Mr. Portugal

Sales & Marketing

Rooms First or Rooms Last? A Case for Event Marketing as a Primary Revenue Model

By Marc Portugal, Director of Marketing, Bortz Group of Companies

As of today, March 24, 2009, there are 800+ hotel-related sales and marketing jobs in the US posted on Hcareers.com alone. That doesn't sound like a recession...unfortunately, that's not the case. While jobseekers perk up at the notion of an abundance of hotel sales & marketing positions, I cringe at the notion that conventional expectations and benchmarks for these roles may be impossible to realize.

Business and leisure travel is down in general, as well as convention attendance and off-site meeting planning. This will not change anytime soon. For many hotels and resorts, the rooms that guests would occupy if they were traveling for any of the aforementioned reasons constitute both the majority of a hotel's space and the primary source of its revenue. So - now what?

In my first article for HotelExecutive.com, "The New "H" Word and the Future of Hotels: (and stop ignoring the locals...)" I proposed that many hotels may benefit from a shift in branding and marketing toward a "habitat" model - providing an ongoing "hub" of activity and experiences for locals as well as out of town guests. In my second article, I discussed means of cross-marketing these activities once they were created. In this article - allow me to back up and clearly address the activities themselves - what I will call Event Marketing - and how they can make hotels money both now and in the future.

To begin with, and for the sake of clarity, allow me to establish some basic operational definitions (at least for this article.) I specifically suggest that hotels pursue Event Marketing to make money sooner and later. Event Marketing is 100% different than Sales Management and 100% different than Event Planning.

Event Marketing (also referred to as Experience Marketing or Experiential Marketing) uses relevant events based on consumer habits and core interests to grow brand awareness, trial, and revenues. Event Marketing makes up the activity allowing hotels to function as a "habitat" and capture revenue from locals.

Sales Management is selling rooms and meeting space. Event Planning is helping guests and clients with their meeting, convention, celebration, etc. once rooms or meeting space is sold. Again and with respect, this paragraph is not meant to be patronizing. It is merely meant to establish clarity of terms, and meant to make clear that I am NOT recommending a duplication of typical sales or event planning efforts.

Conventionally, it is Sales Management that drives revenue for hotels. Fill rooms. Fill meeting space. That's where the money is. However, if conventional travel activity is greatly decreased on both business and leisure fronts, and may continue to decrease or at best plateau for some time, hotels need to find another way to make some money. Event Marketing is an affordable, measurable and enjoyable solution that works both in a recession and in a more robust economy. Event Marketing can work for almost any type of hotel or resort, and can function as a primary or an ancillary revenue strategy depending on the priorities, budgets, and brand vision of a given hotel at any given time.

Historically, corporate decision makers in various industries have shied from Event Marketing for three specific reasons. One, they are under the impression that events are too expensive to be an ongoing solution. Two, they are under the impression that events are too qualitative to accurately measure ROI. Three, and most understandably, they are afraid that people simply won't show up. Humbly, I contend that these concerns aren't accurate, and that Event Marketing is affordable, measurable and effective.

Consider these facts and findings below, as recently reported by the Event Marketing Institute:

EventView is produced through a unique collaboration among The Meeting Professionals International (MPI) Foundation, the Event Marketing Institute (EMI) and George P. Johnson (GPJ). Three hundred senior sales and marketing executives, 41% of whom represent companies with revenues of $1B+, weighed in to produce EventView 2009: North America. This report reveals that face-to-face marketing activities are playing an integral role within the marketing mix, heightened in part by a downtrodden economy in which corporate marketers rely on every marketing dollar to deliver an increased and measurable impact.

Key findings in EventView 2009: North America include:

"EventView 2009: North America indicates that more than 60 percent of respondents have already transitioned or are transitioning from event marketing to experience marketing in the next 12 months," said Robert G. Vallee Jr., CEO of GPJ. "This is a pivotal trend, and it shows that in the current downturn, senior-level marketers want the immediate and measurable business impact that experience marketing delivers. CPM is no longer the measure of success. It's about engagement and follow-through... what experience marketing does better than any other discipline."

Now...back to how Event Marketing can help hotels now and later. The Event Marketing "model" currently operates consistently and successfully for hotels in various markets utilizing on-site venues, relevant events and promotions, and associated electronic and online communications to generate revenues from local consumers. All of these activities are measurable, and most cost very little. To be truly effective, Event Marketing activities must address the social and lifestyle rituals of local consumers, and must be designed, promoted and executed in a manner that acknowledges the consumer on a personal level.

Remember - locals dine, drink, shop, get their hair cut or a manicure, work out, network, take cooking classes, test drive cars, go to art galleries, etc. every single day in every single market. Event Marketing programs can redirect this existing, ongoing traffic and revenue to hotels.

As a key result of Event Marketing programs, local consumers naturally become more devoted brand advocates of the hotel, and serve as critical word-of-mouth resources in recommending properties to family, friends and colleagues - those living in market, and those traveling to the market. Event Marketing objectives can be accomplished with strict control over costs (which are ideally subsidized by sponsorships and partnerships) with the end goal of generating profitable operating margins.

It would take more space than I'm allowed to break down all nuances and variations in costs per event type or costs per promotional medium. However, as a quick example, let's say a hotel considers spending $75,000 on a base salary for a Corporate Sales Manager to try to book roughly $300-400K in room and meeting space revenues for (let's say) six groups of 75 people each over the course of six months.

Hotels can likely spend the same $75,000 on BOTH the Event Marketing program costs AND the necessary consulting and management fees for comparable or better ROI in a shorter time frame - ASSUMING there is even $300-400K of room and meeting business actually out there to be booked...

Is all of this easier said than done? A little, but not by much.

Any marketing program is doomed to fail if no one commits to seeing it through, and like any sales or marketing strategy there are potentially unforeseen factors that can affect outcomes. Event Marketing requires strategy, precision, awareness of competition, consistency, teamwork, measurement, and investment - but it is not brain surgery. Additionally, Event Marketing is FUN for the consumers and the staff, and everyone could use some "fun" these days. Furthermore and most importantly, local consumers and local revenues that an Event Marketing program can capture are available NOW, and will continue to be available whether a convention happens or not, or whether the economy is in recession or not.

Examples of types of events that will work in a hotel setting include but are not limited to:

1. Cocktail Reception at the restaurant, bar, lobby, courtyard, roof, or guest suite
2. Property Tours with food, drink, spa, retail and partner experiences at each venue, suite
3. Cooking Class with a local guest chef
4. Food or Drink Tasting - with local partner restaurants/guest chefs if there is no restaurant on site
5. Salon/Spa Pampering Studio - mini-services and consultations with local salon/spa if there is no salon on site
6. Private Shopping and/or Trunk Shows in meeting spaces, guest suites or venues
7. Living Green Studio - showcases and tutorials on cooking, cleaning, designing, etc. green
8. Live Music Showcase (mini-concerts with a band, acoustic band or string quartet)
9. Fashion Shows - runway, interactive, etc.
10. Casting Calls for local TV shows, modeling agencies, nightclub dancers, etc.
11. Speed Dating Programs
12. Art Shows - gallery on walls, gallery on easels/shelves, live design activity, movie showing, etc.
13. Product Sampling Studio - complimentary samples, launches, etc. from partners & sponsors
14. Guest Hosts - local musician, journalist, author, designer, business executive, politician, etc.
15. Backyard BBQ with local guest chef (or local "celebrity griller"...) - to be hosted outdoors (parking lot, courtyard, etc.)
16. Backyard Organic Gardening - plant and cultivate an organic garden on the hotel property - ideally to be used for the property's restaurant and/or room service menus
17. Backyard Putting Green/Driving Cage with golf course or retail partners - indoor or outdoor
18. Test Drive/Parking Product Placement Programs with local dealerships
19. Car Wash
20. Radio Remotes/Morning TV Show Remotes
21. Viewing Parties for sports tournaments, championships, awards shows, etc.
22. Pet Adoption (outdoor only)
23. Food/Clothing Drives
24. Organizational Drives (lemonade stands for baseball team, Girl Scout cookie stand, etc.)
25. Local School student projects: Example: Art classes to be held on site, work to be on display, or "Green" projects to be held on site, paid for by sponsor brands

26. Fundraisers - carbon events 1-25 above with entry fee, partial proceeds going to charity. This model also allows for more 3rd party local sponsors for additional profitHow might these events be advertised to the locals (and beyond)? Glad you asked. Consider these affordable and innovative communication vehicles below, and you will immediately see by the scope of options alone that any advertising and/or program budget can be accommodated in some manner:

27. On Property Restaurants/Bars - check presenter stuffers, business card drop, e-blasts to frequent diner program

28. Local Alternative Weekly
29. Ethnic Magazines/Newspapers
30. American Way/United/Jet Blue/Southwest In-Fight Magazines - advertorials
31. Open Table - leaderboards, e-blasts if available in partnership with hotel restaurant account
32. Engagement Web Sites
33. Bridal Web Sites
34. Mommy-To-Be Web Sites
35. Business Web Sites
36. Local Health Clubs - check stuffers, business card drop, e-blasts to frequent guest program
37. Local Salons - check stuffers, business card drop, e-blasts to frequent guest program
38. Local Spas - check stuffers, business card drop, e-blasts to frequent guest program
39. Facebook - geo-target by age, education, zip code
40. Twitter - live accounts maintained by Event Ambassadors, Concierges etc.
41. Company web site - general information, registrations for e-mail and/or SMS updates
42. Company web site - live feed cams (at least during high traffic events?)
43. Company web site - video recaps of events
44. YouTube - video recaps of events
45. Merchandising - hats, t-shirts, pens, fragrances, mugs, sundries, toiletries, intimates, etc.

46. Skytracker(s) for evening, marquee eventsHow might the ROI on these events be measured? Glad you asked that too. Here are some generic examples of metrics for evaluating the effectiveness of Event Marketing activity:

47. Total Event Attendance per event

48. Event Attendance by guest type
49. Event Attendance ticket type
50. Event Attendance by time (after 1 hour, two hours, etc.)
51. Gate Revenue (often referred to as ticket sales, cover charge, etc.)
52. Food Revenue per event
53. Beverage Revenue per event
54. Beverage Revenue by type (category, presentation, etc.)
55. Guest Registrations per event (for an e-mail list, SMS list, Twitter list, Facebook list, etc.)
56. Total RSVPs prior to the event
57. Event RSVPs by e-mail
58. Event RSVPs by SMS
59. Event RSVPs by phone
60. Event RSVPs online
61. Event Bounce Backs handed out at exit
62. Event Bounce Backs redeemed at entrance
63. Business Card Drop Submissions per event
64. Pre-Event Brand Awareness and Perception (surveys, total site traffic, page specific traffic, etc.)
65. Post-Event Brand Awareness and Perception (surveys, total site traffic, page specific traffic, etc.)
66. Total Response Frequency per event (to surveys, contests, registrations and RSVPs)
67. Size of E-mail Database created by Event Marketing activity
68. Size of SMS Database created by Event Marketing activity
69. Size of Facebook "Friend Base" created by Event Marketing activity
70. Size of Twitter "Tweet Base" created by Event Marketing activity
71. Event Attendance Frequency per database member (VIP card usage, FGP usage, etc.)
72. Merchandise Sales per event
73. Merchandise Sales over 30, 90 and 180 days
74. Event Revenue Growth over 30, 90 and 180 days
75. Number of Job Applications over 30, 90 and 180 days
76. Media Mentions in Print Publications (local or national)
77. Media Mentions in Online Publications (local or national)
78. Overall Room Occupancy over 30, 90, 180 and 360 days
79. Overall Meeting Space Occupancy over 30, 90, 180 and 360 days
80. Overall RevPAR over 30, 90, 180 and 360 days

81. Other metrics TBDEvent Marketing is the future, and one that can be pursued now with comparable costs - yet higher ROI. Remember the closing reminders from my previous article, as they directly apply to Event Marketing:

82. Develop and brand hotels and their venues with the right combination of style and value.

83. Program the venues with relevant experiences designed to entice and keep locals on property.
84. Prepare in advance to reinvent d'ecor, promotions and programming to keep experiences fresh.
85. Ensure Event Marketing programs and offerings provide stimulation, escapism and diversion!
86. Connect with local guests' emotions, habits and share in their various networks. After all, we're talking about locals here. There's no place like home...for a hotel to make money.

Marc Portugal launches brands and associated programs – including events, sponsorships, partnerships, and more – with a focus on the mindspace, feelings and rituals of consumers. Marc’s most notable achievement is the brand launch of the Palms Casino Resort in Las Vegas. Marc founded ground-breaking marketing partnerships with Playboy, MTV, Red Bull, and other brands that elevated the Palms to a Boutique Casino Resort, and arguably reinvented standards for lifestyle branding and nightlife-driven entertainment nationwide. Mr. Portugal can be contacted at 312-850-8186 or marcportugal@yahoo.com Extended Bio...

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