and a Look Back Only for Lessons
A veteran observer warns hoteliers about using current forecasts for better times on the horizon as a chance for quick recovery of lost profits and a harbinger for a return to “business as usual.”
By: David M. Brudney, ISHC, November 1994
Historically, hotels have followed always the lead of the airline industry. Most recently, the airline introduced yield management and frequent flier programs to hotels. Most of us say one has helped us to manage our rates better and drive revenue, the other is a costly program to buy customer loyalty we wish we could drop.
Not surprisingly, a recent article in the Los Angeles Times caught my eye concerning Boeing’s multibillion-dollar bet on its newest wide-body jet, the 777.
Changing the Way We do Business
Boeing claims their new 777 has fundamentally changed the way it does business, how it design and build aircraft, and its relationships with airlines, suppliers and employees. Customers such as British Airways and United Airlines say they’re so pleased with the openness Boeing has shown they now demand similar treatment from competitors. Paul Nisbe, and aerospace industry analyst with JSA Research in Newport, RI calls it “a revolution from one end to the other.”
Assuming the article to be accurate, I wonder how long it will be before we read similar comments about hotels and hotel management companies being praised by customers for “changing business ways,” “relationships” and new “openness?”.
Yes, to be sure, there have been positive signs of change in our industry of late. We’ve witnessed much corporate downsizing, new employee empowerment and pledges to re-engineer how hotels work. And there have been new relationships formed between hotels and larger corporations and travel companies. But I as here “is it enough?” and “are we really committed to real change” and “forming new partnerships” with our customers? Or are we doing very little more than riding out the economic maelstrom of the past five years?
An Observers Concerns
Unfortunately, from my vantage point, I see too many signs of owners, operators and management companies still resisting real and dynamic change and still seeking only short term solutions. Perhaps most disappointing for me are those who interpret the wave of current optimistic forecasts as signals to return to “doing business as usual” and a golden opportunity to quickly recover lost profits. If such is the case, I am obligated then to ask did we not learn anything from the past five years?
Hotel management today must continue its commitment to lean management with stronger cost controls. Managers must be more teachers than delegators, more team-builders and less autocrats. Organizational charts need to be flattened out with more empowerment given to more responsible line employees. And, of course, we must continue to hire good attitudes and teach the right skills.
Forming New Partnerships
New hotel economics, a decade of new product segmentation and a much different, better informed customer have helped bring about these much needed changes in hotel operating philosophy.
The customers, as we knew them in the 70’s and 80’s, for instance, are “Gone with the Wind.” They’ve been replaced by well-informed, consumer-oriented buyers who fully understand and demand price to value relationships. Many have moved from corporate desks to home-based offices (“The computer will increasingly replace the commuter,” says Gerald Celente in The Trends Journal}. More and more sales departments today are dealing with “third party” meeting planners and travel arrangers.
And what about forming new partnerships with this new breed of buyer? Are we really maximizing all of these new opportunities for pooling technology and marketing resources for mutual benefit? Don Peppers and Martha Rogers have co-authored a must read for hoteliers on this new business paradigm: The One to One Future - Building Relationships One Customer at a Time, where competitors focus on “share of customer’ rather than market share.
Hotel marketing, afterall, is really not a science, it is a clinical art, just like medicine. The practice o medicine works best when physicians and patients form partnerships during the treatment process. Our future relationship with customers should be no less different. We’ve referred to travel companies and planners as our “partners in travel” for years, but have we really explored all the opportunities for “partnering” with them? I doubt it.
Surprisingly, I find far too many unit sales departments representing major U.S. hotel chains, focusing too much time, money and resources on Fortune 1000 and 2000 corporations and not enough focus on proactively prospecting and developing new business. I find too much attention paid to “key account coverage” programs and “volume contract” business and too little attention paid to new leisure-oriented, social, ethnic and family-bonding business. The hotel’s very best sales people should be assigned to more of these less familiar and rapidly emerging market segments.
New Outside Sales and Marketing Services
Hotel owners and operators need to become more aware of the growing number of outside resources available today. The past five years have created some interesting, new cottage industries to service hotels in need of regaining competitive advantage through improved data base marketing, telemarketing, hotel representation and other a la carte services.
Hundred of former successful hotel sales directors have forsaken their full time jobs and now work independently out of their homes, networking with other professionals in providing valuable new resources for hotels with significant and cost efficient results. Hotels may use the service as contract labor to update and qualify old files, prospect new markets, attend selected trade shows produce direct mail campaigns and, in some instances, become the hotel’s sales department on a temporary basis.
Despite the projected return to more favorable occupancy levels in the mid to high 60’s this year and next, hotels will be faced still with the same challenge as before: How do we fill those one-out-of-three empty rooms every night?
Hotels must continue to look at the vast international market for new sources of leisure, commercial travel, meetings and incentive group business. Current efforts to increase USTTA spending and make tourism a priority agenda item with the Clinton administration need acceleration. A commitment for a White House conference on tourism in 1995 is a good start.
Marketing areas and issues in need of more attention by today’s hoteliers:
Remember the Lessons from the Past
At least a half dozen times during my three decades plus in this industry I’ve witnessed hard times followed by a “perceived’ return to normal business. But this last one was different. Hopefully, all of us -- owner, operator, lender, developer, supplier -- have learned a lesson form this one. History does repeat itself and hard times will return again and again.
One lesson that must be learned is that a return to success will only come about because we’ve changed how we do business. We must look forward and embrace not resist new technology and all the new resources available today.
The road for hoteliers for the rest of the ‘90s and into the new millennium will not be an easy one. In order to recapture previous success and regain the confidence of the financial community, and to remain competitive beyond 2000, hoteliers must:
David M. Brudney, ISHC, a nationally recognized spokesman for hotels and a veteran with three decades of experience, is the principal of David Brudney & Associates of Rancho Palos Verdes, CA, a marketing consulting firm specializing in the hospitality industry since 1979.
Comments, observations or more examples, please... let me hear from you! My email is email@example.com
David M. Brudney, ISHC, Principal
David Brudney & Associates
Carlsbad, CA 92009
760-476-0830 Fax 760-476-0860
Web Site: www.DavidBrudney.com