Carol Verret Consulting 
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Driving REVPAR in the Current Economy

The Shift from Managing Demand
to Generating Demand
 

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June 25, 2008 - In the past eighteen months, demand has remained relatively flat while rate has increased by between 7% in 2007 and almost 9% in 2006.  The consumer that seemed so resilient to rising hotel rates has ‘collapsed’, in the words of Bernie Sternlicht, Chairman and CEO of Starwood, pressured by rising gas prices and the resulting cost of goods, not to mention the loss of equity in their largest investment, their homes.  (BTNOnline, June 2, 2008))

Three ‘lions’ of the industry, speaking at the recent hotel investment conference in New York, indicated that they expected eighteen more months of softness in the hotel industry.   J.W. Marriott, Bernie  Sternlicht of Starwood and Jonathan Grey with Blackstone (owners of Hilton Corp.) all saw a protracted period of soft demand for the next eighteen months that will make it difficult to move rates, a fact that is already reflected in the smaller percentage increases in ADR.  (BTNOnline, June 2. 2008)

PKF sees a bottom in the current cycle around November 2008 with recovery beginning in the first quarter of 2009. (Mark Woodworth, June, 2008) However, that prediction was made prior to the announcement by the airlines regarding massive cuts in capacity; United is parking 100 airplanes, increasing fares and additional fees like those for checked luggage.

Recently, I had the privilege of speaking and facilitating a discussion at a meeting called by a hotel company  to  assemble their GMs, Revenue Managers and Directors of Sales to brainstorm on ways of increasing  revenue in the last half of 2008.  They normally have meetings in the fall to plan for ’09 but felt that they needed to plan for the second half of ‘08 before they could begin to plan for ’09.

There is a reason that GDS transactions in the Americas have decreased by 7% in the  first quarter of 2008  on Galileo (Travel Management, May 14, 2008) while Expedia has reported an 8% increase and StarCite RFP requests have increased by almost 7% as of April YTD.  Planners across all segments have turned to the internet to find the best value for their vacation, their company and their meetings!

The focus is back on the hotel sales and marketing department to generate more demand to pick up the slack.  It’s time to flex that ‘prospecting’ muscle:

  • Analyze current marketing strategies.   Before reacting with new strategies from a position of ‘panic’, step back, take a deep breath and analyze what is currently deployed, especially if these were the strategies in the Marketing Plan for ’08 that was developed prior to Q4 2007. How well are the ad strategies and ecommerce initiatives working – measure against both last year and anticipated results for this year YTD.    Are the segments that were targeted in decline, should redeployment with a new message be targeted at market segments with potential in the current economy versus the relatively robust economy of pre Q4 ‘07?  Market sectors such as Financials, should be deemphasized, they are not going to be big revenue generators for a while.  Consumer goods also have rough spots – retail and anything to do with home improvements are soft. Tip:  USA Today has a page in the Money section every Monday that will tell you which stock market segments are up and which are down.
  • Retool the Hotel Sales Department Deployment.   How is the sales department organized now -- is it by market segment, geography, etc.?  Look at the trends in corporate travel, many companies are paring back travel due to cost but some are continuing and increasing travel to maintain their current customer relationships.  Who are they and in which sectors of the economy?   In the meeting sector, large meetings that have been experiencing high attrition rates are fracturing into small regional meetings due to cost.  If the department is organized by geography, pull back those that are focused on the most distant markets and deploy them in drilling down into areas closer to the hotel.
  • Rethink the Hotel’s Value Proposition.   What is the message on the hotel web site and all the places where there are listings in the areas you need to be in?  Don’t lower the rate structure but populate your message with value ads, packages that build in features the consumer considers of value.  For example, for the leisure traveler that may be staying closer to home; package a ‘weekend’ getaway with a spa experience or a ‘family package’ to include kid friendly features such as passes to the local children’s museum that may entice regional, state or local travelers.  The rule of thumb is the destination must be within ‘one tank of gas’.   For the meetings market, offer a meeting package with per person price options.
  • Be where the customer can find you!   If the leisure customer doesn’t know you or even if they do, they are likely to go the OTAs to see what’s out there in terms of not only rate but packages, value ads, etc.  They then may go the web site – make sure that your offers and pricing is transparent across all channels.  Go to the web site and research what key words are being used to find you and what are the referring sites or pages.   Meeting planners are under pressure to demonstrate that they have done their due diligence to their stakeholders.  What is your online presence on meeting planner and RFP sites like StarCite? 
Hotel sales Super Stars will be made in this economy by their ingenuity and resilience producing demand for their hotels. Don’t be afraid to try new strategies and approaches – if one doesn’t work, amylase why and move on. Those hotels that come out this economic downturn, will be the ones best positioned to increase rates when the economy recovers. 

(Join us in Phoenix July 24 at the Radisson Airport North for “I Hate Cold Calls”  sales training open to all members of the hotel sales community – click here for more info.)

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: Tactics to Drive Business in a ‘Not So Hot’ Summer / Carol Verret / May 2008
All Marketers Are Liars - Web 2.0 Strategies for Hotel Sales and Marketing / Carol Verret / April 2008
Contingency Hotel Revenue Management Strategies 'I Will not Cut Prices'/ Carol Verret / March 2008
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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