By: Neil Salerno � December 2009

First, it's an old story, but stop thinking that lowering your rates will sell more rooms and increase room revenue. It may sell a few more rooms, but it rarely sells enough rooms to offset  revenue lost due to lowered rates. It�s simple economics; lower rates have not ever, nor, will ever, create room demand. Travelers do not buy rate; they buy value. Don't reduce rates, add value.

Adding value is the key to increasing room sales. Creating and promoting special packages is a good way to accomplish this. Packaging allows you to mask actual room rates with features which add benefits to staying at your hotel. Don't forget to promote packages on your website.

The tell-tale sign of a hotel-in-trouble is to see increases in occupancy and decreases in room revenue. Any hotelier, who understands and employs the tactics of revenue management, monitors and adjusts rates in reaction to fluctuations in current and future occupancy demand. Every hotel experiences fluctuations in demand all year long. Knowing when to adjusts rates up or down is a function of understanding demand. 

For many hotel owners and managers, reducing rates is the lazy-man's form of marketing. It�s generally the first thought when sales are low; after-all, it takes very little thought and certainly very little research and/or effort. And, it also ignores the fact that people don�t buy rate, they buy value. Simply lowering rates for everyone ignores the fact that most people are not seeking  hotel rooms based upon rate alone. If that were true, the hotel with the lowest rates would be full all the time.

In a vacuum, rates mean little, but no hotel should operate in a vacuum. Low rates, when compared to your competition set, can also devalue your hotel. �You get what you pay for� is still alive and well; when a product is not known, its price will define its quality.

When sales demand is low, look to value-added marketing and position your hotel properly within your marketplace. If your hotel deserves to be in the number one position because of its location, facilities and amenities, make sure it is positioned that way.

Do Your Homework � Stop Working in a Bubble

For a modest amount of money, you can start receiving market share reports from Smith Travel Research. They are not available everywhere, but, if they�re available in your area, they will provide a tremendous amount of insight into your local market status. It is far better than guessing or �counting cars� in your competition�s parking lot; that brings me back to the seventies, it didn�t work then either.

STR reports will provide you with accurate information comparing your occupancy, ADR, and RevPar with your stated competition. The fairness and accuracy of STR reports will assist you to place your hotel in its proper position among your competitors.

Become Well Informed

I�m constantly surprised to hear from hoteliers who have so many excuses why they don�t stay current by reading any of the many online eNewsletters. Lack of time is often the most used excuse; I guess these are the same people who don�t have time to return phone calls too. 

Today, go online and subscribe to at least three free online newsletters. Keep your knowledge base current with the happenings in our industry. You can learn a great deal from the successes and failures of others; the only thing you truly own is what you know.

Use The Power of the Internet

Take a serious look at your hotel�s website; next year, more than 70% of your business will be directly or indirectly influenced by the Internet. Before you look to have another website designed, get an analysis of your current site. A good analysis will give you a clue to what is working or isn�t working very well on your site.

You can then use this analysis to guide the new designer to create a functional website. Remember, search engine optimization must be incorporated into the design of your site; it�s not something that is applied after your site is completed.

It�s an absolute fallacy to think that SEO can be applied to a poorly designed website to increase traffic. If someone suggests that to you, run, don�t walk away quickly. SEO must be incorporated into the design of the site itself.

The number of hotels getting ripped-off by techie-talking web designers is astounding. I read an article the other day, written by a website design company that thinks that a conversion rate of only 2% of site visitors who actually make a reservation, is a good average. Less than 5% indicates that something is wrong. 

As I have said many times, web design is not rocket science. Your site needs to be designed to be easily found through organic search and, once found, it needs to have the necessary elements of location, facilities, attractions, and value to persuade its visitors to make a reservation.

Make a Commitment to Revenue Management

Today is the day to finally make a commitment to learn and use revenue management to increase occupancy and average rate. Sure, it takes a little effort to do the necessary research, but the rewards are great. 

Revenue management relies upon your ability to look into the near and distant future to view occupancy demand and making rate decisions. Measuring reservation booking pace and being aware of occupancy generators in your area creates smart decisions.

The economy is slowly improving; solidifying your position in the marketplace now will heap great rewards in the future.