Hotel Revenue Management Meets the Recession - By Neil Salerno
Well, it's déjà vu all over again, the hotel industry is facing severe business challenges, how we react to those challenges will determine how quickly we can return to some semblance of profit growth. We have been through this before, but, this time, we have no idea just how severe it will get or how long it may last. I've heard from hoteliers all over the country, apparently many hotels are already feeling the pinch. What will you do?
Our industry has always tended to be reactive, rather than current, to changes in the economy. After all, hotels don't create travel, they serve it. There is little hotels can do to induce people to travel. People don't travel for the purpose of staying in hotels, they stay in our hotels because our hotels are located where they want or need to be.
When they do travel, they will continue to choose a hotel based upon whether or not its location, facilities, and amenities present the best value in the market. The question is how well will hotels compete for a larger piece of a shrinking travel pie. There are business people, all over the country, devising ways to reduce travel in 2009 and leisure travelers will, no doubt, follow suit.
When times get tough, we always have choices. Perhaps the easiest choice is to simply dig a hole, jump in, and curl up into a fetal position until the economy recovers. Of course, cutting costs and sitting-out the recession could easily lead to permanent damage to your business base.
Before you decide to sit it out by drastically reducing expenses, consider the bad consequences which are caused by lowering service levels. Sure, there is always some fat which can be cut-off without causing a negative impact on service, but caution, there is rarely any fat contained in your marketing program. Cuts in marketing should be done as a last resort only.
The Travel Pie is Getting Smaller, Will Your Slice Shrink Too?
There's no doubt that the competition picture heats up during a downturn. Upper-scale hotels will compete with mid-scale hotels, mid-scale with limited service hotels, and so on. That upscale hotel down the street will now be after your business. Can your hotel compete? Are you ready to join the battle?
For most hotels, it will be important to maintain a balanced attack among all sales channels. Personally, I don't agree with those articles suggesting that hotels should consolidate all their efforts into the Internet and electronic channels, alone. In my opinion, some of those articles are a bit self-serving. I believe that now is the time to escalate direct group sales efforts, refine front desk training, practice revenue management, and create new local sales partnerships.
It is also time for every hotelier to understand the power of the Internet. If you don't believe, by now, it may be too late for you. Experts agree that, today, more than 70% of all travelers use the
Internet to research and/or book hotels online. Certainly, the vast majority of hotels have an online presence, but the quality of that presence differs substantially.
For hoteliers who want to stay in the game, your Internet presence is critical. You simply can no longer ignore how well your website is performing. I don't mean how many visitors your site gets, but how many reservations its producing.
For most hotels, it isn't a matter of increasing Internet spending, it's simply a matter of "spending it right". I sometimes shudder to see the big dollars being spent on website designs, SEO, and marketing efforts which are generally dysfunctional. This writer, along with many others, have published numerous articles highlighting the many do's and don'ts of hotel website design and marketing. Now that every penny counts, take the time to learn how to make your site a real business generator.
Strengthen Your Marketing Efforts
If all the data about the power of the Internet are correct, marketing on the Internet should become the central focal point for growing your slice of the pie in 2009. It is no longer adequate to simply have a website. Your hotel's website can be used to support your entire marketing program, it's a matter of learning how.
Your website can be used to announce and promote new packages and promotions, Re-think your information distribution methods, do you find that you are still printing brochures and rate cards with more and more left over every year? Are you using your website to promote group sales with "Hot Dates" and an online RFP? Are you using your site to publish guest experience testimonials? Are you selling location and activities first and your hotel second?
Take a good look at your website. Can people find it in a generic search? When they find it, does it look like a homemade template? Does the text sell area attractions as well as the hotel? Does the text drive visitors to your booking page? Did you pay a ton of money to have it developed and promoted, but it still doesn't produce business as it should? Does the developer of your site act like a vested partner in the performance of your site, if not, it may be time to change.
2009 will probably be a difficult year for our industry, but it's time to work smarter, and harder, to secure your place in the marketplace. Make marketing your first priority in 2009.
Neil Salerno, CHME, CHA
Hotel Marketing Coach
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