates, spa menus, discount coupons etc. Hoop eliminates the need for printed materials. It saves on production costs and resource use.
Risk Mitigation
Various risks, including inventory management, reconciliation, theft, and problem concealment, can impact revenue. A conservative estimate pegs these risks at 5% of revenue, amounting to $6,100 per year.
Customer Satisfaction
Many studies confirm that online ordering compared to call-in ordering can increase customer satisfaction. Prompt resolution of problems can also contribute to revenue growth.
We looked at how guest satisfaction impacts extra revenue. We found that, even by conservative estimates, the incremental effect can be as much as $67,100 per year. When our editor read the article, he jumped up from his chair. He opened the windows wide open and exclaimed, "God, it's getting too hot." He can be understood, but we are still ready to share detailed calculations with those who are interested in data and appreciate numerical arguments ;)
Let's take the example of a hotel with 70% occupancy rate: it serves 12,775 clients per year. We assume the client stays in the hotel on average 4 days per year. Based on the average revenue per client of $122 per day, we estimate the lifetime value of the client (LTV) at $488 per year.
We looked at how guest satisfaction impacts extra revenue. We found that, even by conservative estimates, the incremental effect can be as much as $67,100 per year. When our editor read the article, he jumped up from his chair. He opened the windows wide open and exclaimed, "God, it's getting too hot." He can be understood, but we are still ready to share detailed calculations with those who are interested in data and appreciate numerical arguments ;)
Let's take the example of a hotel with 70% occupancy rate: it serves 12,775 clients per year. We assume the client stays in the hotel on average 4 days per year. Based on the average revenue per client of $122 per day, we estimate the lifetime value of the client (LTV) at $488 per year.
Summary
The hotel's net profit from using the Hoop's GoodStay service is $23,400 per year. The hotel saves $24,000 in labor, another $6,100 from risk reduction, and $1,540 on menu design and printing costs. Let's deduct the service cost of $3,500 and $250 labor cost.
In total, the hotel receives an extra benefit of $51,290 per year from using the electronic menu service.
In total, the hotel receives an extra benefit of $51,290 per year from using the electronic menu service.
