How to Succeed in a Difficult Economy

Hotel occupancy is suffering...

In my last entry, I discussed the current trends in RevPAR and HPI. Occupancy is suffering, and this deterioration looks determined to continue for some time. In fact, I read on Travel Daily News last month that,

“PricewaterhouseCoopers estimates 2009 average U.S. hotel occupancy will fall to 56.5% - a decline of 5.2% from 2008 and the lowest in more than 20 years. More importantly PwC projects RevPAR to decline 11.2% this year. It is hard to imagine any hotel getting through this year unscathed.”

Therefore, now is the time to ensure that your hotel stays one step ahead of the competition. The economic situation will hurt your competitors as well, and they may not ever see the light at the end of the tunnel. You need to guarantee that you do; but how will you accomplish this?

It’s all to do with your internal and external marketing…

Many hotels have begun to slash room rates in an attempt to fill rooms. However, you must remember that this tactic can be easily copied by the competition. If you and your five competing hotels all slash prices, or even offer additional nights for free, the impact on RevPAR will be significant. Plus, once you have dropped your room rates, it will be difficult to restore them once the economy improves.

So, don’t slash your prices for dramatic effect; increase price flexibility and be prepared to add value to your guest’s stay. Consider working with outside businesses, such as car rental or day trip companies, to create packages that will ‘wow’ your guests.

In the same way that many companies have cut training, a large number of hotels are now slashing advertising. Ensure that you have a large online presence by improving your hotel’s website and conducting search engine optimization; you need to be listed on the first page for any keyword searches related to your hotel and your area.

Make sure that every page of your website and every word of your hotel blog communicates value. Your prospective guests need to know that they are getting maximum value from every pound they spend. Remember that comfortable surroundings during difficult times make your hotel worth every penny your guests spend.

Customer Relationship Management...

Managing your relationship with your customers is extremely important right now; you need to establish loyalty. Hotels with the most loyal customers are also the most profitable.

Your competitors will most likely focus on attracting new customers. You need to have a more balanced approach toward customer acquisition and retention and actively manage your customer relationships to build loyalty.

However, managing customer relationships has become sophisticated and requires a remarkable amount of coordination. It is all about the movement of prospective guests through the customer lifecycle from awareness to loyalty. This can start with your hotel website, blog, and any other form of advertising you use, all the way through to the up-selling used by employees and the hotel booking system that you use to store guest information.

Remember that loyalty comes as a result of:

1) Using advanced CRM and Hotel Booking Software which has become extremely affordable, even if you are running a small hotel, motel, or guest house.

2) Ensuring your advertising and added value are highly personalized and individually targeted. Remember that your message must be relevant to your stressed and financially-burdened guests.

3) Creating a strong emotional bond with your guests. There may be years between visits but loyal guests do return and give you referrals. Everything from the first view of your website, through the moment they make a booking, to the moment they check out must feel personal. Guests want to feel wanted.

If you take this advice on board, you stand a greater chance of staying ahead of your competitor. Now is the time to implement the new CRM and booking system that you’ve been considering. If you properly implement these systems you will significantly enhance your chance of success during difficult times.

Don’t forget that loyalty is the key to success!

Good luck to you all,

Emma