Creating Results: Strategy vs. Knee-Jerk Reactions
By Brenda Fields Founder, Fields & Company | March 06, 2010
Small, independent hotels have the added challenge of limited marketing resources as they are typically established as a percentage of revenues. Therefore, each dollar spent and each strategy implemented must be efficient and produce the greatest ROI.
This article addresses the key components to establish a plan; how to effectively evaluate its effectiveness; and how and when to change course, without "knee-jerk reactions".
The Planning Process
Determine your position in the marketplace - The first step is to understand your hotel's position in the market place. That will determine which segments of the market you will attract; what rates to charge, per segment, per season; and what services and amenities to offer. A firm understanding of who you are, where you want to be in the marketplace, and what you offer (relative to your competition and general market conditions), will determine all strategic plans and will influence any decisions to be made with changing market conditions or filling specific need periods. It is tempting to rush into decisions and change course in the hopes to generate business, if your property's performance is below expectation. But a clear focus and clear understanding of your position, and establishing strategies consistent to that positioning, will avert costly mistakes for both the short term and the long term.
Create a detailed rooms budget - Planning is the key to ensure effective strategies. A solid rooms budget is one laid out on a daily basis, which clearly has incorporated demand factors and well-founded assumptions, by day, by market segment, with rooms and rates per segment. Each market segment has its own peaks and valleys on a daily basis as well as on a seasonal basis. This is the result of factors such as holidays, conventions, and seasonal trends. Incorporating all of these factors will create an accurate projection of occupancy and average rate when laid out on a daily basis as opposed to taking "short cuts" by just using monthly totals and projections to establish budgets. This also lays the foundation for improved budgeting in other departments, especially food and beverage. For example, 100% occupancy made up of groups which are out of the hotel all day, is not the same as a full house of other segments from which you can assume a certain percentage to impact room service or the restaurants.
By accurately identifying and quantifying all potential segments on a micro basis and understanding each market segments' travel trends and needs, the hotel is able to proactively solicit those specific markets, efficiently and cost-effectively, without wasting valuable resources, as well as understanding when to change course when market conditions change.