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Contingency Hotel Revenue
Management Strategies – 

“I Will not Cut Prices”
 

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March 2008 

“Everyone repeat after me: "I will not cut prices nor panic sell because it does not stimulate incremental demand and only serves to drive down prices." (Jeff Weinstein, Editor, Hotels Magazine, February 08)  Jeff has given us the mantra that all GMs, Revenue Managers and Directors of Sales should repeat every morning.

While most analysts have continued to be bullish on revenue increases of at least 4% in 2008, that was before the employment numbers began to slide.  PKF, in its January research article indicated that although the industry was well positioned to weather the storm, there was one caveat.  “What will keep the economy buoyant, as well as the lodging industry, is the continued growth in employment.  Historically, we have seen a strong correlation between changes in employment and lodging demand,” Woodworth observed.  Unfortunately, the assumption of a continuing employment growth turned out to be short lived as the latest two government indicators showed significantly slippage in this area.

The erosion in the economy has been relatively rapid. A survey of over 1600 meeting planners indicated that  for only 37% of them were their meeting plans for 08 were unaffected by the economy.  (MeetingNews on MiMegasite February 26, 2008)

Okay, disposable income upon which leisure travel is dependent is shaky , the continuing credit crunch  is impacting corporate travel and now the meetings market, what is a revenue manager to do to stop the bleeding and stimulate demand if not cut rate?

  • Monitor Changes to Market Segment Activity Daily.  This should go without saying but many daily flash reports do not carry lines that compare daily activity year over year by market segment or month over month or YTD by market segment.  Reports that include percentages of occupancy by market segment are a graphic way to detect downturns.  This is an ‘early warning’ signal that will allow you to take action before the slippage becomes worse. 
  • Manipulate the Rate Structure – don’t lower it!   Closely monitor inventory and rate on the OTAs.  Open discounts to more room types during periods of low demand.  Participate in promotions with the OTAs until you reach the goals of the promotion.  Close inventory to lower rated rooms when demand warrants it.   Train the reservations staff to close each reservation by skillfully offering room type options at different price points if that’s what it takes to convert the call.
  • Evaluate Channel Distribution.   When the revenue management strategy was first developed last fall, what were some of the distribution channels that were not included due to high commissions, relatively low production, etc?  A high commission on some revenue may be better than no commission on unsold rooms. Were the Opaque channels abandoned as requiring too deep a discount?  A discount on an opaque channel is not a lower rate structure but a way to expose inventory to markets that you may not have exposed the hotel to in the past.  In both of these scenarios, you control the inventory.
  • Dynamic Packaging.  Packaging options on the hotel website, distribution channels and channels such as TravelZoo provide an opportunity to expose your hotel, generate incremental revenue  and ‘disguise’ the rate within the package.  Packaging on the hotel’s web site is the cheapest and easiest way to generate incremental business but you have to drive your customers and potential customers to the site through effective SEO (Search Engine Optimization) and CRM initiatives.
  • Monitor the Hotel’s Online Presence.  Especially in difficult times it I more imperative than ever to monitor the hotel’s online presence.  Pet peeve, make sure that the links work everywhere you are listed.  I logged onto a CVB site recently and four of the seven hotels whose links I clicked didn’t work.  You can’t have an online presence unless you are ‘present’.  There are tools that can assist you in this that can make this process easy and give you the info to make good decisions.  The Avalon Buzz Report among others makes monitoring your online presence and that of the competition easy.  These reports can also expose opportunities to fill gaps in demand with ecommerce initiatives.
  • Correct Deficiencies.  If your hotel presence online monitoring tool uncovers areas where you are not in rate parity, correct immediately.  As well, there may be some links on sites that were enabled years ago that no one was aware of and are therefore unattended.  These can have erroneous information and rates.    I discovered this with a simple search for an independent hotel client. The hotel was offering an NFL special on an obscure site that no one at the property was aware of. 
  • Respond to Critical Online Reviews.  Respond with a measured response to any online review as to how the deficiency has been corrected and or how a situation surrounding a less than optimal guest experience occurred.   Ensure that there are no areas of the hotel that you would not like to see in pictures or videos posted on TripAdvisor.  One client took the response thing to a whole new level and even responded to positive reviews with a Thank You response!
Diligence and creativity are the hallmarks of crafting a contingency revenue management strategy and for many of you the time to implement a contingency plan is here.  I suggest one more thing to implement at your stand up meeting each morning with the GM and DOS.  Prior to analyzing the numbers and starting the day, repeat Jeff Weinstein’s mantra, in unison – “I will not cut prices!” 

Join us in San Diego April 4 for a revenue generation seminar open to all hospitality sales professionals.  For more information on the I Hate Cold Calls – Web 2.0 program Click Here

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.

Carol Verret and Associates is offering a series of public hotel sales seminars nationwide this year in response to growing demand from the hotel community. For more information on where they are to be held or how your hotel or management company can sponsor one, email Carol at carol@carolverret.com or call (303) 618-4065.

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

copyright © Carol Verret, 2002-2003 -2004 -2005 - 2006 - 2007 - 2008


 
Contact:
Carol Verret, Consulting and Training
Carol Verret
5910 S. University #C-18, PMB 374
Greenwood Village, CO 80121
Telephone: (303) 618-4065
carol@carolverret.com
Web Site: http://www.carolverret.com/
Email: carol@carolverret.com
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Also See: The Contingency Hotel Sales and Marketing Plan - Hope for the Best, Plan for the Worst / Carol Verret / February 2008
Change is the Buzz – Rebooting Hotel Sales Activity at the Property Level / Carol Verret / January 2008
Habits of Highly Successful Revenue Managers Ramped Up for 2008 / Carol Verret / November 2007
Five Tips to Improving Hotel Customer Service with User Generated Reviews / Carol Verret / October 2007
Habits of Highly Successful Hotel Sales People – A Seismic Shift in 2008! / Carol Verret / September 2007
GMs – How User Generated Review Sites Can Make you a Better Manager! / Carol Verret / September 2007
Web 2.0 and Hotel Sales Strategies for '08; What Are Your Clients Saying About You? / Carol Verret / August 2007
“It’s not the big that eat the small, it’s the fast that eat the slow” -- Five Revenue Management Tactics for Independent Hotels / Carol Verett / June 2007
Developing New Hotel Business Using Client DNA / Carol Verret / May 2007
The Jigsaw Puzzle – The Fit of the Revenue Management and Internet Group Sales Pieces / Carol Verret / April 2007
Client DNA - The Gold Standard for New Business Development / Carol Verret / March 2007
The 'I Hate Cold Calls' Web Cast - The New Paradigm of Sales! / Carol Verret / February 2007
Hate Cold Calls? - Discover the New Paradigm of Hotel Sales / Carol Verret / January 2007
Issues in Hotel Sales Training - Metics for Success / Carol Verret / December 2006
Is the Party Over?; The Challenge of Decreasing Hotel Room Demand / Carol Verret / October 2006
The Habits of Highly Successful Hotel Sales People Ramp Up for 2006! / Carol Verret / September 2006
Identifying the WIIFM Factor – The Essential of Hotel Sales Success / Carol Verret / August 2006
Revenue Management for Hotel GMs – What You Don’t Know Can Jump Up and Bite You! / Carol Verret / July 2006
Feeding the Revenue Elephant; Hotel Revenue Management / Summer 2006
The "Tipping Point" - Identifying the Touch Points in Hotel Sales / Carol Verret / May 2006
The "Tipping Point" - Touch Points Make a Difference in Customer Service Training / Carol Verret / April 2006
Selling Up! Taking Group Room Revenue to a New Level / Carol Verret / February 2006
Revenue Management 2006; The Risks and Rewards / Carol Verret /January 2006 
Revenue Management and Group Sales - The Partnership Not the Disconnect / Carol Verret / November 2005
Habits of Highly Successful Hotel Sales People / Carol Verret / September 2005
Triple Witching Hour - The Marketing Plan, Revenue Management Strategy and RFPs for '06 / Carol Verret / August 2005
"Smile" is a Learned Behavior - Creating a Culture of Customer Service / Carol Verret / July 2005
Revenue Management Systems -- Considerations for Evaluation / Carol Verret / June 2005
Disconnect -- Aligning the Revenue Management and Sales Strategies / Carol Verret / May 2005
Independent Hotels & Resorts; Ride the Wave or Float with the Tide? / Carol Verret / March 2005
Hospitality Sales Training Companies Reach Across the Competitive Playing Field to Combine Live Seminar Expertise with  the Convenience of the Internet / Carol Verret / January 2005
Revenue Management - The Challenge for Hotel Sales / Carol Verret / January 2005
Hotel Sales Departments -- Issues in Processes and Functionality / Carol Verret / November 2004
The GM'S Role in Revenue Management / Carol Verret / October 2004
Transforming the Hotel Sales Organization; Alignment with the New Realities of Sales / Carol Verret / August 2004
The Revenue Management Strategy - The Pre-Plan Marketing Plan / Carol Verret / July 2004
Hotel Revenue Management this Summer - a Game of Skill, Art and Most of All Nerves / Carol Verett / May 2004
What Do Meeting Planners Want? Hotel Sales Managers Want to Know! / Carol Verret / May 2004
Revenue Management -- The Integration of Revenue Drivers / Carol Verret / March 2004
CYBER SALES -- Hotel Sales in an Internet World is the New Reality / Carol Verret / February 2004
The New Realities of Hotel Sales - Focus on Revenue Generation / Carol Verret / January 2004
Hotel Sales -- Innovation in the Face of Limitations / Carol Verret / November 2003
The Good News & the Bad News; Improving Economy = New Hotel Development / Carol Verret / October 2003
Leadership - General Managers Managing the Sales Process / Carol Verret  / October 2003
When the Crystal Ball is Cloudy; Marketing Plans for 2004 / Carol Verret / July 2003
Partnership of Sales and Technology; Using Tech Tools to "Sell" the Hotels / Carol Verret  / July 2003
Back to the Basics? The Basics of Hotel Sales Have Changed! / May 2003
Creating Sales "HUNTERS": The Skill Sets Required in the New Hotel Sales Environment / April 2003
Heightened Security Requires New Strategies in Hotels Sales / Carol Verret Consulting and Training / Mar 2003
Revenue Recovery - Building The ‘A’ Team in Sales / Carol Verret / January 2003
Contingency Marketing Plan – War In Iraq! / Carol Verret / November 2002
Playing the Rate Game - Positioning -- Positioning -- Positioning! / Carol Verret / October 2002
The Rate Game - Playing to Win / Carol Verret / October 2002
The Challenge of Marketing Independent Boutique Hotels / Carol Verett / August 2002
Hotel Sales in a Limited Service Environment - The Rules Have Changed / Carol Verett / August 2002
The General Manager’s Role in Sales -Chief Marketing Officer of the Hotel / Carol Verret / April 2002
100% Market Share Penetration is Not Good Enough / Carol Verett / January 2002
The Key to REVPAR Recovery –  New Business Development / Carol Verett / December  2001
Trash the 2002 Marketing Plan - And Just Start Over / Carol Verett / September 2001
How to Use Consultants Effectively –  A View From the Other Side  / Carol Verret / August 2001
How Soft Is Your Hotel's Economic Landing?  / Carol Verret / Aprl 2001
The ‘Value Proposition’: Marketing Yourself to Prospective Employees / Carol Verret / January 2001
Generation Y:  Motivating and Training a New Generation of Employees / Carol Verret / November  2000
Why Customer Service Seminars Don't Work / Carol Verret / October 2000
Creating a Culture of Customer Service / Carol Verret Consulting and Training / Sept 2000 
FAT, DUMB AND HAPPY – The Seasonal Boom and  Bust Cycle / Carol Verret / August 2000
Surf's Up - Ride the Wave or Miss the Boat -The Effective Use of Technology in Hotel Sales / Carol Verret / July 2000 
Measuring Effectiveness of  Hotel Sales Departments / Carol Verret / June 2000
Hotel Sales Training - The Need for Immediate Results / Carol Verret/ May 2000



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