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Wrap Up: Fourth Annual Resort Management Conference; 
Paul Schultz Chosen the Resort Executive
of the Year for 2003 
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Reports Indicate Optimistic Outlook for Leisure Industry

MCLEAN, VA (May 13, 2004) – How “The New Normal” is impacting a range of issues, from consumer behavior to distribution channel management and profit control, shaped the solutions-driven agenda at the Fourth Annual Resort Management Conference held at The Greenbrier Resort recently. 

The over-riding consensus was that resorts are well positioned to benefit from all aspects of today’s state of affairs, with three areas crucial to their success: (1) knowing how to manage the new network of distribution channels and the promotional opportunities associated with them; (2) maintaining an ever closer awareness of the distribution and consumer behavior landscape and (3) managing profit by emphasizing those revenue centers that have the highest margins.

Among other findings and highlights at the resort industry event, which was sponsored by the Hospitality Sales & Marketing Association International (HSMAI); the University of Denver’s School of Hotel, Restaurant and Tourism Management; and the International Resort Managers Association (IRMA), are:

The Internet is a huge boon for raising the visibility of many remotely located and/or independent resorts.  However, managing the distribution channels that comprise the web is a complex task requiring expertise in promotions and yield management and an awareness of the constant changes that would affect the resort industry.  Third party travel websites have spent billions promoting travel to American consumers, and while resorts appreciate the incremental business, they resent the discounts and fees paid to the websites for bringing in the volume.  The question that was raised was: Is the hospitality industry too beholden to these third party sites or is it a new paradigm for business the resort industry will learn to manage?

The consumers of 2004 are sophisticated, but they are also looking for a deal, stated Peter Yesawich, president and CEO of Yesawich, Pepperdine, Brown & Russell in his general session keynote address.  Delivering on ever-escalating expectations while managing the cost of services demanded is the challenge of the day posed by travelers to resorts. 

The growth in leisure travel over the last two years is a strong indicator that the economy is bouncing back, which is especially good news for the leisure-oriented resort industry.  But, the demand patterns for hospitality have shifted.  Still substantially down are the business travelers who frequented downtown and resort hotels alike.  A strong mainstay of the resort industry, the business meeting is no longer the bread and butter of the hospitality industry.  Surprisingly, it is the leisure travel sector that has grown larger than the commercial sector for the first time ever.  In fact, according to Mark Lomanno, president of Smith Travel Research, who headlined a general session, May, 2004 is anticipated to be a record month for the industry, selling more hotel rooms than ever before.

Resorts managed the last downturn better in terms of average rate than the industry in general, so the recovery will mean a shorter distance to regain the rates of 2000.  The economic rebound so far, according to Smith Travel Research, is an occupancy-based recovery.  This news circles back to the issue of revenue management. Resorts are in the unique and enviable position to have more revenue centers from which they can profit.  Smith Travel reports that managing profit will come down to better yield management and harvesting the revenue centers that are available. 

Peter Rainsford, director of the School of Hotel, Restaurant and Tourism Management, stated, “The feedback from this year’s conference has been so positive.  We have already started the planning process for next year and expect it to be an even bigger success.” 

Also on the news front at the conference was the announcement of the formation of a charter committee to establish a Resort Marketing Special Interest Group under the auspices of HSMAI.  Comprised of resort sales and marketing executives, it will address the interests of those within the resort industry and provide a forum to exchange best practices and maintain close tabs on hot issues that affect resort revenues such as distribution, Internet marketing, revenue management, CRM and other evolving topics. This new group is an ideal solution for the resort executive who wants to be connected to others for quick updates on current topics and quick idea exchange for dealing with the issues unique to resort marketing.

Additionally, Texas hospitality industry veteran Paul Schultz, who oversees the management and operations of four hotels and a convention center in southeast Texas, was chosen as the Resort Executive of the Year for 2003 at the conference.  The honor is bestowed on an individual that has demonstrated superior management ability, a commitment to staff training and motivation, active participation and leadership in lodging industry association activities, support of legislation beneficial to the lodging industry and leadership within his or her community.

The following is a brief highlight of the sessions:

General Session: The New Normal, Travel Trends

A look at the latest research about travel trends from Peter Yesawich, president and CEO of Yesawich, Pepperdine, Brown & Russell.

Five trends that have affected travel:

         1. Legacy of 9/11 and Iraqwarphobia
         2. Languishing economy
         3. Evolving social values
         4. Shifting demography
         5. Widespread use of the Internet (the greatest impact)

  • The difference between business and leisure travelers is dissolving as far as travel decision-making, choice of hotel, etc. 
  • Bigger focus on family (“togethering”): 71% of parents want more time with family. Families, extended families and friends are inclined to take vacations together, which translates to larger groups making reservations together (80% of adults have done this). 
  • “The Affluent Attitude” includes 10 years of travelers having status levels, (i.e. platinum and gold cards) which make them feel entitled to being treated like a VIP.  These are the new customers.
  • Everyone wants the “best deal”—there is no status in overpaying only in getting the best rates for travel.
  • Brand awareness is less important.  Those who felt it was too risky to choose a lesser known brand dropped from 67% in 1994 to only 50% in 2003. “Price loyalty” overrules  the old and now outdated concept of “brand loyalty”—customers want value.  The concept of giving good service will yield brand loyalty is no longer the case.
  • Changes in choice of vacation: 81% want to “try out a new place”—the “been there done that” mentality.
  • Patterns in vacation lengths: 5 days+ 19%; weekday less than 4 days 22%; weekends less than 4 days including Sat. 59%.
  • Greater interest in personalizing products, packages.
Follow-up panel highlights
  • The sophistication of revenue management has had to improve to deal with the drop in lodging demand; resorts want to track revenue/day/customer.  Resorts have to be realistic about who is coming back to the resort and match products and services to them.
  • The Internet is the great brand equalizer—it allows independent hotels to emerge in the larger consumer market.
  • Improve add-on revenue with other services.
  • Group business has reduced lead times.  To capture Sunday-Thursday business, look at segment trends and determine what product/service should be developed from asset management perspective to support business over the next five years.
General Session: The New Normal for Distribution and Channel Management

Addressing the complexities of channel management and providing strategies to help resort operators maintain control over their own inventory.

Panelists: Carrie Campbell, director of Lodging, D.K. Shifflet & Associates, Ltd.; Richard Chambers, president, TravelCLICKinteractive; Bill Peters, vice president of Reservations, Outrigger Hotels & Resorts;  Jim Young, senior vice president, InterContinental Hotels Group; Moderator: Robert A. Gilbert, president and CEO, HSMAI

  • A DK Shifflet survey of 45,000 adults who traveled in the last three months indicated hotel business evolving from two-thirds commercial/one-third leisure to 50:50.- Bill Peters: third party intermediaries/dot.coms as driving leisure business to hotels with billions of dollars in consumer advertising to stimulate incremental travel business.
  • There is a huge change the in marketplace as hotels used to cater to business travelers who paid the highest rates.  Now business travelers have become price shoppers and behave more like leisure travelers.  Hotels are generally taking the “wrong” tack with the lower rated business coming through third party intermediaries by giving less desirable accommodations to “punish” them for paying less – not the way to go.  It’s better to deal with it through inventory management and control the number of rooms available at lower rates so you can get them when you want them.
  • Jim Young: Another issue with third party intermediary business is tax requirements in some locations.  For example, in New York City a hotel must pay on what the guest pays for the room—not what the hotel gets for the room.  If the third party intermediary collects $100 and gives the hotel $75, the city of New York requires hotel tax to be on the $100, not what the hotel actually received.  It’s becoming the hotel’s problem to find out what the guest actually paid the third party intermediary.
  • Bill Peters: Web management suggestions: engage guests in live chat rooms, be sure to own all content on any website publishing info on your property and maintain parity or superiority to third party intermediaries for info on your hotel.  Don’t let them control the imagery of your property.  Also put a guarantee to customers to say your hotel will match any lower price found elsewhere on Internet – this will attract customers to book on your site.
  • Richard Chambers, discussing best practices, offered: Place the booking engine on the home page – conversion rates increase dramatically with less ‘click-throughs’; Capture email on the home page – like the booking engine, acquiring e-mail addresses for future re-marketing is easier with less clicks; instill confidence on the site by making the best rate clear in the copy and keep the online consumer at your site rather than clicking to another site.
General Session: The New Normal, What is a Resort and How Profitable is It?

Keynote speaker Mark Lomanno, president, Smith Travel Research, presented the latest findings on operating statistics for resorts as well as relative research about the industry.

  • With nine consecutive months of occupancy improvement, it is anticipated that by the end of May 2004 the industry will sell more rooms than ever before – a new record.
  • The recovery has been occupancy driven so all RevPar increases are coming from occupancy. Resort sector had the least drop in ADR during the slowdown and therefore have the shortest distance to travel to get rates back where they were.  If you can increase ADR by 1% you will enjoy a 4% increase in RevPar.
  • Weekday rooms sold is still lower than the last highest point of 2000; weekend rooms sold is much stronger than even 2000 and looks solid.
  • Demand has declined at the economy hotel type—likely due to customers able to “trade up” with deep discounts at every level of hotel.
  • Estimated cost of third party intermediaries (TPI) is $1.3 billion in new “distribution cost.” While it looks like ADRs have declined, if hotels add back the TPI discount, the ADR rates are not as low as they appear based on the portion the hotels get.
  • Hotel demand has tracked very closely with GDP for the last 10+ years.  If this remains true then hotel industry should have 2.4% ADR growth, 5.2% RevPar increase and hit 60.8% occupancy.
  • Overview: The supply is stable, demand is hitting record levels, hotels need to take better control of room rates, economy is rebounding and the longer term outlook is definitely optimistic.
Follow-up panel discussion with GMs/CEOs: Jack Damioli, The Greenbrier; Ed Mace, president, Vail Lodging and RockResorts; Charlie Peck, president & CEO, Destination Hotels & Resorts; and Richard Kelly, chairman & CEO, Outrigger Hotels and Resorts.
  • Ed Mace: The economic recovery increased business on weekends and in peak times to compensate for the still missing corporate group.  We’ve used and overused Internet discounting to compensate and now need to slow that down.
  • Charlie Peck: The answer is not raising the rate by 2% to give a $200 ADR up to $204. In the resort context, the goal is to look for 25% growth, not 2%. This can only come from managing all revenue sources.  Look at revenue per available guest not revenue per available room. One of the resort industry advantages is having many options for revenue and we need to learn to manage this opportunity.
Concurrent Sessions:

Differentiating Your Resort with Creative Package Rates

Moderated by Robert A. Gilbert, president and CEO, Hospitality Sales & Marketing Association International, three panelists provided insight on packaging: 

Salvatore Dickinson, chief executive, Dickinson and Associates:

  • Creative packaging is the integrated packaging, or booking engine, of multiple travel distribution businesses.  It is a consumer driver defined by what is available.  It provides consumers and travel agents access to multiple, dynamic and “value driven” travel packages.
  • All-inclusive packaging is a successful tool to market your resort as it shields consumers from the actual rate, which will make competitive Internet shopping more difficult.
  • To get started, understand your package metrics.  Know what your operational costs are, become familiar with your non-property complimentary providers and set reasonable objectives.
  • Use dynamic packaging firms rather than build your own packages, which take a lot of time and could cost you an opportunity
  • Packages can be personalized by the customer’s needs and customized on the spot.
Kim Schaller, chief marketing officer, Hershey Entertainment:
  • First step: identify the products your resort has available.
  • Marketing – You must have packaging to be able to compete in this market. PR firms look for packages to promote.
  • Set up a task force, a combination of marketing and operational staff.  See what the costs are, what the yield will be, and keep a close analysis of the overhead verses revenue.  Use key phrases such as: “Packages starting out as…” and “Based upon availability.”
  • All packages will not sell. Some serve the purpose of attracting publicity.
Tom Trotta, president, International Lifestyles/Superclubs:
  • Without packaging, resort vacations when compared to cruises appear to have higher costs and are not competitive. When preparing a package, there are ways to entice the consumer such as competing against cruise packaging. All-inclusive packaging can appear to the consumer to be cost efficient if packaged wisely.
  • Add components to hotel packages to include meal plans, breakfasts, cocktail hours, spa packages, etc.  Some hotels offer inclusives for repeat guest program rewards.
  • Use search engines to advertise packaging.
  • Use packages as marketing tool: specialty events (i.e. weddings), off-season rooms.
Repositioning and Renovations for Resorts

Moderator: Paul Beals, professor, Hotel Real Estate and Investment, School of Hotel, Restaurant and Tourism Management, Daniels College of Business, University of Denver

Panelists: David Bland, director of Hotel Investments, MONY Reality Capital; Jim Mangan, director of Strategic Planning, The Greenbrier; Roger Hill, chairman and CEO, The Gettys Group, Inc.; and John McCarthy, President, Liberty Hospitality Group.

  • In a discussion on asset management and increasing the value of your property through renovations and repositioning, panelists presented case studies and ways to ensure asset preservation, profit enhancement, being comparable to competition, and maintain guest sensitivity and ambience through the process.
Staff Recruitment and Retention

Presented by Cindy Clark, director of Human Resources, The Broadmoor Hotel & Resort with panelists Paul Hanna, employment manager and Bruce Rosenberger, director of human resources, both of The Greenbrier

  • A discussion of various recruitment and retention practices within the industry including college recruitment as a valid source; partnering with local workforce agencies and establishing training programs; Pro Start, a program to supply necessary hospitality equipment to local high schools; implementing Talent +, a behavioral interviewing technique; and J-1 Trainee programs can be utilized to educate international hospitality students. 
  • Also presented were methods for retaining employees once recruited: job previewing (having an applicant see the job in progress at a hotel site before accepting the job offer); surveying after training provides feedback and allows new employees to rate their initial job training effectiveness; the use of employment metrics; and employee climate surveys.
Unlocking Hidden Value 
  • Scott Steilen, principal, Warnick & Company, discussed the concept that a resort property is not just a hotel, but a valuable piece of real estate.  He stressed the “strategic imperative” – to capture all the potential value of your asset by “intelligent” use of the land and facilities, and by creating a cross utilization of facilities, services and amenities.
Electronic Distribution 101: Back to the Basics

Presented by Bill Peters, vice president of Reservations, Outrigger Hotels & Resorts with panelists John Burns, president & CEO, Hospitality Technology Consulting; Dwight Gould, president & CEO, Aviatech, LLC; and Mike Hampton, Ed.D., president & CEO, HSA International.

  • Bill Peters cautioned resorts to maintain control of their inventory, rates and presence online.  He encouraged the resorts to take advantage of the visibility the third party intermediaries are giving the travel industry and how hard they work to get Americans traveling again.  He warned resorts to stay on top of the consolidation in the third party intermediary world so they understand how they fit into the marketplace.
  • John Burns emphasized the need for resorts to make powerful presentations of their products, to understand, accept and learn how best to work with the large “mega” third party intermediaries/wholesalers and to maintain inventory control.
  • Dwight Gould reviewed the increase in online versus traditional advertising. He emphasized the need to understand online media and advertising options and start testing and allocating marketing budget accordingly.- Mike Hampton talked about how the web business has changed revenue management and yield management functions and how important it is for resorts to be sure staff in these areas are properly trained.
What are the Criteria that Make a Great Resort General Manager Today?

Moderated by Stephen Bartolin, Jr., president & CEO, The Broadmoor Hotel and Resort, qualities and characteristics were presented by panelists:

  • Dr. Richard Kelley, chairman & CEO, Outrigger Hotels and Resorts: “Be a people person and interact/relate to staff and get involved, stay objective, know all aspects of business, be willing to learn, don’t micromanage.”
  • Charles S. Peck, president & CEO, Destination Hotels & Resorts: “Enthusiasm, energy, leadership, and an ability to stay above the noise.”
  • Ed Mace, president, Vail Lodging and RockResorts: “Have leadership, be motivated, possess language skills, have vision and be able to communicate that with staff and guests, be a good salesperson, be good with numbers, and share your values.”
Financial Benchmarking of Your Resort
Presenters: Robert Mandelbaum, director of Research Information Services, PKF Consulting; R. Mark Woodworth, executive vice president, PKF Consulting.
  • How benchmarking (comparing your financial information against that of other resorts) can help you learn about the operation of your property and identify areas within your operation that require attention to improve performance.
Employee Benefits

Jeffrey L. Moss, executive manager, Culture & Staff development, The Grove Park Inn Resort & Spa.

  • In today’s world of high turnover, a saturated hospitality market, and hard economic times, one of the most useful recruitment and retention tools we as hoteliers have are our benefits packages.  They add an incentive and compensation component that goes beyond the hourly wage.  However, to be effective, you must tailor your packages to fit the needs and desires of your employees. You must also make sure that they are advertised. 
  • Health benefits are some of the most powerful, but also some of the costliest for the company.  Having your employees commit to a healthier lifestyle in order to reduce or slow down rising healthcare costs is a huge help in controlling these costs.
  • Other non-payroll benefits offered by the panel companies included public transportation passes, subsidized housing, free uniforms and dry cleaning, free meals while on duty, on-site medical center, and use of the resort fitness center.
Established in 1946, the School of Hotel, Restaurant and Tourism Management (HRTM), part of the Daniels College of Business at the University of Denver, prepares both graduate and undergraduate students for senior management positions in the fast-changing and competitive hospitality industry. 

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Contact:
HRTM 
Nicci Crowley
303-871-4266
ncrowley@du.edu
www.daniels.du.edu/HRTM

 
Also See: Michael Sansbury Named Resort Executive Of The Year At 2003 Resort Management Conference / March 2003
Resort Management Conference Report - Leisure Travel Drives Growing Destination Resort Recovery / April 2002
Report: Inaugural Resort Management Conference / May 2001


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