How Soft Is Your Hotel's Economic Landing? / Carol Verret Consulting and Training / April 2001

Carol Verret Consulting
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How Soft Is Your Hotel's
Economic Landing?

Carol Verret / April 2001

The Federal Reserve planned for a ‘soft landing’ of the economy, the ‘impact ‘, however, has been softer for some than for others. Those hotel sectors most impacted are those that were in areas dominated by tech companies and extended stay and limited serve products that were in overbuilt markets. While pilots say that ‘any landing you walk away from is a good one’, merely surviving isn’t sufficient for owners who have been used to double-digit revenue growth for the last five years.

PriceWaterhouseCoopers is predicting the slowest rate of REVPAR growth since 1992 at 2.8%, which is just above the rate of inflation (HotelOnline, March 20, 2001). Given the rising cost of energy, that puts many hoteliers at a deficit even if they just maintain current market share.

The summer of 2001 will probably hold challenges that many hotel managers and sales departments haven’t dealt with before. Instead of managing the yield produced by high demand they will need to generate demand from market segments impacted by lay-offs, high gasoline prices and declining disposable income from deflated stock portfolios. Generating demand is a skill that hasn’t been required in most markets for several years.

The addition of new product and the proliferation of brands stimulated by increasing demand over the last few years also mean a decline in franchise contribution for many hotels. Ask not what your franchise can do for you – go look in the mirror and figure out what you can do for your hotel in the short term.

How can you prepare your property to maintain market share in these circumstances?

1. Evaluate your rate positioning against your competition every day. Adjust your ‘drop dead’ rates for the night and short lead reservation rates accordingly. Ensure that all reservation sources that can be immediately impacted are notified of any changes that you may make based on your forecast. These include your central reservations system, internet based distribution sources, and central reservations sources for your area such as resort associations. Develop ‘fast and dirty’ rate driven flyers for local visitor centers, rest areas and other sources of walk-in and short-lead reservations.

2. Get your sales department out on the road making sales calls. Walking in doors, keeping existing clients close and prospecting for new ones can stimulate short lead demand. Grass roots marketing and sales work in most markets. Encouraging smaller accounts and groups you may not have been interested in last year helps to buttress occupancy. The summer of 2001 is about market share. Evaluate the sales skills of your staff and provide immediate training if they have deficiencies. Ask for and analyze their sales reports. Are they generating leads or only responding to inquiries? Support them in their efforts by accompanying them on sales calls and giving the potential client your personal assurance of quality service for their guests.

3. Empower and motivate the front desk to capture every same day reservation and walk-in. Typically, we suspend incentive programs during the summer because demand is high and we believe that we will capture our share of demand without them. It is far easier for the front desk to let a walk-in go back out the door than to go the extra mile to close them. I recall a front desk associate in a newly acquired hotel who had allowed a walk-in to leave on a night when we were running 30%. She had been given the authority to quote a very low ‘drop dead rate’. When asked why, she replied that ‘the more people I check in, the more work I make for myself.’ Your front desk associates may not articulate it the way she did but if there is no incentive for them to sell a room because they get paid the same whether they do or not and chances are you will never know how many walked out the door -- why would they make the extra effort to sell a walk-in? Set a reasonable rate range every night that they can quote with confidence for walk-ins, same-day and short lead reservations and give them a reason to sell it.

4. Give your guests the highest level of service they can imagine – exceed their expectations. Make your expectations of quality customer service clear to your employees in terms of empowering them to satisfy the guest and resolve guest complaints. Don’t limit this to the front desk but include all of your employees. Value-add by putting complimentary coffee in the lobby and a bowl of apples on the front desk. (I am assuming that many of you already do this – I hope I’m right.) Demonstrate to your staff what you mean by modeling customer service behavior with guests -- show the staff your level of commitment to customer service.

In all likelihood, it is going to be a tough summer for a lot of hoteliers. Minimize the damage and maintain or increase your market share against a competitive set that may be ‘asleep at the switch’ until it is too late. Be proactive and flexible – the race belongs to those that are quick to respond to changing conditions.

Carol Verret and Associates Consulting and Training offers training seminars and consulting services to the hospitality industry. Carol’s latest training product is a comprehensive customer service training system, ResultsWOW. For a complete description of her services, log onto her web site at http://www.carolverret.com/ or email her at carol.verret@worldnet.att.net.

**Contact:**
Carol Verret 3140 S. Peoria St, PMB 436 Aurora, CO 80014 (303) 618-4065 Web Site: http://www.carolverret.com/ Email: carol.verret@worldnet.att.net

Also See:	The ‘Value Proposition’: Marketing Yourself to Prospective Employees / Carol Verret / January 2001
	Generation Y: Motivating and Training a New Generation of Employees / Carol Verret / November 2000
	Why Customer Service Seminars Don't Work / Carol Verret / October 2000
	Creating a Culture of Customer Service / Carol Verret Consulting and Training / Sept 2000
	FAT, DUMB AND HAPPY – The Seasonal Boom and Bust Cycle / Carol Verret / August 2000
	Surf's Up - Ride the Wave or Miss the Boat -The Effective Use of Technology in Hotel Sales / Carol Verret / July 2000
	Measuring Effectiveness of Hotel Sales Departments / Carol Verret / June 2000
	Hotel Sales Training - The Need for Immediate Results / Carol Verret/ May 2000

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