Five Things Hoteliers Can Do, Today, to Improve Sales
A look back over 10 years and ahead to the future
by Neil Salerno
First, stop
thinking that lowering your rates will sell more rooms and increase
room revenue. It may sell a few more rooms, but it rarely sells
enough rooms to offset lowered rates. It's simple economics; simply
selling more rooms increases expenses, while even slightly higher
rates increase profit. As occupancy demand increases, ADR should
increase as well.
The tell-tale sign
of a hotel-in-trouble is to see increases in occupancy and decreases
in average rate. An hotelier who understands and employs the tactics
of revenue management monitors and adjusts rates in reaction to
fluctuations in current and future occupancy demand.
For many hotel
owners and managers, reducing rates is the lazy-man form of
marketing. It's generally their first thought when sales are low;
after-all, it takes very little thought and certainly very little
research and/or effort. And, it also ignores the fact that people
don't buy rate, they buy value. Sometimes, lower rates are
interpreted as having lower value or "too good to be true".
In a vacuum, rates
mean little, but no hotel operates in a vacuum. Low rates, when
compared to your competition set, can devalue your hotel. "You get
what you pay for" is still alive and well; a new Mercedes car for
$20,000 is not credible, even though you might sell one to a fool.
When sales demand
is low, look to value-added marketing and position your hotel
properly within your marketplace. If your hotel deserves to be in
the number one position because of its location, facilities and
amenities, make sure it is positioned that way.
Do Your Homework
– Stop Working in a Bubble
For a modest amount
of money, you can start receiving market share reports from Smith
Travel Research. They are not available everywhere, but, if they‘re
available in your area, they will provide a tremendous amount of
insight into your local market status. It is far better than
guessing or "counting cars" in your competition's parking lot; that
brings me back to the seventies, it didn't work then either.
STR reports will
provide you with accurate information comparing your occupancy, ADR,
and RevPar with your stated competition. The fairness and accuracy
of STR reports will assist you to place your hotel in its proper
position among your competitors.
Technology is
Changing Everything
I'm constantly
surprised to hear from hoteliers who have so many excuses why they
don't stay current by reading any of the many online eNewsletters.
Lack of time is often the most used excuse; I guess these are the
same people who don't have time to return phone calls too.
Today, go online
and subscribe to at least three free online newsletters. Keep your
knowledge base current with the happenings in our industry. You can
learn a great deal from the successes and failures of others; the
only thing you truly own is what you know.
The Power of the
Internet
Take a serious look
at your hotel's web site; next year, more than 65% of your business
will be directly or indirectly influenced by the Internet. Before
you look to have another web site designed, get an analysis of your
current site. A good analysis will give you a clue to what is
working or isn't working very well on your site.
You can then use
this analysis to guide the new designer to create a functional web
site. Remember, search engine optimization must be incorporated into
the design of your site; it's not something used after your site is
completed.
It's an absolute
fallacy to think that SEO can be applied to a poorly designed web
site to increase traffic. If someone suggests that to you, run,
don't walk away quickly. SEO must be incorporated into the design of
the site itself.
The number of
hotels getting ripped-off by techie-talking web designers is
astounding. I read an article the other day, written by a web site
design company that thinks that, having an average of only 2% of
site visitors who actually make a reservation, is a good average.
Less than 4% indicates that something is wrong.
As I have said many
times, web design is not rocket science. Your site needs to be
designed to be easily found through search and, once found, it needs
to have the necessary elements of location, facilities, attractions,
and value to persuade its visitors to make a reservation.
Commitment to
Revenue Management
Today is the day to
finally make a commitment to learn and use revenue management to
increase occupancy and average rate. Sure, it takes a little effort
to do the necessary research, but the rewards are great.
Revenue management
relies upon your ability to look into the near and distant future to
view occupancy demand and making rate decisions. Measuring
reservation booking pace and being aware of occupancy generators in
your area creates smart decisions.
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