News for the Hospitality Executive
Marketing Is Not The Primary Thing…It's The Only Thing
By: Neil Salerno
We suspect that 2010 will show some signs of recovery mixed with continued hardship for many hotels. We all know what happens when revenue levels are constricted; fewer dollars in, fewer dollars to spend. At this point, careful consideration should be made for every dollar spent to develop business.
For many years, hotel companies have grappled with the decision of how many marketing dollars to commit to build business. At no time in history has this been a bigger challenge for hotels. Many hoteliers have historically considered marketing dollars as redundant if these dollars are needed to cover revenue shortfalls and/or operational over-spending.
This practice of redirecting dollars, which were ear-marked for marketing, to cover revenue shortfalls, could be a critical mistake in 2010. In actuality, it is too easy to cut marketing dollars to temporarily improve a P&L statement. After-all, every dollar spent on marketing comes off the bottom-line. This makes the marketing budget extremely vulnerable.
We must avoid the dreaded downward spiral; reducing rates to temporarily increase occupancy reduces revenue and profit. Using lower rates as a marketing strategy is just plain self-defeating. You may successfully sell a few more rooms, but you will enjoy it less. Don't join the "woe is me" crowd. Create more value, then market that value.
The fact is that hotels which devote the time, money, and human resources to market and promote their hotel in 2010 , will be the ultimate winners when the economy returns to normal. This is an opportunity to harvest increased market share, which will provide a huge payback for hotels aggressive enough to go after it. But, it will take planning and commitment to accomplish this.
When times are tough, operational spending must be carefully reviewed. Service levels and amenities, which were developed during the boom years, must be re-considered. The revenue will not be there until we stop considering sales and marketing funds as discretionary and not essential to building business. It's time to make commitments.
Strategies & Planning
In this writer's opinion, 2010 will not be a time for experimentation and new market development. Creating new business markets is costly and time-consuming. It can sometimes be rewarding, but we have neither the money nor the time to do it properly. It's time to review your historically productive market segments, prioritize them, and create a plan to grow them. Target marketing dollars to historically lucrative markets and always weigh the results.
If marketing funds are limited, prioritize markets in which to concentrate. Hoteliers need to search-out the 20% of markets that produce 80% of the business for your hotel; the old 80/20 rule. At the same time during the prioritization process, hoteliers need to assess the response speed of each market. How long and how many dollars will it take to see positive results; speed is good. Everyone is hurting, so create those travel partnerships, which you never found the time to do before.
Any plan, designed to build business in 2010, must include a comprehensive Internet and electronic marketing presence. There are few market segments, if any at all, which can produce results as quickly or with the zest of business as is possible with the Internet. Nothing you can do to produce business can equal the cost-effectiveness and return-on-investment of a well conceived Internet marketing program.
There are still too many hoteliers who have been unable or unwilling to devote marketing dollars to get their fair share of the increasingly lucrative Internet market. These hoteliers must understand that simply having a website is not nearly enough.
Anyone, who is serious about developing a strong Internet presence, should come to terms about how their website is performing. Performance is measured by the number of visitors your site attracts and, more importantly, the number of reservations it generates; organic search and sales. We still see many hoteliers who have no idea to what extent their website is contributing, if at all.
As we head into 2010, it's time to get a true and honest assessment of your website to determine its soundness and functionality. Unfortunately, there are still too many hotel sites, which were designed by people who know little about search and/or hotel sales. This has resulted in having many hoteliers who have dysfunctional websites and, sadly, don't know it.
The challenge is that they don't know that the basic structure of their site is more than likely the cause for failure. Designing an attractive site is only a small part of a functional site..You simply cannot determine the functionality of a website by the way it looks.
There are many knowledgeable site developers who can provide you with a objective analysis of the search and sales soundness of your site. Often, minor changes can make a huge improvement in its functionality. This is often a small investment to improve Internet sales.
Human Resource Trends
Human resources will still play an essential role in hotel marketing for 2010. I believe that there are marketing people who may be perfectly suited for an abundant economy, but are totally unsuited for a tough one. Tough times call for tough players. Sometimes it's necessary to go to the bullpen to bring in a heavy-weight when increasing market share is the goal.
If this is financially out-of-reach, get some training for your sales and marketing staff. If training is out-of-reach, many hotels have delegated marketing duties among other staff members. During a robust economy, this would not be a wise decision, but it is becoming more common today. The lack of leadership can be solved if the general manager or someone on staff has the marketing experience to implement the program.
Many hotels have solved the marketing leadership problem by outsourcing this role to outside marketing experts to guide their internal process. This is becoming a popular and very cost-effective way to implement a productive marketing plan without adding to permanent payroll cost.
It's time to end the practice of shoot-from-the-hip marketing spending and lack of commitment to building business through marketing. For 2010, marketing will not be the primary thing, it will be the only thing for success.
|Also See:||Revenue Grabbing Tips for Independent Hotels; Start Thinking Like the Chains / Neil Salerno / July 2005|
|Hotel Budgets and Marketing Plans; Oh No, Is It That Time Again? / Neil L. Salerno / September 2003|