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 Person-to-person Sales Provides Best Return on Investment for
Hotel Marketing Departments, Followed Closely by the
Properties Web Site / HSMAI PKF Survey
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MCLEAN, VA (Oct. 13, 2005) – According to a just-completed survey conducted by the Hospitality Sales and Marketing Association International (HSMAI) and PKF Hospitality Research examining Sales and Marketing Expense Trends in the U.S. Lodging Industry, person-to-person sales is the best return on investment (ROI), followed closely by property web site, public relations, internet marketing and advertising, e-mail marketing, national/corporate advertising and local advertising, which all received between a “Good” to “Excellent” rating.  Merchandising and direct mail were also included and fell just below the “Good” rating on the survey scale.
 
Mark Woodworth, Executive Vice President for PKF Hospitality Research, introduced the results of the survey during the Fifth Annual HSMAI/NYU Industry Strategy Conference, held recently at the Westin Times Square Hotel in New York.
 
“The purpose of the survey was to examine reasons behind movements in marketing expenditures, identify new marketing strategies and techniques, and evaluate the most viable return on investment,” Woodworth noted.  “The survey indicates that the industry places higher value on personnel and yields the best results from quality sales and marketing representatives over all other initiatives.”
 
Reflecting an investment in compensation, rather than increased staffing, the survey revealed that the rise in labor costs in 2004 was a result of: increase in base pay (41.5%); increase in incentive pay (20.8%); increase in employee benefits (17.0%); increase in staffing (15.1%) and other (5.6%).
 
According to survey results, in 2004, resorts spent the most in terms of marketing dollars with an average of $4,464 per room, followed by convention hotels spending $2,648; full-service properties spending $2,068; “all hotels” with an average of $1,882; all-suite facilities with $1,228 and limit-service establishments spending $416 per room.
 
The survey indicated that the biggest increase in operating costs is labor overhead with payroll noted as the fastest growing expense.  To that end, marketing expenses were distributed as follows: 43.6% were allocated for salaries and wages; 28.3% for selling (including trade shows, meals and entertainment, travel, dues and subscriptions, and complimentary guests); 14.0% for advertising (including collateral material, direct mail, media, outdoor advertising, in-house graphics, property vouchers, and point-of-sale material); 12% for employee benefits; and 2.6% for other (including, but not limited to, internet marketing, web site and key word search).
 
Other significant findings include a 72 percent increase in Internet expenditures from 2003 to 2004 with 30.6% of respondents reporting a significant increase; 41.9% stating a moderate increase; 22.6% declaring no change and 4.9% revealing a moderate decrease.
 
With regards to Internet expenditures, the survey findings revealed that properties are investing in the following outlets: company Web Site (89.7%); Links with other Web Sites (75%); e-mail marketing (66.2%); keyword search optimization (47.1%); banner ads (33.8%); and other Internet outlets (2.9%).
 
Looking forward, 46.0% of respondents expect a moderate increase for its Change in Sales and Marketing Expenditures for 2006, while 22.2% plan a moderate decrease; 19.0% predict no change; 4.8% prepare for a significant increase; 4.8% are not sure; and, 3.2% forecast a significant decrease.
 
Of the 65 respondents who answered survey questions based on their 2004 year-end data, 64.6% were full-service properties, 15.4% were resorts, 12.3% were limited-service facilities and 7.7% were all-suite establishments.  The average capacity of all properties polled was 259 rooms.
 
“This survey shows that the lodging industry is putting more money into their marketing initiatives – especially in terms of quality personal and Internet tactics – to help improve their bottom line,” said Robert A. Gilbert, CHME, CHA, president and CEO of HSMAI.  “This survey was timed to coincide with strategic planning and budgeting for 2006, and results will provide sales and marketing professionals in hospitality and travel with valuable information and ideas about measurement and accountability.”
 
A complete report of the survey findings will be featured in the Winter Issue of HSMAI’s Marketing Review.
 
HSMAI is an organization of sales and marketing professionals representing all segments of the hospitality industry.  With a strong focus on education, HSMAI has become the industry champion in identifying and communicating trends in the hospitality industry, and bringing together customers and members at 15 annual events, including HSMAI’s Affordable Meetings, HSMAI’s Meeting Quest shows and the HSMAI World Quest events.  Founded in 1927, HSMAI is an individual membership organization comprising nearly 7,000 members worldwide, with 38 chapters in the Americas region.
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Contact:

 Hospitality Sales & Marketing Association International
8201 Greensboro Drive, Suite 300
McLean, VA 22102
phone (703) 610-9024
www.hsmai.org

Also See: Hotels Increase Marketing Budgets by 6.1 Percent in 2004; Hotels Continue to Shift Marketing Dollars from Advertising to Person-to-Person Selling / PKF Study / June 2005
Maintaining the Marketing Investment; Examing How U.S. Hotels Answered the Marketing Investment Question During the Industry Recession / Robert Mandelbaum / May 2004

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