| By Max Starkov and Lalia Rach - October 2001
What can hoteliers do in the wake of the terrorist attacks to combat the downturn in the economy and falling consumer confidence in the travel experience? Smith Travel Research forecasts full-year 2001 U.S. hotel occupancy at 60.7%, down 4.7 percent from last year. RevPAR for the year is expected to be down 4.3 percent and ADR to be at 2000 level or lower. PricewaterhouseCoopers categorizes this as " the worst performance in 33 years". For hoteliers, the ripple effects of the recent incident, the recessionary economy and the ongoing military strikes mean finding ways to deal with sharply lower occupancy rates and RevPARs, and constrained marketing budgets. But identifying what action to take and planning how to rapidly address the changing realities raises a multitude of questions. Will the usual belt-tightening measures, as in any crisis situation, and sticking to traditional marketing channels be enough? If everyone else is adopting reactive measures, such as layoffs, cost cutting and price dropping, what should hoteliers do to rise above the competition? What strategy will provide smart hoteliers with a competitive advantage even in this adverse situation? We believe that hoteliers should adopt, with utmost urgency, a proactive strategy that includes consistent efforts to differentiate from the competition and embrace co-opetition, joint marketing initiatives and eDistribution. A proactive strategy will not only soften the impact of the current crisis, but also allow hoteliers gain market share faster and cheaper. It is obvious that hoteliers should continue to utilize all traditional marketing channels at their disposal. But what is not obvious is what hoteliers should do beyond the norm. While no one can provide an inexhaustible list, we have outlined several practical considerations for hoteliers, which do not exhaust all that could be done in these trying times. We believe that these action steps can help hoteliers cope with the situation and formulate their survival strategies: Stand Out From The Competition Sound familiar? Everyone knows: in the world of commoditized travel products and with recent price reductions across the board, you have to find distinctive ways to stand out from the competition. Being different from your competitors requires a comprehensive approach, out-of-the-box thinking, concerted efforts and innovative marketing. Here are some suggestions: Unique products at unique prices
Focus on Your Drive-In Traffic
Work With Your Corporate Clients
Work with Your Meeting Organizers
Work with Your Tour Operators
Work with Your Travel Agents
Co-opetition and Joint Marketing Initiatives Think your own industry � become everybody�s partner. Recognize that you are all in this together. The combination of an economic downturn and the terrorist attack has created problems for everyone. All other travel suppliers, providers and intermediaries from your city, state, region and area are being affected by the current situation at least as much as you are. Therefore developing joint marketing initiatives with other local travel players makes excellent sense, especially now. Remember, your worst enemy today is not you competitor across the street, but all those empty rooms, unfilled seats, unused tickets, and unsold packages. Co-opetition is the right strategy in these difficult times. There has never been a better time to work together. Packages like �Unforgettable Night on Broadway� offered by Broadway hotels or �Friday Night Champagne Crawl� promoted by Midtown hotels are good examples of such co-opetitive initiatives. Most importantly, these initiatives offer shared costs and shared benefits among the participants. These joint marketing initiatives could take the form of industry-wide, state-wide, city-wide and destination-wide efforts and use direct mail, fax broadcasts and precision e-mail marketing, as well as print, TV, radio and other media channels. Work with Other Travel Players
Tour operators, incoming operators and travel agency groups can play a very important role as coordinators and packagers of various destination-focused travel services. These entities have a great deal of experience developing and selling packaged travel. Building a coalition that relies on unique strengths of each partner will result in the development of various destination-focused packages and negotiate special deals and cost-sharing arrangements with airlines, hotels, car rental companies, and rail and theater companies. Work with Your Local CVBs and DMOs
Don�t overlook your responsibilities to the CVB -- maintain constant and consistent communication with your CVB and DMO. Be their best friend; offer to be part of the team to convenience elected officials that their support of the industry is more necessary than ever before. Become a lobbyist for your future. Many CVBs have initiated new marketing campaigns
to encourage travel to their destinations. New York State Department of
Economic Development has reinstated the popular "I Love NY" campaign with
a new financial commitment of $40 million. Hoteliers should take full advantage
of these promotional efforts.
Embrace eDistribution Technology can be your best ally--your eDistribution strategy can play a major role in softening the disastrous effects of the terrorist attacks and the economic slump and will, over longer-term, define the winners in these trying times. Why eDistribution? And why right now? First of all, eDistribution is by far the lowest cost channel of distribution. Used properly it increases occupancy rates, improves the bottom line, opens new markets and attracts more affluent customers in these difficult times. Embracing eDistribution is a proactive measure as opposed to the other reactive measures available to hoteliers. eDistribution is inventory distribution that utilizes Web-based applications, eMarketing channels and tools, and online partnerships. It utilizes the Internet as its main medium and uses B2C, B2B, B2E or C2B models. Used properly, eDistribution increases occupancy rates, improves the bottom line, opens new markets and attracts more affluent customers in both good and bad times. It allows smart hoteliers to build market share faster and at a much lower cost. Did you know? The average Internet user who buys travel online comes from a household that earns $72,000 (Forrester Research) and can afford to travel even in the current situation, unlike those from lower-income households. Over 162 million Americans are active Internet users (Nielsen/NetRatings) and 37 million of them have already purchased travel online. All business travelers are savvy Internet users. Aren't these exactly the customers hoteliers are trying to attract? Here are just a few questions you should consider with utmost urgency: Your website
eMarketing Channels
Maximize Returns on Your Marketing Budget
In general, print, radio and TV advertising offer "poor interactivity, limited targetability, poor measurability, and relatively low ROIs" (Aberdeen Group). Direct mail offers better measurability and ROI, but no interactivity. Precision e-mail marketing offers up to fivefold increase in response rates and tenfold lower conversion rates than direct mail (IMT Strategies). Airlines extensively used precision e-mail marketing in their latest special offers campaigns to target specific market segments with unparallel accuracy. Therefore adopting a robust online marketing campaign, including precision e-mail marketing, special promotion alerts, weekly e-newsletters, etc. is a way to maximize ROI and cut costs. Amazonize your marketing � develop customized messages to generate business, i.e., if you liked your last visit you�ll love this idea. Don�t wait for your customer to go looking for something to do, use precision e-mail to let them know what�s going on at your destination. This approach far out-distances the traditional concept of proactivity by engaging the customer in their home with real-time fully integrated trips. Develop an Online Partnership Strategy
Another direction is to partner with non-travel entities, such as becoming the Preferred Hotel of the local Bar Association and of other local trade associations and organizations. Providing the associations' websites with a private label version of the hotel booking engine, featuring special preferred rates for the members and their guests could generate significant new business. Partnering with local businesses (e.g. Chase Bank), special interest clubs and organizations (e.g. opera, theater, Broadway), non-profit organizations and charities. Maintain Brand Trust Every new or modified strategy must be grounded in the enduring and broad-based trust that customers have in your brand. To determine what level of brand trust your hotel company has with your current guests take this easy test � do you deliver on whatever your marketing and sales efforts promise? Is your service consistent from stay to stay? Do your traditional marketing messages leverage your brand? Do your employees actions and words support the brand and its image? Conclusion We do not claim to have outlined all action steps hoteliers may take in these difficult times. On the contrary, we have meant to encourage and stimulate hoteliers to find their own ingenious ways to cope with the situation and to provoke additional thoughts and actions.
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