Carol Verret Consulting 
and Training
Consulting
Training Seminars
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Is the Party Over?
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The Challenge of Decreasing
Hotel Room Demand
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by Carol Verret, October  2006 

Is the party over? Has the hotel industry been lulled into becoming ‘fat, dumb and happy’ after the stunning REVPAR growth of the last 2+ years? Has the industry peaked and is now on the downside of the curve?

Smith Travel reports that nationwide demand was virtually flat this summer and began to decline by 4% or more in the last two weeks of September. Mark Woodworth with PKF forecasts that for full service hotels nationwide in 2007 demand will increase by only .04%, ADR by 2.5% and REVAPR by only 2.9% versus a forecasted 9.5% increase for 2006. 

For the top 51 markets in the US, those predicted to experience the most growth are both in New Jersey, Newark and Edison and they will post gains in REVPAR of 6.2% and 5.3% respectively. At the bottom of the list is the market of Miami, expected to decline in REVPAR by 6.5%. 

The question is how many hotel budgets were conceived in the haze of the ‘irrational exuberance’ of the past two years, to quote Alan Greenspan? Those that were based on historical numbers and not industry forecasts will lean on their sales departments to fill in the gap between the budget and reality. 

In the past several years, the role and function of the sales department has changed substantially in some hotels. In many hotels (but certainly not yours!) sales has been relegated to the role of ‘order takers’ and bookers of “SMERF” groups to fill in the slow times as burgeoning demand was beating down the door to get in most of the time. Having seen this happen in other periods of peak demand, this is not surprising.

As the cycle turns downward, the expectation is that sales will have the right staff and the right skills to generate demand that hasn’t been pursued for several years. What can management do to gear up the sales pipeline in a hurry to counter balance the decline in transient demand?

  • Evaluate the current staff. Do you have the right people who are up for the task? If management has been just hiring warm bodies to answer the phones, you may need to obtain a professional and objective evaluation and perhaps redeploy some of them to other areas in order to make room for professional sales people with a track record that can deliver the business. Will good sales people or people with the right stuff be more expensive – probably!
  • Provide a targeted training and support program. Don’t just throw them into one generic seminar and expect that will do the trick for the entire year. The revenue management and sales strategies need to operate in concert and that requires that specific training and ongoing support so that they can develop new business targeted to the opportunity periods of the property. The SMERF segment alone won’t cut it anymore.
  • Rebuild relationships. In the past several years when demand was high, many marginal client relationships may have been neglected or ‘blown off’. Now, the hotel may need these clients. Sucking it in and retrieving an account that has been intentionally neglected requires the skills of a true sale professional. (See point one above).
  • Develop a targeted distribution strategy. There are new distribution options evolving and coming to market all the time that can help fill your rooms. Can you name more than the obvious ones that you have grudgingly used in the past? Evaluate the cost of promotions on these and the GDS against the incremental revenue they can provide.
  • Develop a Customer Relationship Management Program. When you mention CRM to most hotel managers they begin to twitch because they either don’t understand it or mistakenly think that all the options are expensive. There are even CRM options that you can put together yourself at very little cost. The cost of retaining existing guests is far lower than acquiring new ones. 
These are a few things you can do to protect your properties revenue from a slowing economy but do them NOW! Don’t wait until senior management or ownership is on your back to put these pieces in place. If the forecasts are wrong, you will have contingency strategies in place -- if they are right, you will maintain share instead of trying to find quick fixes to steal share! 



Carol Verret And Associates Consulting and Training offers training services and consulting in the areas of sales, revenue management and customer service primarily but not exclusively to the hospitality industry. To find out more about the company click on www.carolverret.com. To contact Carol send her an email at carol@carolverret.com or she can be reached by cell phone (303) 618-4065.

copyright © Carol Verret, 2002-2003 -2004 -2005 - 2006


 
Contact:
Carol Verret, Consulting and Training
Carol Verret
5910 S. University #C-18, PMB 374
Greenwood Village, CO 80121
Telephone: (303) 618-4065
carol@carolverret.com
Web Site: http://www.carolverret.com/
Email: carol@carolverret.com
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Also See: The Habits of Highly Successful Hotel Sales People Ramp Up for 2006! / Carol Verret / September 2006
Identifying the WIIFM Factor – The Essential of Hotel Sales Success / Carol Verret / August 2006
Revenue Management for Hotel GMs – What You Don’t Know Can Jump Up and Bite You! / Carol Verret / July 2006
Feeding the Revenue Elephant; Hotel Revenue Management / Summer 2006 
The "Tipping Point" - Identifying the Touch Points in Hotel Sales / Carol Verret / May 2006
The "Tipping Point" - Touch Points Make a Difference in Customer Service Training / Carol Verret / April 2006
Selling Up! Taking Group Room Revenue to a New Level / Carol Verret / February 2006
Revenue Management 2006; The Risks and Rewards / Carol Verret /January 2006 
Revenue Management and Group Sales - The Partnership Not the Disconnect / Carol Verret / November 2005
Habits of Highly Successful Hotel Sales People / Carol Verret / September 2005
Triple Witching Hour - The Marketing Plan, Revenue Management Strategy and RFPs for '06 / Carol Verret / August 2005
"Smile" is a Learned Behavior - Creating a Culture of Customer Service / Carol Verret / July 2005
Revenue Management Systems -- Considerations for Evaluation / Carol Verret / June 2005
Disconnect -- Aligning the Revenue Management and Sales Strategies / Carol Verret / May 2005
Independent Hotels & Resorts; Ride the Wave or Float with the Tide? / Carol Verret / March 2005
Hospitality Sales Training Companies Reach Across the Competitive Playing Field to Combine Live Seminar Expertise with  the Convenience of the Internet / Carol Verret / January 2005
Revenue Management - The Challenge for Hotel Sales / Carol Verret / January 2005
Hotel Sales Departments -- Issues in Processes and Functionality / Carol Verret / November 2004
The GM'S Role in Revenue Management / Carol Verret / October 2004
Transforming the Hotel Sales Organization; Alignment with the New Realities of Sales / Carol Verret / August 2004
The Revenue Management Strategy - The Pre-Plan Marketing Plan / Carol Verret / July 2004
Hotel Revenue Management this Summer - a Game of Skill, Art and Most of All Nerves / Carol Verett / May 2004
What Do Meeting Planners Want? Hotel Sales Managers Want to Know! / Carol Verret / May 2004
Revenue Management -- The Integration of Revenue Drivers / Carol Verret / March 2004
CYBER SALES -- Hotel Sales in an Internet World is the New Reality / Carol Verret / February 2004
The New Realities of Hotel Sales - Focus on Revenue Generation / Carol Verret / January 2004
Hotel Sales -- Innovation in the Face of Limitations / Carol Verret / November 2003
The Good News & the Bad News; Improving Economy = New Hotel Development / Carol Verret / October 2003
Leadership - General Managers Managing the Sales Process / Carol Verret  / October 2003
When the Crystal Ball is Cloudy; Marketing Plans for 2004 / Carol Verret / July 2003
Partnership of Sales and Technology; Using Tech Tools to "Sell" the Hotels / Carol Verret  / July 2003
Back to the Basics? The Basics of Hotel Sales Have Changed! / May 2003
Creating Sales "HUNTERS": The Skill Sets Required in the New Hotel Sales Environment / April 2003
Heightened Security Requires New Strategies in Hotels Sales / Carol Verret Consulting and Training / Mar 2003
Revenue Recovery - Building The ‘A’ Team in Sales / Carol Verret / January 2003
Contingency Marketing Plan – War In Iraq! / Carol Verret / November 2002
Playing the Rate Game - Positioning -- Positioning -- Positioning! / Carol Verret / October 2002
The Rate Game - Playing to Win / Carol Verret / October 2002
The Challenge of Marketing Independent Boutique Hotels / Carol Verett / August 2002
Hotel Sales in a Limited Service Environment - The Rules Have Changed / Carol Verett / August 2002
The General Manager’s Role in Sales -Chief Marketing Officer of the Hotel / Carol Verret / April 2002
100% Market Share Penetration is Not Good Enough / Carol Verett / January 2002
The Key to REVPAR Recovery –  New Business Development / Carol Verett / December  2001
Trash the 2002 Marketing Plan - And Just Start Over / Carol Verett / September 2001
How to Use Consultants Effectively –  A View From the Other Side  / Carol Verret / August 2001
How Soft Is Your Hotel's Economic Landing?  / Carol Verret / Aprl 2001
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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