News for the Hospitality Executive
Hoteliers…No Resolutions, It's Time to Take Action;
Combining Electronic Sales and Revenue Management
by Neil Salerno, January 2009
This week, I read an article listing several suggested hotelier resolutions for 2009 but, like losing weight and quitting smoking, most resolutions lose steam after just a few days, as reality and daily tasks set-in. Some people spend more time planning what they intend to do than actually doing them. It's time to act. Stop making New Year resolutions and just do it.
For independent hotels, electronically generated sales are the only viable means to compete with branded hotels. For branded hotels, electronically generated sales can help re-capture lost market share. Yet, there are still many hoteliers who think that volume electronic sales are out of reach, too costly or too complicated to implement..
Perhaps the most frequently asked question I hear is “I know about electronic sales, but where and how do I start?” Start by doing more than simply hiring someone to design a new website. There are several elements involved to create and maintain a successful electronic sales program. The primary three are the Global Distribution System, website marketing, and third-party aggregator partnerships.
Website Sales Basics Revisited
In the last few years, hotel web site design has matured tremendously. Gone are the days of websites designed by the office techie, ad agency, or by some local company plucked out of the yellow pages. Knowledge of and experience in hotel marketing has become a necessary ingredient in the process.
We’ve learned that there are several important factors involved in the design of an effective and productive web site; knowledge of how search engines work; utilization of hotel marketing techniques in the overall design; the great importance of text content (Content is King); and that flash design may be pretty, but seldom works well on hotel sites.
In the past few years, we’ve learned that search engine optimization is worthless unless a site’s design has first been optimized. Please do not believe that hiring someone to perform search engine optimization, without first maximizing the functionality of your site, will do anything to help productivity. More people may find your site, but the primary goal is for them to make a reservation; not simply visit. Website content is king.
Website design optimization requires knowledge of how and why people choose hotels on the Internet; how visitors read and evaluate site data; the technical requirements necessary for search engines to find your web site; and ways to improve your chances of success against your competition set.
It’s not rocket science, but it does take some technical and hotel marketing expertise. Many owners and managers still judge their hotel’s website by its aesthetic values instead of how well it functions. For those who are content with simply having an on-line brochure, instead of an online sales engine, sit-back, relax, stop reading, you won’t read anything helpful here.
Website Real-Time Booking Engines
With the sophistication and affordability of today’s online booking engines, there is absolutely no excuse for not having one attached to your website. Simply trying to impose your will on visitors to phone or email their reservation requests will not cause them to do so. The majority of online visitors want the gratification of making an online “real-time” reservation with an instant confirmation to complete the transaction.
I’ve heard all the typical excuses such as “we want to give people personalized service by making them call us”; this is hogwash. People who believe this simply don’t understand the online traveler. Will some visitors see your site and then call to make a reservation, sure, but how many visitors won’t?
Most people today don’t want to deal with busy phone lines, being placed immediately on hold or the dreaded unanswered call. Sending an emailed information sheet into never, never net-land has too much uncertainty for most people.
For those of you who are concerned about the expense, booking engines are very affordable. With most, the return-on-investment is only one or two reservations a month. Shop around for the best booking engine for your hotel. Some are better than others in function and use; some are better for International feeder-markets than others.
Finally, take a lesson for the big-boy franchises, they all have booking engines.
Electronic marketing has evolved from a novelty, just a few years ago, into a necessity since the early days of the 90’s; especially for independent hotels. Its affordability and effectiveness, compared to the marketing days of old, make electronic marketing the best value of our time. If you have money in your budget, Pay-per-click advertising almost always produces a good ROI.
Franchised hotels have taken the GDS for granted, since most franchises require participation in the GDS through their reservation systems. Although production from GDS travel agents has been negatively impacted by the Internet, they are experiencing a resurgence and their potential production could help to supplement any hotel’s top-line.
For independent hotels, the GDS is available through official GDS providers. You can find them on the Internet. Independent hotels need to take advantage of the Global Distribution System also for exposure to third-party business. Being online with the GDS automatically gets your hotel listed with third-party giants like Expedia, Travelocity, and Orbitz; powerful room producers. Don't be fooled by third-party GDS providers who promote long lists of third-party portals, the top three portals represent 90%, or more, of all online business.
Third-Party Travel Portals
First, put aside all those horrible stories you may have heard during the franchise-brand/third-party war of a few years ago. Those days are in the past. Third-party aggregators can produce valuable room nights and unprecedented world-wide exposure, which you could never obtain on your own.
Choose a partner among the top third-party aggregators and form a relationship. Some of them have special partner programs designed to pump needed business to your hotel. By managing rates and inventory, these marketers can provide your hotel with a base of business, which will enable you to leverage sales and increase your RevPar, revenue-per-available room.
If no one on your staff knows how it works, get them educated by an expert. The return-on-your-investment can be huge. There are many knowledgeable hotel consultants who can coach your team in this invaluable market.
Revenue Management is Profit Optimization
Hotel revenue management has many faces. No matter how you apply it to your hotel, revenue management can reap great rewards, if done properly. The basic principle of revenue management is that your occupancy and rates will consist of several layers or types of business. Creating the maximum or optimal mix of business for your hotel is the key to profitability.
We know that each type of business will produce varying levels of rates. Rack rate business, corporate travelers, group business, leisure travelers, and others all have different levels of rate tolerance. Revenue management will maximize occupancy and average rate.
Creating a base of lower rated business will allow you to appropriately close lower rates as room supply diminishes and let higher rates kick-in. Remember, average rate is not what you sell some rooms for; it’s what you sell all your rooms for. The goal is not 100% occupancy; the goal is to sell as many rooms as possible, at the highest rates possible.
The relationship between revenue management and electronic sales is obvious. Utilizing all forms of electronic sales can create that base of business which will allow you to get better rates from call-ins and walk-ins. Reach-out and take advantage of opportunity. The results of inaction can be severe.
|Also See:||Great Opportunity for Independent Hotels - Cash-in on Electronic Sales / Neil Salerno / January 2006|