Sell Harder Before You Cave-in on Rates
|By: Neil Salerno – September 2005
When times get tough, natural human tendency tempts hoteliers to reduce rates in order to drive more business. At least that’s the general idea. Over and over again, this can of worms rears its ugly head every time there is a dip in occupancy. Caution…use some serious thought and harder selling before you cave-in on rates. If you don’t you may be setting yourself up for longer term disappointment.
It’s a common belief that reducing one’s rate will radically improve occupancy. Don’t we all wish this were true? It would sure make hotel marketing an easier job. The fact is that reducing rates does not generate new demand; never has and probably never will. The usual result is to get the same or only slightly more business at lower rates; most often not enough business to offset the new lower rate offered.
Before you simply react, take a hard look at your rate positioning; where do your rates reside as compared to the hotels in your competitive hotel set. Cornell University has a great study on their web site, which discusses this very issue. The best rate position can only be determined by an honest evaluation of where your hotel’s location, facilities, and amenities rank within your competition set, and then set your rates accordingly.
Your published rates define your hotel. Like it or not, people who do not know your hotel will make a value-judgment based upon your published rates. Rates that appear too low will also appear too good to be true. As the old saying goes, if it seems too good to be true, it usually is. This is the heritage of our free-enterprise society; the freedom to choose based upon our best value judgment. Setting your rates too low can negatively impact your business; instead of improving your hotel’s marketability.
Your hotel does not exist in a vacuum; your rates should reflect your deserved position among your competition set. Before the franchises started the “lowest rate guarantee” nonsense, we used to sell hotel rooms based upon the merits of the property and the simple principle of supply and demand. The franchises succeeded in re-capturing some market share from third-party aggregators, using this fabricated rate tool, but at the cost of the profitability of their franchisees. Their intention is not to increase demand; it’s intended to steal market share from the third-party sites; pure and simple
They lowered guest expectations, created a market based upon rate instead of merit, and made the Internet a Filenes Bargain Basement. It’s time they found a better way to compete with the third-party sites. It’s time for our industry to go back to selling location and facilities.
Third-party aggregators serve a very special place in the marketplace. They have the ability to drive many room nights to your hotel. Use this base of business to increase your published rates. They have more power and spend more money marketing your hotel than most franchises.
Improve your web site’s capture capabilities to get your fair share of direct business and stop relying on your franchise to do all the marketing of your hotel.
Concentrate on Marketing
There are few shortcuts to developing business. Generating new business is a long continuous job with big rewards for those who persevere. Easy fixes, such as drastically reducing rates, rarely result in a healthier top line.
If your rates are properly positioned against your competitive set, it’s time to examine your marketing techniques. Unless you plan to sell your hotel by rate alone, re-evaluate your web site’s effectiveness. Beware of web masters who emphasize all the wonderful “hits” or “unique users” your site is receiving. The best way to judge the effectiveness of your site is to measure the number of reservations you are getting from your site; period.
I have had many clients who thought their sites were perfect, beautifully designed, but the sites were completely ineffective. It’s not just what you see that defines the marketability of your site.
The most common errors:
Your Sales Team
If you are lucky enough to afford an identified sales team or take on the job yourself, it’s time to review sales activities and how you are selling your hotel. The majority of new business will result from your direct sales effort. Don’t judge your sales effectiveness from the number of contacts that are being made; new bookings and reservations are the keys to success.
There are many good hotel sales consultants who can put effectiveness back in your sales program. Good sales programs result from sound and consistent sales habits. Get an objective view of your sales practices. You might be surprised.
|Also See:||The Web Site Conundrum…Are You Winning the Electronic Marketing Game? / Neil Salerno / August 2005|
|Lions and Tigers and Bears…Oh My; The Hotel Yellow Brick Road is Less Scary than It Used to Be / Neil Salerno / August 2005|
|Running Dry on Good Hotel Ideas? It’s not What You Know - It’s Who You Know / Neil Salerno / July 2005|
|Revenue Grabbing Tips for Independent Hotels; Start Thinking Like the Chains / Neil Salerno / July 2005|
|Hotel Web Basics That Really Work…Content 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 Internet…The 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? We’ve Come a Long Way, Baby! / Neil Salerno / March 2005|
|New Consumer Hotel Booking Preferences - They Love the Internet…Now 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 “Make-Over”? 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 Internet’s 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|
|Don’t Compromise Your Goals In 2004; Five New Year’s Resolutions You Will Want To Keep / Neil Salerno / January 2004|
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|Hotel Web Site & Search Engine Optimization; Always A Work In Progress / Neil L. Salerno / October 2003|
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|How Often Have You Heard, 'I could have gotten a better rate but the client saw our rates on the Internet' ? It’s 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|
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|Coaching and Mentoring, Sometimes A New Paradigm Can Go A Long Way / Neil L. Salerno / June 2003|
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|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.... You’ll Always Get What You Always Got! Hotelier’s Mantra... Thinking Outside The Box / Neil L. Salerno / April 2003|
|Good Sales Planning - The Basics Still Work / Neil L. Salerno / April 2003|