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Seek Out And Seize
Here's what you hotel owners and general managers must do to endure in the current economy.
Thursday, April 02, 2009
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It’s tough out there nowadays and there’s no denying it. This miserable economic climate that prevails has caused most hoteliers to write off 2009 with only hope that 2010 will be much better. But we can’t afford to keep our heads in the sand for a year and expect to pop it out and have everything will be fine and dandy as though we are waking up from a bad dream. That type of fairy-dust just doesn’t occur in the real world. Hoteliers need to do more than tread water; they need to find tools to build a proverbial raft to stay afloat.
Most of the industry assessment professionals are in agreement that the current cycle will be far worse than the last two downward cycles in the early 1990s and early 2000s. Even those few (and may I add they are in the extreme minority) that still have some glimmer of hope coupled with some capital resources are now stepping back to take a second look at their business missions and future projections. It goes without saying that they are taking the safe road and waiting out the economic storm before proceeding with any development projects. When you are facing a decrease in the key numbers - meaning occupancy average daily rate and revenue per available room - there is very little to be done on the property level except to outperform your competition and contain costs. Unfortunately, many hotels play the rate game and I am sure that is exactly what will happen again, even though history proves that we are all collectively losers when everyone lowers prices. Fact is, rate cuts actually do very little to generate new business. To excel in downtimes hoteliers must focus on stealing business from the competition with value added services, guest service and product amenities. This is where hoteliers need to embrace the mantra, “out of chaos grows creativity” in order to get through these tough times. Here are a few examples hoteliers can employ to maintain a competitive status:
- Stay ahead of the marketing curve by creating a strong presence in social networking sites. If you have a presence in a blog, Twitter, and Facebook sites, it shows the younger consumers that you have your finger on the pulse and are in-the-know of the latest technological and communication tools. Hoteliers should be showing off their properties and taking ownership of their local area as the hotel of their city. When consumers search for a certain city’s name in Facebook, for example, your hotel’s name should show up.
- Research what local competitors are offering and one-up those promotions. Be bold and creative. Caribou Coffee nailed this recently after their competitor, Starbucks, announced they were going to stop brewing decaffeinated coffee in the afternoons. Caribou shot back with a promotion announcing that coffee drinkers deserved better and offered a free decaffeinated coffee on certain days during a limited time window. They took advantage of the market’s affect on a direct competitor to win new consumers. I’m not stating that hoteliers should offer free nights but they should have their eyes open for unique attention-getting opportunities.
- Engage your guests in word-of-mouth grassroots marketing techniques through customer rating sites such as Expedia, Orbitz, Travelocity, and Hotels.com. It’s a no- brainer that consumers have turned to the Internet for inside-track information about properties and they are relying on the other guest’s experiences to judge whether to book a stay. Whereas good reviews are worth more than an elaborate ad in a national magazine, bad reviews are a guaranteed business killer.
- Strengthen personalized service. In order to ensure good word-of-mouth recommendations, your property needs to offer top-notch customer service to guests.
Additionally, in these tough times hotel owners should really make sure they are capitalizing on all the resources that their franchise company has to offer. The stronger franchise companies certainly have the ability and wherewithal to help your property reach its full potential, from regional marketing, IT tools, share funding for regional advertising, substantial discounts with state travel guides, AAA, and a host of other programs that will ensure your property is receiving it’s fair share of business. Far too often, these tools are readily available but underutilized by property management.
Finally, it’s easy to say that any good property operator is watching and modifying expenses whenever and wherever possible. My suggestion is that in this challenging economy, there are simply no sacred cows. In other words, every line item expense on the P&L should be appropriately sent out for comparative bids. That includes long-term vendors you may have had a relationship with including food vendors, insurance companies, printers, uniform companies, everything from soup to nuts. A good general manager will sit down and spend the necessary time to competitively shop each and every item. You may well be surprised in the marketplace today, how much money can actually be saved through this process providing it’s done thoroughly.
Even though we are all in for some tough economic times that will bring about many challenges in our industry we each need to be creative to stay afloat and drive competition. Mark my words, in 2010 those who were creative and diligent will not only survive but will be noted as trendsetters in the new era of our industry. Every hotelier should have the expression “Out of Chaos Comes Creativity” etched on their desk.
About Hospitality Solutions, LLC
Hospitality Solutions LLC, Randolph, NJ., provides new franchise agreement negotiations, franchise termination and liquidated damage claim negotiations, mediation, expert witness, litigation support, motivational speaking, market studies, feasibility studies, on-site analysis and ownership and development assistance to the hospitality and service industries. Company President and CEO Steven Belmonte, former President and CEO of Ramada Hotels, also served as Chairman of the American Hotel & Lodging Assn.’s Educational Foundation and served on the Board of Directors of Arlington Hospitality Inc. For more information, please visit www. stevenbelmonte.com or call (973) 598-0839
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