Start Thinking Like the Chains
|By: Neil Salerno Ė July 2005
In many Florida coastal cities, and cities across the country, smaller
independent hotels struggle with the daily task of selling rooms along-side
Consolidated marketing and the synergy of chain branding threaten the future existence of many independent hotels, but now there are some solutions on the horizon.
Thanks to the Internet and other forms of electronic sales tools, independent hotels have their best shot at playing on a more level playing field, but they may need to borrow some techniques from the playbook of the chains.
Reservations contribution has been the bastion of hotel franchises for many years. Central reservations offices, participation in the Global Distribution System, instant electronic access to rates and inventory, and brand advertising are formidable franchise assets. The promise of 25%, 30%, 35%, or more in reservations contribution to total sales is the strongest reason to buy a franchise.
The sheer nature of the Internet and the popularity of online third party aggregators are changing the playing field itself. Itís now possible for Independent hotels to get 30% or more reservations contribution directly from the Internet; without a franchise. The fact that most franchise fees are upwards of 5% or 6% of total room sales, while Internet sales costs are so low, is causing some consternation among many franchisees.
The franchisesí self-imposed war against third-party aggregators was caused, at least in part, by their fear that the success of third party bookers could threaten their reservations base and their very way of life by also eroding brand loyalty. In part, their fears are warranted. Third-party suppliers are developing their own brand loyalty. Independent hotels can play the third-party game.
The proliferation of specialized brand types, created by the franchises, has caused some confusion in the marketplace. In their effort to fill niche markets, some franchises have diluted their branding effort by creating too many brands and confusing at least some of the traveling public. Frankly, I know many knowledgeable hotel people who canít define or describe all the latest products in the marketplace; imagine the plight of the average traveler.
Now, donít get me wrong, I certainly donít predict the doom of hotel franchising. For the most part, they employ brilliant people and do a great job for their franchisees. I do, however, feel that smaller independent hotels, for the first time, have a wonderful opportunity to compete.
Many franchised hotels are now taking a second look at their franchiseís reservations contribution to their properties.
The Importance of Electronic Sales
The most obvious lesson to be learned from franchised hotels is the value of the Internet. As experts have said for quite some time, the Internet is still the most effective and value-packed sales tool ever devised. Yet, itís hard to believe that there are still many independent hotels which have not yet discovered the many benefits of the net.
There are now many independent hotels receiving upwards of 30-35% of their total sales online, just like their bigger franchise brothers. The Internet has raised independent hotels from relative obscurity in the marketplace to global players in the world-market.
Through third-party players like GenaRes in Texas, independent hotels have access to the valuable Global Distribution System which enables travel agents, airlines and car rental companies to book their hotels. Fees are reasonable and it squares them with the franchises. Travel agent reservations are on the rise again.
Expert Hotel Business Advice
Another strong advantage enjoyed by franchisees has always been the expert knowledge base provided by the franchise itself. Good business advice from knowledgeable and talented franchise people helps their members set the right course in marketing and operating their hotels.
They assist with rate and market positioning, valuable market data collection, data analysis, and provide sales techniques to franchisees, which, in turn, help them to develop successful operational strategies. Many independent hotels are still flying by the seat of their pants, often without a good strategic plan.
The entrepreneurial spirit of many independent hotel operators, in some respects, has hindered many of them from seeking outside expert advice and assistance. In some cases, itís that inside-the-box thinking which has limited their growth. In addition, most of the membership affiliations, available to smaller independent hotels, have neither the budget nor the expertise to help their members in the same ways in which franchises offer their franchisees.
There are resources available to independent hoteliers, but unlike franchises, they need to reach-out to find them. There are many experienced hoteliers who can provide guidance, sound solutions, and technical expertise for modest fees. Sometimes just a little advice will do the trick. It doesnít have to be costly nor a permanent situation. .
The biggest difference between large hotels and smaller independent hotels are the numbers, themselves. Many smaller hotels would do well to utilize some of the techniques used in franchised properties to position and market their hotels.
Although jobs are more consolidated in smaller hotels, they can still deal with the same sales and data collection issues as their big brothers by hiring an experienced coach for their business; someone to temporally guide their hotelís growth in the market. The rewards can be enormous.
Copying someone is the sincerest form of flattery; it could be the key to success. Most franchises have healthy budgets for research and development; they can afford the very best people available; and have their finger on the pulse of the market. Independent hotels would do well do study and emulate some of those resources.
|Also See:||Hotel Web Basics That Really WorkÖContent is King / Neil Salerno / July 2005|
|Hotel Supplier Sites versus Online Travel Agents; The War Chronicles / Neil Salerno / June 2005|
|New Hotel Technology Surround Us; Yet Face-to-face Selling is Still Most Productive / Neil Salerno / June 2005|
|The InternetÖThe Great Equalizer For Independent Hotels / Neil Salerno / June 2005|
|Third-Party Booking Sites Still Dominate Internet Sales; Why Do So Many Consider this Bad? / Neil Salerno / April 2005|
|Now That Online Hotel Booking Is Here to Stay, New Challenges Emerge / Neil Salerno / April 2005|
|Independent Boutique Hotels Can Compete With their Big Box Neighbors / Neil Salerno / April 2005|
|Who Are Your Most Important Guests? Weíve Come a Long Way, Baby! / Neil Salerno / March 2005|
|New Consumer Hotel Booking Preferences - They Love the InternetÖNow What? / Neil Salerno / March 2005|
|Who Would Have Thought - Today's Hotel Marketing Necessity Is Also its Best Value / March 2005|
|Time For a Hotel Web Site ďMake-OverĒ? Methods for Building a Successful Web Site Change / Neil Salerno / March 2005|
|Create Impact by Developing a Link Strategy For Your Hotel Web Site / Neil Salerno / February 2005|
|Steps to Develop Your Hotel's Presence on the Web / Neil Salerno / February 2005|
|Five Hotel Internet Marketing Myths - Busted!/ Neil Salerno / January 2005|
|How Does Your Hotel Web Site Measure-Up? 2005 Will Be the Internetís Most Productive Year so Far / Neil Salerno / January 2005|
|Are You Being Out-Hustled By Your Competition? How to Dominate Your Hotel's Market Set / Neil Salerno / December 2004|
|Why Are Some Hotel Companies Plagued By Management Turnover? Is This Systematic of Poor Performance? / Neil Salerno / December 2004|
|Basic Components of a Hotel Website: Current Weather, Flash Animation, and Virtual Tours?? Plain Talk About Internet Sales / Neil Salerno / February 2004|
|Donít Compromise Your Goals In 2004; Five New Yearís Resolutions You Will Want To Keep / Neil Salerno / January 2004|
|No More Whining About Third-Party Suppliers; You Control Your Own Fate On The Net / Neil Salerno / December 2003|
|Six 'Maxiís' Guaranteed To Boost Hotel Sales / Neil Salerno / November 2003|
|Itís Time To Take Back Control Of Rates & Rooms - But Is The Enemy...Us? / Neil Salerno / November 2003|
|Booking Engines Are Like A Box of Chocolates...You Never Know What Youíre Gonna Get! / Neil Salerno / October 2003|
|Hotel Web Site & Search Engine Optimization; Always A Work In Progress / Neil L. Salerno / October 2003|
|Hotel Budgets and Marketing Plans; Oh No, Is It That Time Again? / Neil L. Salerno / September 2003|
|Increasing Hotel Internet Sales Is Not Rocket Science...And It Doesnít Have To Be Costly Either / Neil L. Salerno / September 2003|
|Are You Treating Third Party eWholesalers As Competititon Or a Valuable Marketing Partner? / Neil L. Salerno / August 2003|
|How Often Have You Heard, 'I could have gotten a better rate but the client saw our rates on the Internet' ? Itís Time To Get Back To Selling Location, Facilities, and Services / Neil L. Salerno / August 2003|
|Before You Begin that Marketing Plan Challenge Your Sales Team; Expect More and Get More / Neil L. Salerno / July 2003|
|Jump Up and Shout Yes - Delivering Best Online Customer Experience, Nice Job Vividence! / Neil L. Salerno / July 2003|
|Is The Internet Delivering On Its Promise? Well, It Depends on How you Look at It / Neil L. Salerno / June 2003|
|Coaching and Mentoring, Sometimes A New Paradigm Can Go A Long Way / Neil L. Salerno / June 2003|
|Sales Training Works Well, But Sales Mentoring Makes It More Effective; Mentoring Lasts a Lifetime / Neil L. Salerno / May 2003|
|Is It Time For A Sales Tune-up? How Healthy Was Your Last Forecast? / Neil L. Salerno / May 2003|
|Hotel Web Sites; Want it Creative or Effective? / Neil L. Salerno / May 2003|
|If You Always Do What You Have Always Done.... Youíll Always Get What You Always Got! Hotelierís Mantra... Thinking Outside The Box / Neil L. Salerno / April 2003|
|Good Sales Planning - The Basics Still Work / Neil L. Salerno / April 2003|