News for the Hospitality Executive
|Lessons from the Field
A Common Sense Approach to Success in the Hospitality Industry
|By Dr. John Hogan, CHA MHS CHE, July 29, 2009|
Hotel Common Sense –
Recognizing There is More than One Approach to
Ongoing Success in Building Revenues
|By Dr. John Hogan, CHE CHA MHS, July 29, 2009
It is easy to sit up and take notice, What is difficult is getting
up and taking action.
In the past quarter, I have read at least 20 columns on strategies to encouraging revenue growth, with many of them offering contrasting opinions and options.
This is the fourth economic crisis I have had to address with in my career. These crises have run the gamut from gas shortages to high inflation and unemployment, to the savings and loan equity/credit debacle to 911 to the current global economic meltdown. Each was painful at the time and both failure and success were part of the solutions for us all.
With that recognition, I am revisiting the discussion on discounting and rate strategies by sharing some industry recognized leaders’ comments and opinions.
In late April, I offered some ideas in a column published in this service titled “ Four steps to setting accountability: building revenues”. Those steps echoed author Harvey MacKay’s perspective on recognizing that each of us must address our challenges with focus and energy.
Building revenues these days is a moving target facing all hospitality businesses. We receive some short-term good news on lower gas prices that is offset by higher unemployment. Opposing opinions on government actions flood the media and we all find ourselves pondering the next course of action.
Cornell University's Center for Hospitality Research using data provided by Smith Travel Research offers some very specific data in published reports that concluded cutting rates is ultimately harmful for the hotel industry – regardless if the economy is strong or weakened. This was a detailed study and examined several hundred hotels in various market conditions.
In early July, I offered another column titled Lessons on Brands and Discounting (with a touch of humor). I shared that I have worked in both independent and branded hospitality businesses and found advantages and limitations in both at times. I found the reality of brands is that they can offer tremendous resources to participants if everyone acts as partners and not antagonists. The challenge is when the partnerships waver.
I offered my belief that the owners and managers of each individual hotel and hospitality business need to be aware and involved in the pricing levels offered by their business. I commented that I sincerely believe adding VALUE and creating synergy with other businesses is a much better way of reaching both ongoing and long-term success and asked readers to share examples. I received several on how people effectively extended their local networks and were able to involve other area businesses.
In that April column mentioned above, I saluted the determination of Starwood to rally its organization at all levels when they launched a program that was not technology based, but one that focused on proven tactics of the past. Their announcement labeled “hitting the road—hard” would lead to what they called its "most aggressive sales blitz in history." Starwood associates planned to call on 20,000 key accounts and new customers throughout the United States and Canada with a stated target of generating $135 million in new potential revenue.
The announced strategy was an “everyone sells approach," with company sales and catering teams working with corporate executives. Hotel teams including general managers, chefs, executive housekeepers, concierges and others are planning to call on all segments of business from retail travel agents to corporate travel planners. The purpose was to generate leads, prospects and eventually to build revenues. A sales blitz places a concentrated effort by a large number of people in one or more targeted areas for a specific time.
I do not recall reading about the outcome of this effort, but Starwood again made the headlines this past week with their latest effort to build revenues: a global 50% off sale.
The blogs and the editorials immediately ran on over-drive, beginning with Joie de Vivre CEO, Chip Conley’s comments in a guest post on USA Today's Hotel Check-in blog that critiqued Starwood’s actions of “Cutting prices across the board—as opposed to strategically to those market segments who will most increase demand by seeing selective cuts in prices—doesn’t just damage Starwood’s reputation and their hotel profitability, but it does a disservice to our industry since it creates a rush to bottom feeding in an industry that has high fixed costs."
Starwood defended its global discounting (on Hotel Check-in ) stating the promotion is an annual event. Vice President of Revenue Management, Leslie Anderson agreed in general that price integrity is a positive aspect of brand-building but said that does not entirely preclude hoteliers from putting inventory on sale from time to time. She wrote: "With our sophisticated revenue management systems, we're able to strategically target this segment [short-term leisure] to create and execute short-term promotions that are incredibly popular with our guests and profitable to our hotels, with no negative impact on our long-term pricing power.”
Finally, in his HOTELS’ Magazine July 24, 2009 online blog, Adam
Kirby commented that he felt “Revenue management typically means tweaking
particular rates at particular hotels across particular channels for particular
periods of time; a global half-off sale seems to me to be closer to mass
discounting than precision revenue management. In an ideal world, Conley's
thesis—that wide-scale discounting ought to be minimized—holds true. Unfortunately,
this isn't an ideal world, and short-term financial reality oftentimes
outweighs the desire for long-term rate integrity.”
I find it both aggravating and rewarding that there apparently is not only one approach to long-term revenue success. Whatever strategy is used today probably needs to be revisited next month, as we must all adapt regularly to be fresh!
What are you doing today?
Feel free to share an idea for a column at email@example.com
anytime or contact me regarding consulting, customized workshops, speaking
Autographed copies of LESSONS FROM THE FIELD – a COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES can be obtained from THE ROOMS CHRONICLE www.roomschronicle.com and other industry sources.
All rights reserved by John Hogan and this column may be included in an upcoming book on hotel management. The opinions expressed in this article are those of the author and do not necessarily reflect the views of this publication
John Hogan, a career hotelier and educator, is frequently invited to participate at franchise meetings, management company and hospitality association industry events. He is a successful senior executive with a record of accomplishment in leading hospitality industry organizations at multiple levels, with demonstrated competencies as a strong leader, relationship builder, problem solver and mentor. He conducts mystery-shopping reviews of quality in operations and marketing, including repositioning of hotels.
Expertise and Research Interest
He writes weekly columns for a number of global online services and has published more than 400 articles & columns on the hotel industry. He co-authored (with Howard Feiertag, CHA CMP) LESSONS FROM THE FIELD – a COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES, which is available from firstname.lastname@example.org, ROOMS CHRONICLE www.roomschronicle.com and other industry sources. He resides in Phoenix, Arizona and expects to publish in 2009 his 2nd book based on his dissertation – The Top 100 People of All Time Who Most Dramatically Affected the Hotel Industry.
Hogan’s professional experience includes over 35 years in hotel operations, food & beverage, sales & marketing, training, management development and asset management on both a single and multi-property basis, including service as Senior Vice President of Operations in a specialty hotel brand for six years.
He holds a number of industry certifications (CHA, CHE, MHS, ACI) and is a past recipient of the American Hotel & Lodging Association’s Pearson Award for Excellence in Lodging Journalism, as well as operational and marketing awards from international brands. He has served as President of both city and state hotel associations.
John’s background includes teaching college level courses as an adjunct professor at three different colleges and universities over a 20-year period, while managing with Sheraton, Hilton, Omni and independent hotels. He was the principal in an independent training & consulting group for more than 12 years serving associations, management groups, convention & visitors’ bureaus, academic institutions and as an expert witness. He joined Best Western International in spring of 2000, where over the next 8 years he created and developed a blended learning system as the Director of Education & Cultural Diversity for the world’s largest hotel chain.
He has served on several industry boards that deal with education and/or cultural diversity and as brand liaison to the NAACP and the Asian American Hotel Owners’ Association with his long-term involvement in the Certified Hotel Owner program. He has conducted an estimated 3,200 workshops and classes in his career.
Service to the Industry and Hospitality Education includes
working with the Educational Institute Certification Commission of the
AH&LA, the Hospitality Industry Diversity Institute, the AH&LA
Multicultural Advisory Council, the Accreditation Commission for Programs
in Hospitality Administration, the Commission for Accreditation on Hospitality
Management Programs, the AH&LA and AAHOA Education and Training Committees,
the Council of Hotel, Restaurant and Institutional Educators (CHRIE), the
International Hotel Show and the Certified Hotel Owner program for the
Asian American Hotel Owners’ Association.
Dr. John Hogan, CHA MHS CHE
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|Planning in a Challenging Economy - Probing Hotel Expenses / Dr. John Hogan / December 2008|
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|Defining Hospitality - Readers Respond with their Insights / Hotel Common Sense / John Hogan / October 2008|
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|Principles for Success as a Hotel Manager: 6 Observations on Finding and Employing Problem Solvers / Dr. John Hogan / September 2008|
|10 Hotel Sales Action Steps to Succeed in Today’s Competitive Marketplace / Dr. John Hogan / September 2008|
|10 Hotel Sales Mistakes to Avoid in Today’s Competitive Marketplace / Dr. John Hogan / August 2008|
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|Principles for Success As a Hotel Manager - Maintaining Relationships Throughout the Organization / Dr John Hogan / August 2008|
|Principles for Success As a Hotel Manager - Part four: Communicating with Clarity and Candor / Dr. John Hogan / July 2008|
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|Principles for Success As a Hotel Manager - Part Two: Motivating the Team / Dr. John Hogan / July 2008|
|Principles for Success As a Hotel Manager Part One: Understanding the Organization / Dr. John Hogan / July 2008|
|Updating Hotel Marketing and Sales Strategies Mid Year NOW Is Essential / Dr. John Hogan / June 2008|
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|Factors for Successful Interviewing Potential Hotel Sales Candidates / Dr. John Hogan / June 2008|
|The Importance of Meaningful Sales Team Job Descriptions / Dr. John Hogan / May 2008|
|For Hotels with Limited Service, Fewer than 100 Rooms - How Do You Determine if You Need a Person Dedicated to Selling / Dr. John Hogan / May 2008|
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