Carol Verret Consulting and Training Consulting Training Seminars |
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The Impact of the Rising Cost of Gas: Why It's Different This time! |
March 14, 2012 It’s almost Easter – the first test of the
impact of the
cost of gas on leisure travel. It’s a
good thing the Energizer bunny runs on batteries! Haven’t we been here before?
Didn’t we go through this last summer and the year before
that with the
gas prices? What’s the difference
between those years and this year – this is more serious as the price
per
gallon threatens to leap to over $5 may be even $6!
The $5 0r $10 gas card isn’t going to
impress. The most obvious impact will be in leisure
as the cost of a drive
vacation and rising air fares will take a quantum leap but it goes much
deeper
than that – it will also significantly drive up costs on the hotel side. Decreasing revenue and increasing costs
are
not a good cocktail and just when we thought we could begin to drive
rate in
the leisure segment! Just when business travel was making a
strong showing it
appears that the cost of gas is impacting this revenue generator. In an article in USA Today, it states that “Business travel had been on the rebound,
with expectations that spending on corporate trips would return to
2007's
pre-recession levels by spring, (Michael) McCormick's (executive
director of
the Global Business Travel Association,).
… But if fuel prices stay high and economic emergencies
such as the debt
crisis in Europe aren't resolved, companies may again pull back.” (USA
Today,
3/13/12) Group business will
not feel the impact immediately due to advance bookings.
“Group committed occupancy on the
books for February through the end of 2012 is up 5.9 percent compared
to this
time last year and new group business added over the last month is up
5.1
percent. However, ADR in the group segment is down marginally from a
year ago
by -1.1 percent.” (TravelClick, 3/8/12) Inquiries
and bookings going forward may take energy costs into consideration for
new
bookings. The most immediate concern is leisure this
summer as there
are no indicators that the price of gas will retreat that quickly. Strategize now for the summer! Rate
and Revenue Management strategies.
Be realistic about rates – don’t just stick to the
budgeted
numbers! Mine the data in your comp
set
to see what rates they are projecting for this summer.
Value add breakfast if you don’t already
offer it as this is a tangible value that a customer can easily
monetize. Be ready to adjust rates on a
dime and at the
last minute, even on the same day, depending on pick up.
It’s astonishing how many travelers book on
the OTAs and the web site for the same day! Then there are the leisure
travelers that will drive into a market without a reservation to see if
they
can cut a ‘walk in’ deal. Distribution
strategy. Be prepared to give
up
some rate in exchange for occupancy and visibility.
Last minute deals and discounts for length of
stay on the OTAs can generate additional volume and don’t forget Mobile
only
deals. Work with market managers to
get
a feel for their summer promos and participate when it makes sense. Remember the Billboard effect – the more
visibly the hotel has the more reservations are actually made through
the web
site. Promotions. Remember the one tank of
gas promos from
years past? They make sense again. Target areas in that circle that are roughly
one tank of gas away. Consumers may be
reluctant to give up their vacation plans but will definitely be
conscious of
the price of gas to get there. Locals
promotions – create an experience package ‘tourist in your own town’
for people
within 100 miles of the property. Don’t forget the
other two segments. Take the
temperature of your corporate accounts and see what if any impact the
price of energy
is having on their travel plans. Monitor
production closely. In these situations, companies are tempted to
‘trade down’
into another segment that offers more value adds like breakfast or
manager’s
receptions and of course, free WIFI. Keep your booked
groups close and monitor to see if rising gas prices and air fares are
going to
impact their pick up before the drop date.
Take the pulse of new group inquiries in terms of their
sensitivity in this
area going forward.
Carol Verret and Associates Consulting and Training offers training services and consulting in the areas of sales, revenue management and customer service primarily but not exclusively to the hospitality industry. To find out more about the company click on www.carolverret.net. 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] |