| June 25, 2008 - In the past eighteen
months, demand has remained relatively flat while rate has increased by
between 7% in 2007 and almost 9% in 2006. The consumer that seemed
so resilient to rising hotel rates has ‘collapsed’, in the words of Bernie
Sternlicht, Chairman and CEO of Starwood, pressured by rising gas prices
and the resulting cost of goods, not to mention the loss of equity in their
largest investment, their homes. (BTNOnline, June 2, 2008))
Three ‘lions’ of the industry, speaking at the recent hotel investment
conference in New York, indicated that they expected eighteen more months
of softness in the hotel industry. J.W. Marriott, Bernie
Sternlicht of Starwood and Jonathan Grey with Blackstone (owners of Hilton
Corp.) all saw a protracted period of soft demand for the next eighteen
months that will make it difficult to move rates, a fact that is already
reflected in the smaller percentage increases in ADR. (BTNOnline,
June 2. 2008)
PKF sees a bottom in the current cycle around November 2008 with recovery
beginning in the first quarter of 2009. (Mark Woodworth, June, 2008) However,
that prediction was made prior to the announcement by the airlines regarding
massive cuts in capacity; United is parking 100 airplanes, increasing fares
and additional fees like those for checked luggage.
Recently, I had the privilege of speaking and facilitating a discussion
at a meeting called by a hotel company to assemble their GMs,
Revenue Managers and Directors of Sales to brainstorm on ways of increasing
revenue in the last half of 2008. They normally have meetings in
the fall to plan for ’09 but felt that they needed to plan for the second
half of ‘08 before they could begin to plan for ’09.
There is a reason that GDS transactions in the Americas have decreased
by 7% in the first quarter of 2008 on Galileo (Travel Management,
May 14, 2008) while Expedia has reported an 8% increase and StarCite RFP
requests have increased by almost 7% as of April YTD. Planners across
all segments have turned to the internet to find the best value for their
vacation, their company and their meetings!
The focus is back on the hotel sales and marketing department to generate
more demand to pick up the slack. It’s time to flex that ‘prospecting’
muscle:
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Analyze current marketing strategies. Before reacting
with new strategies from a position of ‘panic’, step back, take a deep
breath and analyze what is currently deployed, especially if these were
the strategies in the Marketing Plan for ’08 that was developed prior to
Q4 2007. How well are the ad strategies and ecommerce initiatives working
– measure against both last year and anticipated results for this year
YTD. Are the segments that were targeted in decline,
should redeployment with a new message be targeted at market segments with
potential in the current economy versus the relatively robust economy of
pre Q4 ‘07? Market sectors such as Financials, should be deemphasized,
they are not going to be big revenue generators for a while. Consumer
goods also have rough spots – retail and anything to do with home improvements
are soft. Tip: USA Today has a page in the Money section every Monday
that will tell you which stock market segments are up and which are down.
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Retool the Hotel Sales Department Deployment. How is
the sales department organized now -- is it by market segment, geography,
etc.? Look at the trends in corporate travel, many companies are
paring back travel due to cost but some are continuing and increasing travel
to maintain their current customer relationships. Who are they and
in which sectors of the economy? In the meeting sector, large
meetings that have been experiencing high attrition rates are fracturing
into small regional meetings due to cost. If the department is organized
by geography, pull back those that are focused on the most distant markets
and deploy them in drilling down into areas closer to the hotel.
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Rethink the Hotel’s Value Proposition. What is the message
on the hotel web site and all the places where there are listings in the
areas you need to be in? Don’t lower the rate structure but populate
your message with value ads, packages that build in features the consumer
considers of value. For example, for the leisure traveler that may
be staying closer to home; package a ‘weekend’ getaway with a spa experience
or a ‘family package’ to include kid friendly features such as passes to
the local children’s museum that may entice regional, state or local travelers.
The rule of thumb is the destination must be within ‘one tank of gas’.
For the meetings market, offer a meeting package with per person price
options.
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Be where the customer can find you! If the leisure customer
doesn’t know you or even if they do, they are likely to go the OTAs to
see what’s out there in terms of not only rate but packages, value ads,
etc. They then may go the web site – make sure that your offers and
pricing is transparent across all channels. Go to the web site and
research what key words are being used to find you and what are the referring
sites or pages. Meeting planners are under pressure to demonstrate
that they have done their due diligence to their stakeholders. What
is your online presence on meeting planner and RFP sites like StarCite?
Hotel sales Super Stars will be made in this economy by their ingenuity
and resilience producing demand for their hotels. Don’t be afraid to try
new strategies and approaches – if one doesn’t work, amylase why and move
on. Those hotels that come out this economic downturn, will be the ones
best positioned to increase rates when the economy recovers.
(Join us in Phoenix July 24 at the Radisson Airport North for “I Hate
Cold Calls” sales training open to all members of the hotel sales
community – click here for more info.)
 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. Visit www.hotelsalesblog.com.
copyright © Carol Verret, 2002-2003 -2004 -2005 - 2006 - 2007
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