Traditionally hotel asset management has been focused on operations and cost control. Over the last few years we have seen a clear shift in revenue management getting a more prominent role. Profitability is not only a result of cost control but also revenue generation. Finally we also see sales and marketing become a key area for the by hotel asset manager.
Why previously was there so little focus on marketing and sales? Would you not want to control the promotion and positioning of your property? As in the early days most asset management companies signed a franchise deal with a large chain, this was left for the brand to manage.
But the playing field changed drastically over the last 2 decades. No longer are the hotel franchises the only brands that deliver a global distribution and marketing platforms to hotels. With the rise of the search engines, OTA, review websites, meta-search and social media, hotels have to be omni-present to achieve a good market share.
Hotels can no longer solely depend on the brand marketing strategies of the chain to compete in their local market. The SoLoMo (social, local, mobile) trend in marketing has caught many of the more traditional hotel companies off guard. The old school approach is not sufficient anymore to guarantee good results.
We can’t simply keep doing the same thing each year and expect the same results. Sales and marketing efforts and investments should be made measurable to evaluate their impact. And we have to keep looking which budgets we can allocate and spend differently to get a better ROI.
And importantly, going through these times of economical constraints, asset managers have to make sure that previously scrapped expenses don’t make it back in once revenues rise again.
A perfect example asset management needs to expand its focus into marketing are the results generated at our client property, Hotel de Londres y de Inglaterra in San Sebastian, Spain. The hotel was previously managed by a traditional national hotel group. Focus was on the brand and not on the property. Overhead and transaction costs were high, including corporate marketing contributions.
Now run as an independent property revenues have gone up over 25% in the last 2 year, this even though Spain is going through a tough economic crisis. Most notable, direct sales, through the hotel’s own website more than doubled (more than a € 800.000 increase).
With a strategic approach to revenue management, search engine optimization, and social media marketing, we have significantly increased the online reach of this property. For example previously it was positioned number 38 on TripAdvisor, out of 51 in the destination. Xotels took over and started pushing for more guest feedback. And in only 12 months time we climbed up to number 5. We expect to be in the Top 3 before the end of the year.
Hotel Asset Management by merely controlling cost will not get you the results you need. Marketing is a vital part of the final success and achieving profit targets.