by Patrick Quek

In good times or bad, the success of the sales and marketing department is crucial to a hotel's bottom line. A vigilant sales administration must stay flexible to stay abreast of new techniques. Every day technology and market forces make new demands on internal creativity, and the sales and marketing department lives with constant change.

To measure these changes, PKF ConsuIting conducted a study of current practices within the sales and marketing departments of U.S. hotels. The study was designed with the assistance of sales and marketing directors and concentrated on:

• Department finances
• Affiliation benefit
• Revenue management
• Contract terms
• Third parties
• Technology
• Personnel/staffing
• Advertising

Following are highlights of the survey.

Personnel/Staffing
Hotel sales departments surveyed were staffed with approximately six full time people, four of whom are directly involved in the hotel's sales efforts and two who provide administrative support. The average annual budget for a sales department equates to $2,845 per available room at the hotel. Forty-five percent of the budget goes to paying salaries and wages.
 

Hotel sales staffs historically have received some form of bonus compensation based on their ability to book business. However, the basis for a sales person's bonus has shifted over the years from an emphasis on room nights to an emphasis on revenue. While 60.9 percent of survey participants use room nights to some degree or another, 78.1 percent of hotels surveyed use rooms revenue as a measurement in the bonus calculation.

For those hotels that do not have any full-time sales personnel (11.5 percent of the sample), the responsibility for sales typically rests on the shoulders of the general manager. These general managers allocate 57 hours per month for sales and marketing.

Affiliation Benefit
Approximately 6.2 percent of the properties in the survey were affiliated with a national chain. These properties spent an annual average of  $l,360 per available room for all royalty, reservations, and marketing costs associated with the affiliation. In general, it appears that affiliated hotels receive greater benefit from the national reservations system than from the efforts of the national sales offices. Not only do the reservations systems provide more room nights, but the rooms are sold at a rate higher than the hotel's average annual room rate.
 

Revenue Management and Technology
Instead of looking solely at the number of rooms occupied, hotel sales and marketing staffs concern themselves with the total revenue benefit of a piece of business. Some companies assign the title director of revenue management  to those who previously carried a director of sales title. It is in the area of revenue management that we have seen the greatest impact from technology. In fact, analysis / budgeting / forecasting was cited as the most frequent use of technology in the sales department.
 
 

Technology has also had a significant impact on the ability of hotels to control room rates. Automated yield management programs are i place in 79.8% percent of those surveyed. For properties using an automated yield management system, the highest room rates are quoted when the hotel is projected to achieve an occupancy of 78.5 percent, while the lowest rates are not quoted until it looks like the hotel will he less than 61.8 percent occupied.

Third Parties
The increasing involvement of third parties in the booking of guest rooms has forced hotels to re-evaluate their posture and position toward these entities. Since the depths of the recession in 1991, hotel sales departments have seen the greatest third-party increase in the prevalence of travel agents in the hooking/selling process, followed by such relatively new entities as internal corporate travel agencies and independent meeting planners.

With more intermediaries involved in the sales distribution system, the study examined both the amount of commissions paid and compensation methods. Not surprisingly, a percent-of-revenue is most frequently used to compensate third parties. However, a flat-fee-per-reservation is often used in compensating either CVB housing bureaus or internal housing bureaus run by a convention's own association.

Contract Terms
During this period of high performance within the industry, the leverage of negotiation has swung from the meeting planner to the hotel sales manager.

One area where hotels have flexed their muscle has been in the area of '"freebies." Approximately 60 percent of hotels surveyed noted they have changed their policies within the past five years with regard to the amount of complimentary rooms or food and beverage discounts given to a group. Of those properties that have changed their policies, 81.5 percent have made them more restrictive, while the remaining 18.5 percent have loosened the restrictions regarding such concessions.

Historically, the quality of a hotel sales person was measured by the amount of time spent away from the property. Good sales people were constantly on the road," while those who claimed to be hogged down with paperwork were viewed as grouses.

The technology and sophisticated analysis necessary in today's hotel sales departments have changed this stereotype. It appears that time spent at the desk analyzing such issues as yield, total revenue benefit, and distribution systems may prove to be mote beneficial to the bottom line than blindly chasing new accounts. A strong handshake and plaid sports coat just doesn't cut it anymore. The successful hotel sales person is now described as needing cerebral qualities such as creative, analytical, and financially savvy.

A copy of the results of the 1997 Sales and Marketing Survey will be available in the  fall of 1997.  Contact the research department  of PKF Consulting at 415-421-5378 to purchase  a copy.

Patrick Quek is president and CEO of PKF Consulting, an international hospitality consulting firm headquartered in San Francisco.

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