Four Post Recession Shifts in the Hotel Sales Environment 'What You Need to Know for Success in 2010'

Nov 19, 09 | 1:59 am

By Carol Verret

The recovery is coming - not a huge surge in demand but a slow manageable increase in demand.  Rates are another story. There are four subtle but important changes in the sales environment that evolved during the recession and that impact hotel sales processes. Hotel sales offices and marketing departments need to understand these subtle paradigm shifts in order to maximize the opportunities in the fragile recovery ahead.

The GDP slipped into positive territory in Q3 09 at a 3.5% growth rate. GDP is expected to increase at rates close to 3% for Q4 09 and Q1 and Q2 1020 with the last two quarters of the year posting GDP growth of 3.0% according to USAToday on November 2. 

The hotel industry is not so fortunate.  While demand increases are anticipated in leisure and the corporate segment the percentage of demand increases will be moderated by the influx of new supply in any given market.  In other words, the recovery in demand will be spotty with stronger growth in those markets where there is the least new supply. (PWC, HotelNewsNow, 11/09/09)

Social Networks:   In the past year since the recession took a nose dive off the cliff, social networks have become more embedded in sales process.   However, there are few guidelines on how to maximize engagement on these networks in the sales process.  Few independent hotels and management companies have developed policies and procedures in order to ensure that their teams are using them efficiently, not only for connecting to potential clients, but in their qualifying processes for companies and contacts.   Hotel marketers need to begin planning for how they are going to handle Twitter as Tweets will shortly be appearing in Search Engine results on Bing and Google.  Example: Ben Bethel, owner operator of the Clarendon Hotel in Phoenix has been using social media for some time to promote his independent hotel.  "For The Clarendon Hotel, I currently use Twitter, which also automatically updates my FaceBook account every time I tweet.  I keep everything on a personal level - it comes straight from me as "Ben Bethel" instead of an account under The Clarendon. ... When promoting The Clarendon's rooftop bar, pool area, upcoming events or rooms specials, I always try to make sure I'm being useful to the reader by including something newsworthy or pertinent to the area, and not just create something that will be considered spam."

Prospecting or New Business Development. The verticals have changed in relation to who has the money!   Which industries are emerging as the new economy leaders as the country comes out of the recession - those are the ones that hotels need to pursue.  Those verticals that received stimulus finds are the hot prospects now!   For example, oil and gas are out -alternative energy is in!  The ways that we locate companies and contacts have changed - Google tools incorporating Advanced Search, Google maps,   Google Earth make prospecting faster and more efficient!  Using social networks to log onto company's profiles for info and locating key contacts that may be one or two degrees of separation away from you can assist in getting introduced or referred to the contacts you want to know.   Example:  a hip hotel in a major metro area came way from a recent web cast with a new prospect from the example we used to illustrate this prospecting process - that's ‘take away'!

Online Group Platforms and the OTAs: It is a mistake to measure the effectiveness of online platforms and OTAs only in terms of leads and bookings. We have always discussed the ‘electronic billboard' effect but have made very little effort to measure its impact on direct leads to the hotel or to reservation increases on the hotel's web site.    Finally someone has.  Expedia, love it or hate it, has always maintained that it's platform is used as a travel search engine by consumers, many of whom then go direct to the hotel's web site.  Expedia has even gone so far as to say that for every reservation made on it's web site, another is made on the hotel's web site.  Cornell University conducted a study on Expedia's ‘electronic billboard' effect.  While the one to one ratio was not demonstrated the results were significant.  According to the study, the hotels saw a boost in reservations ranging from 7.5% to as much as 26% for the indie hotel when they were listed on Expedia vs. when they were dark. (Cornell Study, Hotel Marketing.com, 11/12/09).  Example:  Ask a group lead how they have heard about the hotel - you may be surprised by the platforms they are shopping!

Contrarian Strategies for Corporate Business: A few months ago we wrote about ‘turning over small stones' for big results. The large RFP accounts have been brutal in their negotiations this year and are producing less and less as their travelers go ‘rogue' in booking hotels outside the agreement on Priceline and other sites - all with the tacit approval of the company as long as it saves money!  Many hotels are feeling ‘held for ransom' as the RFPs come back every few months to renegotiate as rates drop. Enough!  There was a recent study conducted by Forrester Research for Best Western that identified the opportunities in the small business space.  "According to Forrester's Consumer Technographics North American Q1 2009 travel online study, a majority (56 percent) of U.S. business travelers are unmanaged" (Best Western/Forrester Research Study, Hotel Resource, 08/25/09) .   Consider developing a small and medium sized business strategy to identify and court the small businesses in your market.  They are less rate sensitive and in many cases, grateful to have a hotel that acknowledges them and appreciates their business.  Example:  Small select serve property, 150 rooms, with no major demand generators within 3 miles of the hotel.  Called on every small business in their market and rose to the top of their comp set in market share penetration within six months by building a business based on companies that generated between 10-20 rooms per month!

Building these four initiatives into your sales and marketing efforts can propel you to more market share in 2010 - remember ‘It's not the big that eat the small -it's the fast that eat the slow"! (Jennings & Houghton, 2004)


About Carol Verret And Associates Consulting and Training

Need some assistance in identifying the ‘small stones' in your sales and revenue management strategies?  Email us at carol@carolverret.com for more info.  We will review your reports absolutely free and if we don't think we can help you we will tell you!

Carol Verret is an author, speaker and trainer to the hospitality industry in the areas of sales and marketing, revenue management and the guest experience.  Log onto the web site www.carolverret.net, the blog www.hotelsalesblog.com   or find her on LinkedIn and follow her on Twitter.