By Larry and Adam Mogelonsky
This article is aimed primarily at resorts, but there is a profound lesson in here for urban hotels as well. To summarize what will be discussed, it’s okay to only ever cater to a regional or domestic market and becoming comfortable with that fact in the wake of COVID-19 can help you to better serve the territories where the majority of your guests will be coming from while also cutting costs.
Prior to the pandemic, many of our asset management assignments involved the long-term ramp up of international traveler awareness so as to make the property as prestigious as possible in a strategic vision focused on ADR growth and cultivating a diverse range of feeder markets.
But as the pandemic closed borders, this dream rapidly became a fantasy for many hotels. Some resorts have weathered the coronavirus storm by seizing upon the blooming demand for drive-to getaways, but others aren’t so lucky. Inevitably, the longer international travel restrictions continue to plague hotel owners’ wallets through an inability for foreign guests to visit your locale (or through a media-driven fear of journeying abroad), the more that new behaviors will permanently change people’s travel habits.
Travel bubbles will be first to emerge, but even then most of your leisure and corporate travelers may still come from domestic markets. So, how does you – the owner, operator or senior team – accept that most of your revenues will be locally driven for years to come? How do you know when your hotel or resort has only regional appeal and will be hard-pressed to ever again reenter the international marketplace?
Building a Regionally Focused Vision
Whether it’s a lack of direct air routes from desired markets that have allowed travel in a post-Covid world, being situated a great distance from major airports, a lack of iconic nearby attractions, currently incongruent product positioning for where you want to target, too little capex to win any design awards or a slew of other factors, there are often many things beyond your control that hinder your awareness outside of the territories where you are already known.
In more ways than one, what we’re addressing here is how the college textbooks are doing a disservice to the term ‘market penetration’ because what’s taught in classroom terms does not echo the reality of balancing a budget down to the penny. Extending your awareness into any new demographic niche or foreign territory is a truly dogged affair. This is doubly true given that there’s a satiety of digital travel advertisements and marketing allocations must remain threadbare to stay within budget.
A Example from British Columbia
From an assignment early this year working as an asset manager for an independent resort in British Columbia, we can offer several less-abstract tips to aid in your understanding. Not located within driving range of the primary international hub of Vancouver nor within the ski destination mecca of Whistler meant that building a following outside of the local area was extremely hard to get off the ground.
So, how did we initiate growth out of this niche? As a start, we had to give guests an unforgettable reason for visiting. As a mountaintop resort, the jaw-dropping views were enough to merit a one-night stay but increasing LOS and return guests meant we needed another pillar to hang our hat. The decision was to become a food destination with exquisite cuisine to make every meal incredible and an extraordinary wine cellar focused on the best of the province.
Next, collaboration was essential. Our public relations arm worked closely with the DMO to develop stories highlighting the best of the area paired with our resort, all with the broad goal of developing awareness nationwide and into the lucrative West Coast states of Washington, Oregon and California. We also joined an international loyalty association to help gain some notice in Western Europe.
Together, this helped to diversify our guest origin percentages in order to not be entirely dependent on the local feeder market. Plus, these visitors were hardly ever short lead; they also had a significantly longer LOS than hyper-local staycations and more often than not reserved our upper-tier room products. For a small resort like this one, we’re not talking about a ton of rooms here, but enough to still make the whole endeavor profitable – a small win is nevertheless a win.
While regional resorts experienced booming occupancies during the summer of 2020 when everyone was thinking local, it’s nevertheless important to continually refine your hotel’s reason of being in order to sustain return visits and regional interest long after borders reopen. There will be lucrative profit opportunities with the projected travel surge in Q2 through Q4 2021, but it will largely be a matter of deciding where to focus your efforts.
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Editor’s note: To discuss business challenges or speaking engagements please contact Larry or Adam directly.