Management

Recession Lessons: What Will Drive Hotel Sales & Revenue Management in 2010 - By Carol Verret

- Did you catch the revised forecast from PKF? PKF-HR is now forecasting lodging demand to post a quarterly year-over-year increase during the first quarter of 2010, thus ending eight consecutive quarters of declines. On an annual basis, PKF-HR is now forecasting lodging demand to rise 1.9 percent in 2010, up from the 1.6 percent increase forecast back in September. (HotelNewsNow, 12/14/09)

The increase in demand of almost 2% may not seem like much but it is an increase and will likely be felt by most hotels where the entry of new supply into the market is negligible. What lessons have we learned from this recession that will make us better equipped to maximize the opportunities that will present themselves in 2010.

In the last great downtown when I was new DOS, I was often brought in to reposition and 'turn around' hotels so the banks and receivers could sell them. Yes, if I was successful I worked myself out of a job but the lessons that I learned from that experience have served me well. While the difficulties of the past year have been extreme, DOSs and Revenue Managers have learned things that will serve them well going forward although it may not be apparent now.

December is a time to reflect on what this recession has taught us and identify those lessons learned that have brought us through this brutal past year. The recession has changed the game in many respects - how we play that game in 2010 will be critical.

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Revenue Management:
Rate Slashing. If there is one thing to be learned it is that rate slashing alone leads to a vicious cycle of decreased revenue. Putting a 'floor' under rates can be part of a well thought out plan to use that strategy to increase market share so you are better positioned to push rates. Value propositions are still the most important thing that we bring our guests. It is to whom and how we market that value proposition that counts. Witness the recovery in the luxury and upper upscale sectors of the industry. Value is not a price point but, as Peter Yesawich said so well, it is the perception being able to afford something that a customer may not otherwise be able to afford.

Rate Parity. Rate parity across all channels is a matter not only of the trust of our guests, it is vital to protecting the revenue from all market segments. Those who haven't been in parity complain about the RFPs booking outside of their agreements by going to the OTAs and opaque channels where someone thought they could get away with posting lower rates. Those that haven't posted rates consistently across channels have watched group blocks at a higher rate dribble away and left money on the table for the sake of a few more rooms for a given period.

Social Networks. Social networks have gained a prominence in this recession that could not have been foreseen eighteen months ago. Working through these channels has provided smart marketers a platform to present their value proposition with immediacy and targeted reach like never before. Twitter has given revenue managers the ability to push out packages and 'deals' that become viral and drive short lead business. Unfortunately, Twitter deals are part of the issue of the consumer booking short lead. As Tweets will now appear on search engines when a hotel search is done, this is a lesson that needs to be learned quickly if it hasn't already been mastered.

Sales:
Groups. The traditional corporate group with its high end F&B component is on life support for the foreseeable future. The verticals have changed dramatically in the past eighteen months. Government per diem is now more attractive and while they may not be the 'glamour' groups, they are a 'hot' market. Alternative energy will become mainstream in 2010 and those verticals that have arisen as a result of the changing economic dynamic prompted by stimulus funding are the new 'hot' sectors.

RFPs and LNRs. The large RFPs have been brutal in their negotiations this year and in many cases failed to deliver the volume that was their 'ace'. Locally Negotiated Rates have fared slightly better in that there is a personal relationship with the hotel and the sales person. The corporate travel sector is the second to stage a 'come back' after the leisure sector. Small to medium companies with 'unmanaged' travel and smaller volume drive rate in this sector as they know they don't have the clout to demand mega low rates. Small is good!

Social Networks. Hotel and personal branding are critical on social networks and provide a space that is immediate to potential clients. A robust hotel profile page on the majors is becoming as important if not more important than the web site itself. Personal branding on social networks is vital to the sales effort. Customers want to buy when they are ready and are becoming immune to the constant barrage of product pushing messages and emails from hotel sales people. Social networks provide a platform that the customer can use to get to 'know' both the hotel and the sales person. Social networks are also a dynamic sales tool for the sales department providing much more robust and current info than traditional sources like Hoovers.

In this traditional slow period for hotels, take a moment to reflect on what positive things have been learned in the recession and how you can use these lessons for a more profitable New Year in 2010.

Carol Verret Consulting and Training provides sales training with an edge and measurable results revenue management training that drives incremental revenue and market share. She also provides consulting services in these areas. She has provided keynotes and seminars both nationally and internationally to hotels, management companies and related associations as well as having articles published in national and international publications. Check her out on the web site www.carolverret.net, the www.hotelsalesblog.com and on LinkedIn and Twitter. She can be reached at (303) 618-4065 or at carol@carolverret.com.

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