Hotel Online Special Report


Hotel Common Sense –
.
Some Careful Digging Will Help
Uncover Lots of Profit
October 2003
by John J. Hogan, MBA CHA MHS

Zig Ziglar tells of visiting the Washington monument.  As he and his party approached the monument, he heard a guide announcing loudly that there would be a two-hour wait to ride the elevator to the top of the monument.  However, with a smile on his face the guide then said, "There is no one waiting to go to the top if you are willing to take the stairs." (King Duncan, King's Treasury of Dynamic Humor, Seven Worlds Press)
 
A salesperson's responsibility to management doesn't end with going out on sales calls.  It's the generating of sales or, more aptly, of profitable sales that counts.
 
Being a professional in hotel sales comes from a continued process of making yourself aware of what's happening in the marketplace.

  • Learn what the competition is doing.
  • Learn what different group accounts need or want. 
  • Learn how to present your hotel's features. 
  • Learn about creative food & beverage functions and how to use them as selling tools.
  • Learn how to network both within and outside the industry.
Specifically, managers and salespeople should learn all they can about their property's business mix; they need to explore market segments that have more profit potential; they need to tap the potential of existing accounts; and they need to solicit accounts similar to the ones they're already servicing.
 
A brief look at each area is to carefully examine what is usually called the Business Mix.
  
Salespeople need to meet with the general manager to examine the current mix of business. By analyzing how much business is being generated from each market segment, and at what rate, it will become obvious if a change in the mix is desired. Most properties have a system for recording this information daily.  
 
Aiming for 100% occupancy as the only goal has not worked for years now – in today’s market, we have to consider revenue per available room (RevPAR), the overall arrival/departure patterns and the level of service we are able to provide as well.

Typically, the market segments for most hotels (regardless of size) will include individual travelers, which will further break-down into those paying regular rate, certain negotiated rate corporate travelers and a variety of individuals participating in some kind of special discount program, such as seniors, AAA, government, referrals from 3rd party web sites, etc. 
 
Another market that will vary by hotel size, location and facilities will be the extent of group business.  These may include associations, corporations, government, educational and/or group-tours.  Smaller hotels can access these accounts by working with nearby larger hotels or convention bureaus in overflow situations.
 
The objective is to develop more business from the segments that bring in the best rate or could be more profitable in the operation. If the AAA individual rate is better than the group or tour rate and they have equal demand, then it is obvious that more effort should be put into selling individual AAA customers.  If the group meetings market has more potential in revenue and rooms volume (whether the meeting is at your hotel, the convention center or at another site), then that is where the focus should be.
 
 • High Profit Market Segments: 

Some types of business generate more profit for a property than other types. Student tour groups, for example, may generate good room sales, but little in the way of food & beverage revenues.  Youth sports’ tournaments bring teams, parents and families that do provide F&B sales.
 
The objective here is to generate sales in market segments that not only rent rooms, but provide revenue to all property outlets and/or that we can influence to use our facilities at a time mutually beneficial to both the customer and the hotel.
 
 • Tapping Existing Accounts:

There are many salespeople who make sales calls on their corporate accounts only to look for the individual business traveler. 
 
The potential for additional business from an existing account is great, but it requires the salesperson to learn as much as possible about the account and to ask questions like:

  • Does the company have meetings? Who handles the meetings?
  • Which other departments in the company have people visiting who may need over- night accommodations? 
  • Who takes care of the company’s social activities and holiday parties?
  • To which clubs or trade groups do the company's executives belong? Can they influence a decision to bring a meeting to the property?
  • Does the company use hotels in other cities? This question can allow you as the sales person in city A to help your client in city B. While you may not receive any direct and immediate revenue, you might be able to help your client and another hotel of your brand and/or management group.  Networking requires the efforts of everyone, not just when you get something today.
Generally, an existing account can and will provide more business to a property if the right contact is made and business is solicited.
 
 • Similar Accounts:

There is a tendency for similar businesses or accounts to do similar things. If, for example, a property does business with Army recruiting people for meetings and meals, it is likely that the Navy, Air Force and Marines are doing pretty much the same thing, somewhere else.   If a property hosts a weekend conference of piccolo players, then it is probable that there are associations of drummers, piano players or violinists who have similar meetings.  If there is a party for a new-car showing put on by one auto dealership, then there may be a similar party that could be solicited from other dealerships in the area.
 
Salespeople need to regularly look for ways of developing new business for rooms, meeting business and food & beverage.  Opportunities abound for all types of business. Knowing what's going on in the marketplace, checking on the competition and exploring new profit sources are important keys to success in sales.
 
And remember: be enthusiastic about what you're selling! 
 

Think Tank

Question of the day for owners and managers

The following questions are to stimulate discussion about the way we do business.  There is not necessarily only one “correct” answer – the reason for this section of the column is to promote an awareness of how we might all improve our operations.

  1. What organizations do you belong to?  Have you “listened “to what the members of these organizations say when the conversations deal with needs that your hotel might be able to meet?
  2. Do you track trends (through your PMS system or even manually) and demand cycles?  Do you know when the trends for the various market segments are?
  3. Do you decide which reservations to take on a 1st come, 1st served basis or by considering the overall profitability of each market by demand? 

John Hogan, MBA CHA MHS is the Director of Education & Cultural Diversity for Best Western International, the world’s largest lodging chain.  His background includes teaching college level courses as an adjunct professor for 20 years, while working with Sheraton, Hilton, Omni and independents hotels.  Prior to joining Best Western International in spring of 2000, he was the principal in an independent training & consulting group for more than 12 years serving associations, management groups, convention & visitors’ bureaus, academic institutions and as an expert witness.  He has conducted more than 3,000 workshops and seminars in his career to date.

He has published more than 175 articles & columns on the hospitality industry and is co-author (with Howard Feiertag, CHA CMP) of LESSONS FROM THE FIELD – A COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES, which is now available from HSMAI.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of this publication or of Best Western International.  A variation of this article appeared in LESSONS FROM THE FIELD – A COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES.

Contact:

John J. Hogan, MBA CHA MHS
Director, Education and Training
Best Western International
20400 N. 29th Avenue 
Phoenix, AZ 85027 
623-780-6310
Fax 623-780-6831

John.Hogan@bestwestern.com



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