How to Create Demand

By Juston Parker President & CEO, Parker Hospitality Group, Inc. | June 15, 2010

Is it possible for a hotel to "create" demand? Is this just a myth used by Directors of Sales to try and stimulate the troops? When it appears that there is just no one wanting to visit your property, can you really "flip a switch" to drive people to your product? It is possible to create demand where there is none. First we need to uncover what is demand and how can it be managed and even stimulated.

Hotels have always wrestled with the idea of reducing rate to drive demand. Then the field of Revenue Management came along and initially said, "Don't just drop the rate!" Now, with things like GOPPAR (Gross Operating Profit Per Available Room) being a major benchmark, profitability plays into the decision process and reduction of rate is not the best option. In order to stimulate demand, we must first understand how to manage demand.

What is demand? Most hotels refer to demand as the volume of rooms they sell in any given period. "Our demand for this past year was 20,383." Some hotels refer to demand as the movement over any given period. "We went from 378 room nights on the books for next week, to 478, therefore our demand is 100 room night this week." Demand is actually defined as, "The demand schedule, depicted graphically as the demand curve, represents the amount of a good that buyers are willing and able to purchase at various prices, assuming all other non-price factors remain the same."

So, how does this help us out? Well as you see, demand includes the amount of product (in this case room nights) that people are willing and able to purchase. This means that demand goes beyond what they bought, but also includes what they are able to buy or in this case, available inventory.

What we need to achieve is the balance of what they customer is willing and what they are able to buy to get the maximum yield from the existing demand for our property.

The Strategy

Coming up in February 2018...

Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.