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. . The New Normal � What Does the New Normal Look Like for Hotel Sales and Revenue Management . |
May 1, 2009 - Any hotel sales person and revenue manager can tell you demand patterns are different than they have been in the past. The question then becomes -- will this pass at some point and demand patterns of the past �snap� back into place or have been demand patterns been permanently or semi permanently altered? The question is important as it is the difference between �hanging on� until things resume their previous demand streams or developing new processes and paradigms. Reporting on the Association of Corporate Travel Executives (www.acte.org) in Washington DC, Tom Belden in the Philadelphia Inquirer April 13 described the term. �People in the travel business now have a fresh buzzword to describe what's happening. The term is new normal, meaning that airlines, hotels, conference centers, and car-rental companies are expecting their revenue has plunged to levels that could be typical for years to come.� IHG is realigning the responsibilities of its executive staff in order to focus on the priorities of the driving revenue at the unit levels. �This is not a knee-jerk reaction to the economy,� Francie Schulwolf (VP of Corporate Communications) said, but a strategic approach by management to �the new normal.� (As reported in the Atlanta Business Journal April 17) We all know that the impact on business travel has been profound. According to Dorothy Dowling, senior vice president of marketing and sales for Best Western, though business travelers are employing a number of techniques to control costs and reduce spending, they are opting for shorter trips rather than canceling travel across the board. In addition, more companies are looking to mid-market hotels for corporate travel to streamline costs. Leisure travel patterns, while a potential source of demand this summer has also changed. Ypatnership�s latest TravelHorizons survey found that nearly two-thirds of U.S. adults are planning to take at least one overnight trip for leisure purposes during the next six months. That February number is up from 60 percent in January of 2008. The study goes on to say that current travelers, however, are looking to save money wherever they can. The survey of 2,200 Americans found that 87 percent plan to book a package to save money, 84 percent plan to spend less overall and 64 percent plan to take more day trips. In addition, 51 percent plan to stay fewer nights while on vacation. (South Florida Business Journal, April 7) The knee jerk reaction has been to cut rates in an effort to gain a larger price of a smaller pie. A recent Cornell Study indicated that this strategy was self defeating. Cathy Enz, in a column for Hotel News Now , described the research based on a gaming model. In short, if one hotel discounts and the other doesn�t, it is a Win- Lose game, if both discount it is a Lose- Lose game. The positive in this is that it is an opportunity to reinvent hotel sales and revenue processes, which in the end, will create more knowledgeable hotel professionals. How then should hotels adjust to the �new normal�:
Carol
Verret And Associates
To contact Carol send her an email at [email protected] or she can be reached by cell phone (303) 618-4065. Visit www.hotelsalesblog.com . |
Carol Verret 5910 S. University #C-18, PMB 374 Greenwood Village, CO 80121 Telephone: (303) 618-4065 [email protected] Web Site: http://www.carolverret.com/ Email: [email protected] |