Logo

We’re at the bottom – aren’t we??

Here is Glenn’s article, one in a number of recent articles that have talked about the trough bottoming out. The future is looking brighter although how bright depends very much on the amount of new supply in your backyard.
The challenge on the horizon is – what will the way back up the hill look like? Will it be gradual and more U-shaped , a sharper uptick to the top? At the recent Distressed Hotel Summit, Lee Pillsbury, Chairman and CEO of Thayer Lodging, subscribed to the sharper rise while Mark Woodhouse, Executive Vice President of PKF Hospitality Research, thought it would be a more gradual and U-shaped return. While Jim Abrahamson from IHG sees the uptick more like the Nike Swoosh, slow and more gradual than U shaped.

Either way, I think we should rejoice in the obvious – it’s looking brighter at the end of this long, dark and claustrophobic tunnel!
For those of you with more supply to contend with, the going may still has some bumps for you. However, your experience, stronger guest service and interaction are the stall worthy hallmarks of a steady and reliable guest base. You cannot go wrong with an investment in your team who can make that investment in guest experience.

Thank you

Nagib.

Room Demand is on the Rise!
Pricing power may still lag, but at least there are real indications that demand for hotel rooms is back.
Monday, November 09, 2009
Glenn Haussman

While Nervous Nellies are still ruling the roost, signs of an industry rebound are finally becoming tangible. During the last couple of months many industry insiders were saying a recovery was afoot, but the evidence was anecdotal. Now it looks as if there are some provable signs – and the numbers to back it up — that demand for hotel room nights is coming back.

However, the biggest problem going forward will be pricing power. That is, hoteliers will still have a hard time pushing that ADR back to levels enjoyed just a little over a year ago. As the hotel industry rapidly lowered prices to pump up occupancy, the industry will now have to reckon with a baseline price that is much lower than it’s been in about five years.

“It is getting a little better,” said Mark V. Lomanno, president of Smith Travel Research (STR), during this past weekend’s AHLA Fall Conference held in conjunction with the International Hotel/Motel & Restaurant show here in New York. “During the last couple of months, demand has begun to trend upward and I can say with a great deal of confidence it is not going to get any worse.”

Lomanno said that, while the hotel business has been in a malaise, on average there are 2.7 million rooms sold every day in the United States.

According to figures from STR, rates during the last year declined precipitously from an average daily rate (ADR) of $107 a night to about $96. However, that seems to have hit a plateau that is reminiscent of the previous downturn experience in fall 2001 after the terrorist attacks of 9/11. But it’s the revenue per available room (RevPAR) that has suffered most during the last year.

Lomanno said RevPAR is at the lowest levels since the company began tracking that statistic 16 years ago. RevPAR has plummeted 18.1 percent this year, a full 10 percent by last year’s most dour estimates predicted by PricewaterhouseCoopers last year at this event. RevPAR slipped just 1.8 percent in 2008. As for ADR, it’s dropped about 9.1 percent so far this year after a 2.5 percent decline in 2008.

Though Warren J. Marr, director with PricewaterhouseCoopers (PwC) said the U.S. economy has stopped contracting, he expects the economy recovery to be “uneven and a bit choppy.” Part of the reason is the severity of this past decline which has been extremely significant, especially for hotel occupancy. “The magnitude on occupancy during this decline has been greater than at least the last two previous cycles,” said Marr.

He said, however, that leisure business will still be strong, although it’s because the consumer is more highly engaged in finding the best deals. According to PwC, on September 15, 2008 – the day Lehman Brothers fell apart - consumer interest in travel deals was 13 percent below average. On November 5, 2009, interest was 7 percent above average. That’s a huge swing that is helping to further depress pricing power.

“The Internet has added to the challenge and the industry needs to be targeted as to how and why to discount. What is happening now is if I find at 8:00 AM you drop your rate, by early afternoon your competitors will too. That is something you didn’t have to deal with 10-15 years ago,” said Marr.

Interestingly Marr broke down exactly where the occupancy declines have come from during the past year. And it’s group business that is essentially responsible for the mess the industry is in. Call the AIG Effect or whatever, but 81 percent of the decline is due to vanishing group business, something many hoteliers don’t see fully coming back until 2011. Seventeen percent of the decline was due to transient business; however, Marr said it was offset by increases in leisure travel. Two percent of the decline was due to contract business, such as fewer airline crews utilizing rooms.

“Our real focus is on utilizing new strategies and technology for 2010 and beyond to drive revenue,” said Jeff Wagoner, president, Wyndham Hotels and Resorts. “We are all looking at 2011 for when things turn around. Unfortunately we have all of 2010.”

One area STR’s Lomanno said could help boost pricing is through better yield management. While the science of pricing rooms is the right way, it’s still not being used effectively to bump up weekend rates as leisure travelers still set their sights on getting away. “Yield management still isn’t beinf applied properly,” he said.

Some very sage advice from Carol.

With the very many domains not within our control, there are some that we DO control. And, they happen to impact revenue – imagine that! Her observations are spot on.

Whilst Carol speaks to the opportunities in the social media environment, I remain somewhat skeptical about plunging into this arena. My concerns emanate from some observations:
·         There are many opportunities within the traditional avenues of ecommerce which many hotels are not fully exploiting yet. The payoffs here are tried and well proven.
·         The greatest impact in these media is still, in my opinion, a proper and vigorous attention to guest feedback sites – TripAdvisor, Expedia, Travelocity, etc, etc. With a strong ecommerce and internet strategy coupled with a disciplined approach to responding appropriately and honestly to guest comment postings, you can influence a larger number of travelers than diverting limited resources prematurely to exploring new outlets.

BTW: I have set up a Twitter account, and have received many requests from others to follow me but have yet to come across someone I know who actually uses this! I plead guilty to the same too!
So, where would I push first?

So, that is my two cents. Read on and good luck, as always!

Nagib.

The 20% Solution to Increased Market Share and Revenue - By Carol Verret
Date: 2009-10-07
Industry: -Gaming-Hotel- Category: Features

The local market may be fraught with challenges - new supply, major demand generators cutting back on budgets and revenue dilution due to heavy discounting. These factors comprise the 80% that is out of control of individual properties - accept it and move on to the 20% that you can control.

PKF states that ‘Our research over the past 10 years reveals that seventy-five to eighty percent of a hotel’s performance is systematically a function of changes in the larger market in which the property is located,’ notes John B. (Jack) Corgel Ph.D., Senior Advisor to PKF Hospitality Research and the Robert C. Baker Professor of Real Estate, Cornell University School of Hotel Administration. ‘And who is better at knowing that remaining twenty to twenty-five percent than the local property owner or operator? The person in charge of the hotel knows when rooms will come in and out of service, when renovations occur, and when competitors open across the street.’ (Hotel Marketing, August 14, 2009)

The local market may be fraught with challenges - new supply, major demand generators cutting back on budgets and revenue dilution due to heavy discounting. These factors comprise the 80% that is out of control of individual properties - accept it and move on to the 20% that you can control.

How would the numbers look different if you generated an additional 20%? That means that 80% of your market is out of your control but that 20% is the difference between 100% market share and 120% — that 20% could be the difference between servicing the debt on your hotel or not, that 20% can save a few jobs in your hotel. 20% can easily be spread among multiple market segments.

Market share will determine which properties are best positioned to move rate when the recovery begins. There are various reports that most hotels have access to that indicate market share by market segment. Those include the Hotelligence report, the monthly STR report and some of the reports furnished by the OTAs. An analysis of these reports read with an eye toward market share reveals opportunities for achieving that additional 20% over the market average.

Achieving an additional 20% or whatever percentage the hotel is below 120% market share is doable. A strategy developed across all market segments based on report analysis of which market segments have room to move the needle on market share, can yield significant revenue benefits.

Corporate Business: ‘The next six weeks are very critical in my point of view, said (Starwood’s) Chief Financial Officer Vasant Prabhu during a presentation at Deutsche Bank’s leveraged finance conference. It is ‘the first indicator of what next year’s trends look like.’ ..in relation to the return of corporate business. (Forbes, October 1, 2009) Using the Hotelligence report, where can you steal share? Have you examined the in-house reports to locate smaller volume businesses that may be using you but aren’t on your radar screen? Are these businesses in a market sector that is growing and are there any others in that market sector in the local market? Build a corporate package for the smaller accounts that won’t beat you up on rate like the big RFP accounts.

Corporate Groups: You have exhausted the database, you have done your internet searches and the battle fatigue has set into the sales staff. Have you tried nontraditional sources such as social networks to put out ‘hot dates and rates’? Is there a corporate group promotion on the hotel’s FaceBook page in addition to the usual ’specials’ for F&B? Have you put out a subtle tease on the LinkedIn discussion groups in which you participate? While only 13% of meeting planners say they use Twitter can you reach that 13% with a Twitter promotion provided that you have meeting planner followers? Is the hotel on i-Meet, the social network for meeting planners and suppliers? Are you absolutely sure that you have mapped all of your accounts to locate every contact that can give you business?

Leisure: Autumn and the holidays are a heavy travel time for both leisure transient and leisure groups. Going back to social networks, have you posted leisure packages on the hotel’s FaceBook page? Is the LinkedIn hotel profile ‘tagged’ with links to landing pages that have special packages for leisure groups? Is the hotel still implementing Twitter campaigns for leisure business? Going back to the database, corporate clients also have leisure travel and groups that come into the market. Send out mini eblasts to the corporate database promoting leisure packages. Promote special rates for holiday travel family travel to your corporate clients. Be present on internet platforms where leisure groups go to check out their options such as Hotel Planner and others.

The bottom line is - are you absolutely sure that you have exhausted all of your sales and revenue management options to achieve small percentage gains in both revenue and market share? Can you get that incremental revenue up by another few percentage points in share?

If the next 45 days is critical in terms of demand, are ready to ‘own’ an extra 20% of any increase in demand?

The 20% Solution Consulting Package is available now - email carolverret@earthlink.net for details.

Carol Verret And Associates Consulting and Training offers training services and consulting in the areas of sales, revenue management and customer service primarily but not exclusively to the hospitality industry. To find out more about the company click on www.carolverret.com. To contact Carol send her an email at carol@carolverret.com or she can be reached by cell phone (303) 618-4065. Visit www.hotelsalesblog.com.

This article comes from Hotel News Resource
http://www.hotelnewsresource.com

The URL for this story is:
http://www.hotelnewsresource.com/article41568.html

Who generates the most room nights in your hotel?

The article below speaks to a critical component of our sales processes – the Front Desk. Some hotels focus on this realization – that the FD is your biggest contributor of room nights and hence your hotel’s most valued sales ally – while others look upon this team as more operational. From the standpoint of channel contribution, in almost all cases, few compare to the power of the FD team to generate/capture more traffic.
Whilst the walk-in guest listed below is a very important opportunity for all of us, the implication to other segments is what is even more significant, from my perspective.

The Power Play -  A Sure Win.

If you view your FD team as a primary and critical cog in your sales apparatus, then they should be trained and encouraged to
1.    Engage the guest in conversation about which company they are with
2.    What brings them to the area – remember, they may tell you a company that is large in your area when they are actually a vendor to that company. Very important to recognize the difference.
3.    Are there others team members who also come to the area
4.    Obtain a business card (use some competition or draw type of program to stimulate this tried and true program)
5.    Offer them an upgrade because …. they are so nice and we sure know how to take care of nice people!
Incent your desk for their efforts. More leads and opportunities can be obtained by data mining your own in-house guests than most realize. However, this is not an easy, simple or a sporadic exercise. You need a systematic and focused approach by multiple team members to effectively utilize this information to your advantage. This takes thought and discipline to convert into an effective program to drive sales.

It can be, and most often IS, your MOST powerful sales generating opportunity. I do not say that lightly.

So what’s next?
Try it …….  You’ll like it!

Nagib.

Front Desk Training Is The Key To Capturing More Walk-In Business - By Doug Kennedy
Date: 2009-06-01
Industry: -Gaming-Hotel- Category: Features

While many hotels have focused attention in recent years on helping reservations agents increase their sales effectiveness, many are still overlooking the numerous other sales opportunities that front desk sales associates encounter everyday.
One such opportunity is the walk-in inquiry. Depending on your market segment, brand, and especially your location, walk-in sales can represent a significant source of additional revenue.

Unfortunately, the hotel industry overall does a less than adequate job of selling to walk-ins. Typically, the car pulls up out front and someone gets out; sometimes it’s the mom, sometimes it’s the dad, sometimes it’s the 12 year old kid. Regardless of who it is, they all ask the same question: ‘How much are your rooms?’ All too often associates simply say ‘$99 a night.’ Nothing more is mentioned other than price. And what’s the worst mistake you can make in sales? Quoting a price without demonstrating value.

When you stop to consider it, the walk-in sales opportunity provides the hotel with some significant advantages over other distribution channels. For one, the sales person can visually evaluate the guests needs and wants. Are they dressed as if on a business trip, or on vacation? What is their age? Are they traveling alone or with family? What is their level of commitment; do they park the car and walk-in with luggage, or do they just run in to find out the price?

A second advantage is that the sales prospect can see the product firsthand and is able to formulate a first impression. (This is why it is critical for hotels to maintain curb appeal.) Another significant advantage in selling to walk-ins is that it takes more effort for the prospect to shop around. It’s harder to get back in the car and drive down the road than it is to click on the next Internet link or to dial the phone number of the next property.

If you’re looking to capture and convert more walk-in inquiries into bookings, here are some training tips to review at your next front office meeting:

• Connect With The Customer. Fundamental guest service principles will help you gain a competitive edge. Greeting the guest before they greet you, establishing eye contact, smiling, and using positive body language will set you apart from competitors.

• Offer A Menu Of Options. Depending on your inventory of rooms and packages, you’ll want to offer two or three choices when possible, versus only quoting the lower rate. For example, offer a traditional guest room and then an executive level room, or non-view and view rooms; or a room versus a suite. Or if your hotel has a limited number of room categories, you might still be able to offer a menu of ‘rate’ options such as a ‘room only’ rate and a second rate option that includes other services (such as breakfast, parking, or Internet.) Offering a menu of options migrates guests into a ‘which should I choose?’ versus ‘Should I choose to stay here?’ decision making process.

• Describe The Room And/Or Rate Option. Common industry terms like ’standard room’ and ‘continental breakfast’ do little to convey value and to entice guests. Instead, help them take psychological possession by fully describing the furnishings, views, concierge level lounges, and/or continental breakfast presentations. Remember to use the knowledge gained from reading the guest to point out features that might provide a benefit; instead allure and entice them with visually and emotionally descriptive language.

• Avoid positioning last-sell or higher rated options in the negative. When the only rooms available to walk-ins are either the highest-priced or least desirable, which is frequently the case in high-demand situations, it’s important to make them sound as appealing as possible. Rather than saying ‘Oh, we only have our suites left’ instead, create a sense of urgency with ‘Oh good, we still have some of our suites, which feature…’ Instead of saying ‘All we have left are our limited view rooms,’ reiterate value by saying ‘Although this room does have a limited view, you still have all the same amenities and services as with all our rooms, and I have to say this room really is a great value at this time.

In addition to training your front desk to utilize these and other sales techniques, it’s also important to measure the results both individually and on a department-wide basis. If your property management system allows, assign a special source code to walk-ins. Otherwise, create a form to manually record your results. Of course, you’ll also want to challenge your staff’s competitive spirit by posting the results on a ‘daily,’ MTD, and YTD basis, and then to celebrate your success via staff recognition and/or incentive programs.

By employing the basic sales principles for capturing walk-ins, your front desk team can help your hotel maximize it’s market share even in a down market.

Doug Kennedy

Visit www.kennedytrainingnetwork.com for details or e-mail him at: doug@kennedytrainingnetwork.com.

Nagib Lakhan
RevMax Hospitality Consulting Services
O: (425)677-7866               C: (425)445-7750               F: (866)508-7866
nagib@RevenueMaxConsulting.com