Wednesday, January 25, 2017

What is the best hotel strategy to increase occupancy and revenue? How can we differentiate ourselves to compete with other big hotel competitors?

No single 'expert' has an answer to this one that will work for everyone, and any answer I give you will be questioned (along with my 'expertise', and 'qualification' to answer the question), by someone, somewhere. So -- as with any question that calls for me to give you expert advice, I can tell you how I'd go about it, with most any hotel. Parts of it won't work for every hotel. Nor will I pretend to you that I have all the answers.
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(I'm assuming here that you have a marketable hotel that does not have a franchise -- or that, if you do have a franchise, you are smart enough to know that your franchise organization does not have all the answers either, which puts you ahead of 95% of the people in this business.)
Here is how I'd go about it:

Toss the prevailing pricing model -- if you do it the way everyone else does it, you're going to get the same results as everyone else; and if you do it the way it's always been done, you're going to get the same results you always, already had . . . at best.
Hotels, and hotel chains, have so overused and worn out a single pricing model for so many years -- decades, literally -- that it is overripe for disruption: it needs to die, and be put out of its misery, and have its suffering ended, and given a decent burial. All that is needed is for someone to get creative.
Get rid of any entitlement rates that you have that don't get you a return in terms of added customer capture or loyalty -- and as much as it may sound like heresy, AAA and AARP is the place to start. (If you operate a franchised hotel, good luck with that -- your franchise organization may not let you. But if it's not Choice or Best Western, each of which requires the ten percent discount, try to chip it down to something closer to six or seven percent if you must have it at all.)
Your rooms have value, you want to preserve that value, and every discount you give compromises the perceived value of your rooms. They also reduce the effectiveness and all but negate the value of any discounts you might give that do benefit the hotel in some way.
Never, never, never, never treat your rooms like a commodity, where offering discounts to the public supposedly equates to increased customer response. That only works for bottles of pop, or gallons of milk, or other commodities. When someone is traveling, or has a need for a hotel room, they have a need, then and there, and a discount is of little to no value -- there is not even a need on your part to assume they want a discount. If they didn't have the need, then and there, you couldn't rent it to them at any price, or even give it to them and have them show up to occupy it.
The only customers to whom discounts are going to make that much of a difference, are people to whom a hotel room is strictly a discretionary purchase -- and you might want to consider carefully whether you even want those.
All of your marketing is targeted marketing, not commodity marketing. The more success you can generate for yourself at drawing to your hotel people who can and will pay $200 per night for a hotel room, the better your chances of getting $200 per night for your rooms. You want to bring people to your hotel, but you want to bring the right people to your hotel.
  • Reward extended stays -- whether yours is an all-suite, 'extended stay' property or not.
Our hotel brands that we develop in-house advertise their rates, for a 'hundred-dollar-a-night' hotel, as $100/$88/$80. We offer a rack rate, a three- or four-day rate at twelve percent discount (you can have it for three nights if you check in on a Sunday, Monday or Tuesday so we can have you out of there by the weekend: a four-night minimum is what it takes for us to justify giving it to you if you check in on any other day of the week), and a seven-day rate at a twenty percent discount. Always. Without you having to ask.
Since most business travelers stay two to four days, we become the go-to hotel for stays of that length.
There's a catch. You have to have one of our loyalty cards. For a couple of reasons.
The value of any hotel brand is directly proportionate to the number of people running around with that brand's loyalty card in their pocket.
And it gets us around the 'rate parity' requirements of our agreements with Expedia and If it's a 'publicly available rate', we have to offer it on online travel agency sites, and pay their exorbitant twenty to twenty-five percent commission on it. But if a loyalty card is required, it's not a publicly-available rate.
(Since online travel agencies use us pretty hard, we use them right back. If you must book on, we want to turn you from being their customer to being our customer, and calling us instead of them next time. Even on a one- or two-night stay, we'd rather split the difference with you than pay that 20-25% commission, and save you a few bucks on the room.)
It benefits us as well as you. If the room doesn't have to be made up each day for a new guest, our housekeeping costs are reduced by half (or even eliminated completely, if you can agree to forego housekeeping services at all for the duration of your stay) on the days on which you plan to stay over, and we don't mind sharing. Having most of our guests stay several days also reduces the demands on our front desk, perhaps enabling us on a busy night to make do with one clerk instead of two.
  • Support your local non-profits -- and more importantly, let them support you.
Here, we'd partner with, for just one example of many possible, Habitat for Humanity. Donate ten bucks to Habitat, and we'll give you twenty bucks off the rack rate. So, on this special rate program, you get, effectively, ten dollars off your nightly room charge. During the night audit, the auditor will back out the ten dollar donation to Habitat, combine it into an account with all the others from other guests who asked for the 'Habitat rate', and at the end of the month, we send the local Habitat for Humanity chapter a check for several hundred dollars from all of the accumulated ten-dollar donations.
Guess what Habitat is going to do, to keep that deal going, and the money that they get from it coming in? That's right -- any visitors to your city that Habitat, or any members of its board, or any of their more diligent supporters, get, are going to be directed to your hotel. Indeed, Habitat will probably make an urgent, if not insistent plea to their supporters that they choose your hotel. This option will probably be mentioned every month in their newsletter - both in your city and in other cities from which people who are connected in some way with Habitat come to visit your city.
We never could get a deal like that out of AAA, or AARP.
This can be done with any non-profit or community group, not just Habitat. I'd select a half dozen or so of them in each city (in Winston-Salem, Habitat, the Make-A-Wish Foundation, U. S. Marine Corps Reserve Toys for Tots, PAWWS [a local no-kill animal shelter], Sunnyside Ministries, and Modest Needs [Home - Modest Needs®] or GoFundMe). If you have a hotel in more than one town, you want to have the same set of groups - or at least as much overlap as possible - in each town. More can be done with a sufficiently advanced property management system. An unlimited number can be done if your loyalty cards can be linked to a database of them (conceivably, you can allow any cardmember to designate any non-profit or community group, anywhere).
  • Bring back the reg card.
I've lost count of the number of 'good' hotel marketing plans I've seen over the years that invariably contain two prominent features: 1) the list of the area's top 50 companies/employers downloaded from the local Chamber of Commerce website, and 2) not much of a plan in between for reaching decision makers from those companies and securing their referral business to the hotel other than "we're going to provide the most fantabulous service of any hotel in town!".
Let's get real. You're probably not going to reach a decision maker at many of those companies without an inside connection (and I try to avoid relying on those, although if someone working at your hotel does know someone there, use it to your advantage).
The most reliable way to expand your corporate and group business, and to identify potential new corporate and group business, is to scale up what you're already getting. That's why we still ask guests to fill out the registration card. It contains several fields for information that we need that most property management systems don't provide (the all-important What brings you to our town?), and it's hard to get hurried clerks to ask each customer (the even more important Company name:). They get checked against the data in the property management system, all of the fields in that are kept up to date, then they go right to the sales department - via the g.m.'s office - after the guest checks out, so the check-in process isn't slowed down.
Every week, we have a meeting, and come up with a plan for following up on the information that we glean from them.
  • Market your city as a destination -- even if you're not in Florida.
You won't see that many pictures of a hotel, or a hotel room, on our website. Of course, you will, if you surf the site: we want you to know as much as you're willing to learn about the hotel and what a great place it is to stay.
But on the all-important front page of the site, the focus is a bit different. You see a listing of upcoming area events. Those, not tourist attractions, are our focus.
Everybody already knows that New York is the big city, that Hollywood is in L. A., that Washington is the nation's capital, that there are things to see in all three places, and those things will always be there.
Everybody that knows Raleigh, N. C., already knows that Raleigh is the state capital and a business destination, everybody that knows Morehead City already knows that Morehead City is right across a bridge from a beach, everybody that knows Durham already knows about Duke University and its medical facilities, and everybody that knows Winston-Salem already knows that Old Salem is in Winston-Salem.
What will actually prompt people to pack up and make the trip is that something's happening in that town at a particular time (even if that something is a personal or family event for them that no one else knows about), not that there are things for them to see and do there that are always there for them to see and do.
Indeed, we'd kind of like for people to check our site from time to time just to see when a good time for a road trip to a particular town where we have a hotel is coming up, and we'll certainly pass the word about area events on our Facebook and Twitter pages.
Because once you've given an answer to the question "Why should you travel to this town?" that will actually inspire the customer to take the trip, it doesn't take much more to persuade him or her, "Why should you stay at our hotel?"
Especially if you can sell the tickets and the room as a package.
Some towns - Detroit, Newark, Camden - have a reputation (deserved or not, at various levels) -- as rusted-out, voodoo hellhole ghetto towns. But if I own a hotel in Reading, Pennsylvania - which I'd very much like to do (there is actually opportunity for hotel developers in such places) - I want Reading to look like the most attractive vacation spot in the world. This will involve some very good, high-resolution (not to mention selective subject matter) photography, and lots of attractive shots - both of the hotel and the surrounding area - on the website.
When I put my new property in Bethlehem, Pa., I want lots of Musikfest video ( ). A property in Havelock, N. C. will likewise feature lots of video of Marine aircraft taking off. (Such a sight is taken for granted around Havelock, and the noise is a bit of a nuisance, but to a visitor to that city . . . it's a memory. )
  • Get your occupancy, then get your ADR.
I've seen several comments that you can get a higher occupancy percentage (total number of rooms you rented/total number of rooms in your hotel), or you can get a higher average daily rate (total room revenue/total number of rooms you rented), but you can't do both. Actually, you can. You just can't do both at once.
Your first priority is always getting your occupancy up. That'll cover your bills. Once you're up to about sixty percent, then you can think about tapping up your rates a bit. That increases your profit.
Here again, don’t mindlessly cut the rates to get the occupancy up, like too many people do.
Like many of the others I take on, this is a bigger question than I can answer in an evening. I'll work on it more as I have time and can come back to it.

Originally appeared on Quora

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