The hotel industry lost a lot more than just some room business in the years since 2001; we lost some of the many fundamentals which made us successful in the past. Namely, we lost our aggressive selling mentality and slipped into the race to see who can offer the lowest rates in the market.Mistakenly, many hotels thought that lower rates would create more new demand. Reduced rates never have and never will, create demand. Since 2001, hotels stopped the practice of selling product, amenities, value, and good service and began selling by rate alone. We stopped selling; we forgot that people buy value; not price.
This selling-by-rate mentality has also blurred hotel type segmentation. Mid-class hotels began to compete directly with budget-class hotels; and full service hotels with limited service hotels (just see how many full service hotels now offer free breakfast), and so on. Brand segmentation is quickly becoming meaningless to the traveler. Rates rule the marketplace, because we stopped giving the consumer anything else to consider.
Ironically, the popularity of the Internet began its explosive growth during this same period. All available rates are now exposed to the public. Several franchisors led an effort to create the well-known “best available rate” strategy for their Web Sites; further perpetuating the selling-by-rate strategy. They will all live to regret it.
Clearly, something has to change. It’s time to return to selling rooms by presenting “value” to the consumer and not simply lower rates. Many studies have shown that lower rates may produce room nights, but these lower rates negatively impact your RevPar and profit margins.
With the return of higher travel demand, you have an opportunity to lead your market set back to selling the hotel experience. Set your rates to be among the highest in your market set and start selling your hotel again.
Just about every market has a core of companies which provide a base of transient and group business. Now that demand is growing again; are you getting your fair share?
There are two ways to build business; maximize business received from current clients and find new clients. As the old saying goes, “In order to fill the bucket, one must first seal the holes in the bucket”. Has some of your business base slipped through the holes in your bucket because of poor service and other factors? It amazes me how many hotels concentrate on new business alone; and do little to keep the business they have and build on it.
New front office systems give hotels the ability to track business from every market segment, yet so many hotels do nothing with the data they capture. Reviewing the numbers in a monthly meeting is a good start, but what, if anything is done with the data. Are your corporate transient clients living up to the room production numbers they promised in order to get the deeply discounted rate you gave them? How often is your sales team contacting them to see why they are not? Is their production being compromised by other hotels in your market? Even worse, is your hotel handing-out discount rates which are based upon a smile and a hand-shake and not client room production?
Not all corporate accounts are equal. Examine your negotiated rate accounts. Do the rates make sense? Do the companies which, provide you with the most room nights, get your best rates? If not, you have a lot of work to do.
There was a time when companies had limited shopping ability. All they could do was to choose a hotel and ask for a good rate. They soon learned that better rates could be negotiated with specific hotels, based on volume and other factors, and, they learned that most of those hotels would rarely question whether the company was fulfilling their volume room requirement. Life was good for corporate travel managers.
Most of your negotiated rate companies don’t track their outgoing business; they often have no idea how many rooms you received from them…until you tell them. Your team should be contacting every one of them, every month. What other hotels are they using in your market? Are you getting your fair share of business from each corporate account? If you don’t know the answer to that question, it may mean that no one has asked.
Many accounts like to spread their business among several hotels in the area. Hopefully, your hotel is one of them. But, are you working to get a greater share of their business? Are you getting your fair share….or more? How much additional business is there; do you have a plan to steal it?
An excellent technique to penetrate larger corporate accounts and get more of their business is account-mapping. Many larger companies have eliminated travel departments to disperse their room business. This leaves that task to individual departments within the company. How many of those departments do you know and work with?
An easy way to find out is to map the departments within the client company. Start with the contacts you know. Place their names and departments on a chart. Now add, who they report to; and who reports to them. If you don’t know, find out and contact them. Once they have been contacted, add them to your chart and continue the process. The end result should be a virtual organizational chart of the company. This chart or map will ensure that you are doing business with every mover and shaker in that company. Easy isn’t it.
Soliciting New Business
The day of the cold sales call is dead. I can’t think of a better time-waster. Many hoteliers still cling to this outmoded method, primarily because they know of no other way.
There are many solicitation techniques which utilize the Internet; learn to use it. However, one of the most effective solicitation methods is to target accounts in various market segments, which are currently using the competition. Assign each of these accounts to specific members of your sales team, even the general manager. This top 5 or top 10 accounts become the heart of your solicitation efforts. Each individual needs to report on progress for each account, every month. The team should discuss these prospects and the various methods to get their business; a team effort.
We all know that good business is comprised of relationships. Besides your excellent facilities, great service, and perfect location, personal chemistry plays a large part in anyone’s willingness to do business with you. Relationships need to be cultivated; nurtured.
The best general managers will take a major role in developing good client relationships. Although many prefer to be invisible, general managers need to meet every client possible. The general manager represents a neutral position with the client. The client’s outlet for minor problems; left with none, it’s logical for them to go elsewhere.
Every member of the sales team needs to “own” a client list. These are the top ten clients booked by that person. The accounts on this list should be contacted every month. This sounds basic, but is rarely done.
One of the best relationships to develop is that with one or more of the fine hotel sales & marketing companies available to get your hotel back on track. Many times it takes someone with a view from outside the box. An infusion of new ideas or sometimes a reminder of old ideas could make the difference in 2005.