Seeing empty units as lost revenue could be a way of creating urgency and driving sales.
By Steve Moran
It is not true so much any more, but back 20 years ago you could walk into an upscale hotel late in the evening and get a real bargain for an empty room — as long as you were actually willing to walk away if you didn’t get good deal. The reason for this was simple . . . an empty hotel room is worth zero dollars and getting just about anything for that empty room was — in effect — pure profit.
This rarely happens anymore because most of the time the front desk folks don’t have the discretion to make those deals.
The big idea was that these operators were looking at empty rooms as representing real lost dollars, and capturing those lost dollars was a big deal!
Oakmont Senior Living and Lost Dollars
Earlier this year, I was at the Interface Senior Living Conference in Los Angeles, where Courtney Siegel, the VP of operations for Oakmont Senior Living, was a panelist. One of the things she said was that Oakmont is very deliberate about seeing empty units as lost revenue as a way of creating urgency and driving sales. It also has a big impact on how much money they need to budget to get to full capacity.
It might work something like this (my numbers, not hers):
You take over a new property that has consistently been running with 20 empty units (80% occupancy). Those 20 units represents $80,000 per month in revenue loss, almost a million dollars a year. You look at that monthly loss and take, say $20,000 of that lost revenue and spend it on extra marketing as a way to capture more of that lost revenue.
The other thing they do that is very effective is to put 5 people on the ground during the fill-up phase. This includes the executive director, two sales people and two support people.
You can see part of my interview here: