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Key Items Owners and Managers Must Address During
the Continued Economic Downturn


By Steven Belmonte, President & Ceo, Hospitality Solutions LLC
September 2011

It’s a tough world out there right now and that cannot be denied. This rough and difficult economic climate has caused most hoteliers to write off the past few years in hopes that 2012 will be the year when it all turns around. Unfortunately, these are just pipe dreams and expectations like those are just too high. Instead of just enduring, hoteliers need to begin to find the tools in order to build a foundation to grow upon.

If you ask any industry assessment professional, most will agree that this current cycle will be much worse than the downward cycles of the early 1990’s and early 2000’s. The few that retain a small glimmer of hope mixed with capital resources are taking a step back to take a better look at what their business missions and future projections are. They are taking the safer road by waiting out the economic storm before moving forward with any developmental projects. When faced with a decrease with occupancy, average daily rate and revenue per room, there is little that needs to be done on the property level except to make sure to outperform your competition while containing costs. The issue is that many hotels will play the rate game and you will see this happening again even though history has proven that we are all together losers when this occurs and in actuality, this does very little to generate new business. Hoteliers needs to begin to focus on literally stealing more business by using value added services and product amenities. It is at this point where hoteliers need to accept and embrace the mantra, “out of chaos grows creativity” in order to make it through these difficult times. Here are a couple examples that hoteliers can use to maintain a status that is competitive:
  • Create a solid presence in the world of social media to keep yourself ahead of the marketing curve
Having a presence on Facebook and Twitter shows the younger consumers that you are in the know about the modern technologies and communication tools. Hoteliers need to be promoting their properties and taking ownership of their local area by being known as the hotel of their city. For example, when a consumer searches your city’s name on Facebook, your hotel’s name should also show up. Remember that social media is FREE! So using it is a wonderful and inexpensive way to interact and reach out to your consumers.
  • Create a buzz over your property by coming up with contests that will excite consumers
This can be easily done using social media sites like Facebook and Twitter. Not only will contests create buzz for your property but they will also help you gain a loyal following and fan-base on those sites. This is important because it helps provides your hotel with credibility and nowadays, everyone goes to the Internet to find hotels. As prizes, you can give away free night stays or if that seems like too much, even just giving out simple gift cards will do.
  • Make sure you research what your local competitors are presenting and one-up those promotions
Don’t be afraid to act boldly and creatively. A great example is when Caribou Coffee showed up their competition, Starbucks, by announcing a promotion that coffee drinkers deserved a choice and offered a free decaffeinated coffee on certain days during a limited time window. The kicker? Starbucks had previously announced they were going to stop brewing decaffeinated coffee in the afternoon. Caribou won new consumers by taking advantage of the market’s affect on a direct competitor. I’m not saying that hoteliers should be offering free nights but they should absolutely be keeping their eyes open for unique attention grabbing opportunities.
  • It’s important to engage your guests in word-of-mouth grassroots marketing techniques via consumer rating sites such asExpedia, Trip Advisor, Travelocity, etc
It’s clear that consumers turns to the Internet for the inside information about properties. They rely on the experiences of previous hotelgoers. Good reviews can be worth more than an expensive ad in a national magazine but bad reviews are a guaranteed business killer. Always make sure to respond to the negative reviews. Offer your apologizes and see what you can do to make it up to that guest. Most sites will allow properties to respond to a negative review so take advantage of that opportunity. Responding shows that you care and are wiling to make things right to win back their business. So every time a potential consumer sees a negative review, they will also see that you have addressed the matter and it will give them the confidence to book their next stay with you.
  • Fortify personalized service
To ensure positive recommendations, your property needs to offer top-notch customer service to guests. Consider fun and interesting incentive programs for your staff. Also, make sure to reward them when they have done well. Never skimp on employee training and customer service focus. Consider them an investment. Creating a great working environment for your employees that makes them feel appreciated can make a huge difference in the standard of service that they provide to your guests.

Additionally, during these difficult times, hoteliers need to make sure they are making the most of all the resources their franchise company has to offer. The solid franchise companies undoubtedly have the ability and wherewithal to help your property to reach it’s full potential by using regional marketing, share finding for regional advertising, IT tools, substantial discount with state travel guides, AAA and a host other programs that will guarantee your property receives it’s fair share of business. These tools are often overlooked and underutilized by property management.

Another big question that hoteliers should be asking themselves is whether or not they are in need of renovations or product upgrades. Unfortunately, just because we are in an economic downturn does not mean that you should wait to make these upgrades. The truth is that regardless of whether we are in an economic downturn or a strong business environment, if your operating environment does not live up to guest expectations or is substandard in comparison to your competition then upgrades are absolutely going to be required. The consequence of failing to upgrade your hotel can result in a serious decline in guest satisfaction and loyalty. When there are upgrades needed you cannot make excuses. The reality is that your guests do not care and if they are dissatisfied then you can bet that they will not be back.

If you find yourself in a position where you are unable to make the necessary upgrades to your property then perhaps it’s time to consider repositioning yourself in the marketplace. There is no shame in doing this and there are in fact many economy-based products that are available. This can help you to meet your guests’ expectations while eliminating the need to invest millions of dollars into the property. However, this is not a decision to be taken lightly as it will negatively affect your average daily rate. Remember that not all hotels need to be thinking about renovations right now. Properties that have their products in order and have remained competitive in their marketplace do not need to be considering any upgrades.

Conclusively, it’s easy to say that any decent property operator is going to watch and modify expenses wherever and whenever it is
possible. It is my suggestion that during this tough economy there are no sacred cows. In other words, all line item expenses on the P&L
should be properly sent out for comparative bids which includes any long term vendors including food vendors, insurance companies,
printers and uniform companies you may have had a relationship with. Good general managers will sit down and spend the time
necessary to competitively shop all items. Hoteliers should especially take a look at that large check you write to your franchise company
each month and consider whether or not there is an alternative franchise company with more affordable fees. It could surprise you how
much money can actually be saved through this process in the marketplace today providing it is done correctly.

Although we are all in for some challenging economic times, we need to continue to be creative to stay afloat and drive competition. There are so many opportunities out there for us to make a difference in how consumers view our property. You may be talking about an expensive renovation or you may only be talking about utilizing some of the modern technologies that are available to everyone for FREE. I can’t stress enough how incredibly important it is to take advantage of those technologies. It only takes a little extra work and time but it will be well worth it in the end. Mark my words, in 2012, those who were diligent and creative will not only survive but be noted as trendsetters in this new era of our industry.

Steven Belmonte is President & CEO of Hospitality Solutions LLC, which he founded in 2001. Hospitality Solutions provides new
franchise agreement negotiations, franchise termination and liquidated damage claim negotiations. For more information please visit www.stevenbelmonte.com. Mr. Belmonte is also CEO & Owner of Centerstone Hotels. The Centerstone brand was launched in 2011 as a three-segment franchise designed to create a fair and cost effective franchise model for the hospitality industry. Visit
Centerstone at www.centerstonehotels.com. Mr. Belmonte can be contacted at 407-654-5540 or steve@centerstonehotels.com

**This atricle was reprinted with permission from the author and HotelExecutive.com**

Contact:

Steve Belmonte
CEO/Owner
Centerstone Hotels
Tel: (407) 654-5540
steve@centerstonehotels.com



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