for the Best and Highest Use?
|By Brenda Fields, January 2004
“Build it and they will come” may work in The Field of Dreams, but not necessarily in the hotel industry. The more accurate sentiment may be “Build it RIGHT and they will come”. To realize the highest room sales potential, it is important for owners and managers to make sure that each room is configured to its highest and best use. Many times, with very little expense, room revenues are significantly impacted through occupancy and/or average rate increases, by making minor adjustments. This is especially true in the case of small, boutique hotels, where each room sold has a significant financial impact.
By understanding and implementing a few basic principals, owners and managers can potentially avoid costly miscalculations in revenues and expenses by building it correctly or by reconfiguring an existing property. Some basic principals are:
1. Know your targeted market(s), i.e. who they are and what they expect.
Sometimes, by trying to be all things to all people, the room product becomes diluted and does not satisfy the need of the core market, resulting in an underperforming hotel. For example, upon new ownership of a high-end, all-suite hotel in West Hollywood, California, it was observed that the large suites had twin beds and the small suites had king beds. The core market was entertainment groups, typically comprised of a lead singer and his/her band. The concept of the original room configuration was based on accommodating many guests in the larger suites, as opposed to catering to a high-rated guest. But, the core business required the larger suite for the lead performer who wanted privacy, VIP services, and a king bed. As we know, price sensitive groups will double up to save money. By switching the king beds with the twin beds, and charging accordingly, the hotel was able to capture its core business, impacting occupancy and average rates.
Another example of inefficient planning is that of an urban hotel in a prime corporate transient business location, with enough roomnight potential to fill the hotel three to four days per week. Upon new ownership, most of the guest rooms were changed to connecting rooms, with the idea that this would appeal to families. Additionally, in-room amenities, such as microwave ovens were placed in each room for families. A key business amenity, such as high speed internet access, was only available through the business center. As a result, families did not stay in the hotel because the rates were above their budgets. The individual business traveler would not stay in the connecting rooms because of noise and lack of privacy, as well as the lack of in-room business amenities. By not recognizing the core market, and by not understanding the needs of that market, the hotel failed to attract the high rated business on which all their proformas were based, despite their location advantage and other strong competitive advantages. The wrong room product was created and there was ample supply among the competition to meet the needs of the two markets.
2. Quantify the mix of business.
To ensure the right mix of room types (suites, king-bedded rooms, double/doubles, etc.), it is important to understand the desired mix of business and to quantify demand. In an urban market, the mix of business could be 80% corporate and 20% leisure. A detailed analysis would address the ideal room configuration which would provide the correct breakdown of kings, twins, double/doubles/and suites. A hotel located on a highly trafficked interstate may cater to 50% corporate and 50% leisure markets. Therefore, in that case, it is important to be all things to all people, and the entire inventory of double/doubles could conceivably work. Therefore, it is important to quantify the desired mix of business and configure the rooms accordingly.
3. Know your competition and stay current with trends and new standards.
After identifying your markets, understand what the competition is providing and how your property compares. Remember the days when a king bedded room was one of the high-rated premium rooms? Now, it is a standard and rarely commands a higher rate just based on the bed-type. Twin bedded rooms have virtually been replaced by double/doubles in most American mid-market hotels. Twin beds may be less expensive in linen costs, laundry, and labor, but if they have become obsolete, and the market does not want them, revenues are jeopardized.
Competition drives change and “standards” can change. Staying current and staying competitive will place the hotel in a stronger position to drive business.
As market conditions change, often times resulting in a change of market mix, a few simple tools and a thoughtful analysis will help ensure that owners and managers are continuously reaching the highest room sales potential.
BRENDA G. FIELDS
In her more than 20 years as a marketing and sales pro in the hospitality industry, Brenda G. Fields has emerged as the “go to” consultant for independent and/or privately owned hotels and resorts seeking real-world solutions for today’s market challenges.
From small boutique hotels to large convention properties, Brenda has created and implemented highly successful marketing and yield management programs that enable owners to achieve target results despite market conditions. Most notably, she helped a 1,400 mid-town Manhattan hotel realize 86% occupancy two years running in a depressed economy, resulting in the achievement of Performa and first place in market share out of 14 competitors. For a small, four-diamond property on Park Avenue, she helped turn-around declining sales resulting from increased competition from nearby chain-affiliated hotels through a restructuring of the sales department and effectively increased distribution channels to reach new markets.
With extensive expertise in pre-openings and repositionings, Brenda was responsible for the successful opening and stabilization of the Paramount Hotel in New York, for which she developed and executed a direct sales and yield management program in addition to a national and international marketing campaign. As a result, the strategies and structure she designed and implemented continue to be used as the prototype for new acquisitions by Ian Schrager Hotel.
With a “who’s who” roster of clients, Brenda has worked with a number of industry leaders and real estate investment companies including Starwood Lodging Corporation, Vornado Realty Trust and Planet Hollywood, John Hancock Mutual Life Insurance Company, Olympus Real Estate Corporation, Gotham Hotels and Apple Core Hotels, among others. Her growing consulting practice for independent properties includes clients such as The Kitano Hotel, New York; Founders Inn and Conference Center in Virginia Beach, VA; Bel Age Hotel, Los Angeles, CA; Mondrian Hotel, West Hollywood, CA; and many others.
A native of Kentucky, Brenda holds a B.S. in Psychology and English
from Murray State University. She is lives on Manhattan’s Upper East
Side and enjoys cooking and entertaining in her cottage in upstate New
500 E. 77th Street, #1101
|Also See:||Direct Sales - What to Expect from Your Hotel Sales People and How to Get Results / Brenda Fields / August 2003|
|Boutique Hotels: How to Survive in a Down Market - Getting Back to Basics / Brenda Fields / May 2003|
|Industry Marketing Pro Brenda Fields Opens Consultancy Focusing on Independent Properties / January 2003|