By Larry Mogelonsky, MBA, P. Eng. (www.hotelmogel.com)
The summer of COVID-19 for hotels has meant a dominance of local leisure guests and road trips as we await the return of group travel to boost our occupancies and our margins. With the approaching next normal of autumn, winter, more properties reopening and less overall desirability for a vacation to a domestic location during the colder months, it would be all too easy to succumb to a price war.
Fortunately, we know the ramifications of a price reduction, notably that it erodes your customer base by making it harder to return to your standard rates. And yet, market forces will dictate bold moves to maintain increased leisure bookings through Q4 in the face of still-awful group travel confidence. While price will always be a top influencer for transient searches and reservations, instead of reducing ADR to keep demand high, what I advocate is to compete purely on value.
Without reducing your price to a point where it becomes essentially a loss leader, how can you ‘out-value’ the competition? What services, amenities and perks can you add so that, on an apples-to-apples price comparison, your hotel has the x-factor? What unique package attributes or add-ons can you use to promote direct bookings?
Numerous hotels around the globe are already getting quite creative with bespoke experiences embedded within their standard packages and promotions to not only incentivize more trial bookings but also create fond memories to spur great word of mouth. While the start of this is complimentary F&B, if everyone is already doing this you have to noodle your offer so it’s a bit different. In this sense, the marketing is equally as important as the value-add itself.
You can start by looking at the welcome amenity, or in this case the ‘welcome back’ arrival experience. Aside from only including snacks or beverages from local producers, to meet guests’ newfound virus anxiety, many properties are including branded facemasks and small bottles of hand sanitizer. Nevertheless, have some fun in the messaging to help alleviate fears.
Related to the arrival experience, with most of your guests coming from drive markets for the foreseeable future, the parking lot can become a point of differentiation. Complimentary parking is the most basic – and thus the most expected and unappealing – value-add. In a depressed gas market, hotels are now offering mileage reimbursements. And while valet may be out of the question due to the contactless nature of our present times, with the right PPE for employees a free car wash may just work.
Circling back to F&B, meal vouchers as an incentive are boring because everyone else is doing them and they don’t spark an emotional image in the mind. However, for the remainder of warmer days you could create a ‘picnic starter kit’ for outdoor, physically distanced dining or even offer private, plated meals in a secluded space. Then as the weather cools, there are still ways to facilitate outdoor dining like bubble tents or torchlit setups, in addition to fun indoor amenities like a mixology cart for guests who want to enjoy cocktails in their rooms or a wine and boardgame room service bundle.
Many of these programs can also be expanded for corporate retreats to help give you a leg up for when groups do in fact return. Furthermore, with the permanency of work-from-home conditions in place, digital nomads will be looking for properties where they can escape the confines of the domicile while still being able to type away and join yet another videoconferencing call. Consider how you can create an ‘office away from the office’ package to enable this kind of hybrid travel behavior.
Whatever program you pursue, look beyond the price and straight numbers. It’s all about providing a point of differentiation that’s imaginative and entertaining. And as a forewarning before autumn, you best get something in the works now. Not only will there be more local and urban competition on the way, but inevitably the sun destinations and cruise lines will be looking to restart operations and draw in snowbirds. That is, you can’t compete with these territories or related industries on price alone, so you need value-added promotions that are emotionally resonant.