Carol Verret Consulting 
and Training
Consulting
Training Seminars
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The New Normal – What Does the New Normal
Look Like for Hotel Sales and
Revenue Management 

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May 1, 2009 - Any hotel sales person and revenue manager can tell you demand patterns are different than they have been in the past.  The question then becomes   --  will this pass at some point and demand patterns of the past ‘snap’ back into place or have been demand patterns been permanently or semi permanently altered?   The question is important as it is the difference between ‘hanging on’ until things resume their previous demand streams or developing new processes and paradigms.

Reporting on the Association of Corporate Travel Executives (www.acte.org) in Washington DC, Tom Belden in the Philadelphia Inquirer April 13 described the term.  “People in the travel business now have a fresh buzzword to describe what's happening. The term is new normal, meaning that airlines, hotels, conference centers, and car-rental companies are expecting their revenue has plunged to levels that could be typical for years to come.”

IHG is realigning the responsibilities of its executive staff in order to focus on the priorities of the driving revenue at the unit levels.  “This is not a knee-jerk reaction to the economy,” Francie Schulwolf (VP of Corporate Communications) said, but a strategic approach by management to “the new normal.” (As reported in the Atlanta Business Journal April 17) 

We all know that the impact on business travel has been profound.  According to Dorothy Dowling, senior vice president of marketing and sales for Best Western, though business travelers are employing a number of techniques to control costs and reduce spending, they are opting for shorter trips rather than canceling travel across the board. In addition, more companies are looking to mid-market hotels for corporate travel to streamline costs. 

Leisure travel patterns, while a potential source of demand this summer has also changed.   Ypatnership’s latest TravelHorizons survey found that nearly two-thirds of U.S. adults are planning to take at least one overnight trip for leisure purposes during the next six months. That February number is up from 60 percent in January of 2008.  The study goes on to say that current travelers, however, are looking to save money wherever they can.  The survey of 2,200 Americans found that 87 percent plan to book a package to save money, 84 percent plan to spend less overall and 64 percent plan to take more day trips. In addition, 51 percent plan to stay fewer nights while on vacation. (South Florida Business Journal, April 7)

The knee jerk reaction has been to cut rates in an effort to gain a larger price of a smaller pie.  A recent Cornell Study indicated that this strategy was self defeating.   Cathy Enz, in a column for Hotel News Now , described the research based on a gaming model.  In short, if one hotel discounts and the other doesn’t, it is a Win- Lose game, if both discount it is a Lose- Lose game. 

The positive in this is that it is an opportunity to reinvent hotel sales and revenue processes,  which in the end, will create more knowledgeable hotel professionals.   How then should hotels adjust to the ‘new normal’:

  • Business Travel:   A study indicated that business executives are trading down and with that, so are their expectations of their selected hotels.   When asked which features they simply could not do without, business travelers were impressively devoted to productivity on the road: internet connectivity is indispensable to more business travelers (76% of respondents) than a quiet room (56%), good transport links (54%) or central location (52%).  (Hotel Resource, 2/10/09)  Give them what they want – FREE internet service and  a good clean and quiet room.   Value adds  such as reasonably priced room service,  free breakfast, restaurant coupons to keep them on site  also contribute to a good ‘road warrior’ experience.  Companies are still in a cost containment mode – focus on new economy companies and associations related to alternative energy, etc.
  • Meetings.  Bill Marriott announced that group cancellations are slowing down, and there’s solid business growth for 2010 and 2011 group bookings.  If anyone should know, Mr.  Marriott should.    Solid growth may not mean a return to the demand of 2007 but it is a positive sign.  Focus on emphasizing  the functionality of the hotel for productive meetings – leave out the spa and the golf course.  Use testimonials from other groups to reinforce this fact.  Maximize every RFP and networking opportunity, have a social networking strategy to stay in front of planners and establish relationships.   Be prepared to value add extensively!  Companies are still going to be critically aware of ‘appearances’ and justifying off site meetings for a long time!
  • Leisure.  The great American Road Trip is back!  Family travel is going to be ‘in’ this summer! People are booking packages – make sure that you have packages that appeal to families.  Make sure that they are on every internet site and your web site.  Invest in a pay per click strategy.  “Most people (46%) do a little research, finding a few comparable choices and selecting the most suitable. But one in ten (10%) simply choose the first ok one that they find,” says a new global survey by Travel and Leisure (HotelMarketing.com, April 29).  ‘Walk Ins’  are back  -- the front desk is again key to closing walk ins at a good rate.  Train them on the ‘drop dead’ rate for every evening based upon occupancy and demand.  
  • Revenue Management and Rate Discounting.  Every time I say that hotels should not lower their rate structures on a wholesale basis, I get an eye roll and an “Easy for you to say!”  Offer packages that disguise the rate, limited time offers,  web site only hotel dates and rates.  The perceived  value of a hotel that offers and emphasizes the value of these compared to their regular rates is in a better position than the hotel that just offers a low rate.  The hotel that reduces their rate structure has very little room to do the above because no matter what the regular rate structure is, the consumer is going to want a ‘deal’. 


In a subsequent article we will focus on what a recovery may look like but make no mistake, the economy is undergoing a paradigm shift.  Those hotel sales and revenue management professionals that can learn flexibility in response to changing demand patterns will fare well in the recovery.  Those that cling to processes that served them well in the past and don’t make the adjustment in their processes  will – well, you  know how that could turn out! 


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.net

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 .


 
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 New Hotel Sales and Revenue Management Metrics - This Could save Your Job! / Carol Verret / April 2009
Back to Hotel Sales Basics: The Basics Have Changed Big Time!  / Carol verret / March 2009
Stimulate Hotel Revenue -- The Economic Stimulus Package Opportunities / Carol Verret / February 2009
2009 The Game Changer for Innovation in Hotel Sales Processes / Carol Verret / January 2009
Contrarian Strategies for Hotel Sales Departments to Thrive in an Economic Downturn / Carol Verret / December 2008
‘Selling Into’ a Bad Economy – Overcoming Fear and Stealing Share / Carol Verret / October 2008
Habits of Highly Successful Hotel Sales People – Accelerated Sense of Urgency / Carol Verret / September 2008
The Challenges and Opportunities for Independent and Boutique Hotels in a Difficult Economy / Carol Verret / August 2008
The Science of Hotel Sales* – The Benchmarking Imperative for Success in a Difficult Economy / Carol Verret / July 2008
Marketing & Revenue Management Plan 2009 - Succeeding in a Difficult Year / Carol Verret / July 2008
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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