One Size Doesn’t Fit All: Optimise Your Negotiating Strategies

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | July 10, 2011

For many hoteliers, 2010 will forever go down in history as the one that got away. As the economic downturn bottomed out, hoteliers around the globe received an unexpected boost from international tourism demand which offset some of the implications of financial recession. The United States alone welcomed 1.2 million travellers that year, with long-haul arrivals contributing a 9.5 per cent increase on tourism compared to numbers achieved in 2009(1).

It goes without saying that hoteliers in many locations were ideally placed to make the most of this unexpected return of demand but for a lot of hotel operators it turned out to be a case of right place and right product but wrong time.

For those operating in the leisure and tourism industry, the recession was a frightening experience. Hoteliers sought to safeguard their future with long-term contracts designed to lock in guaranteed income and help weather the storm. However, in a bid to make the contract as attractive as possible to similarly beleaguered businesses, hoteliers found themselves drastically under-pricing their offering before quickly realising that a poorly negotiated deal will take the shine off the contract the moment the going gets good.

The lesson learned is that whilst the recession was felt by industry and individuals alike, it is essential that during periods of economic crisis hoteliers delve deeper to discover the reality of their situation before doing anything reckless. The factors affecting each element of a hotel operator’s offering are so dynamic and diverse that a ‘one size fits all’ approach simply will not cut it, and whilst a high volume of long-term contracts may prove the right way to go at one location, it may be more financially sound to reduce them at others. Equally, it is critical that when entering into a contract, the terms are set at a rate and conditions which are beneficial to all parties. Ultimately, hotels are preparing for a period of anywhere between 12 and 18 months of trading, so if a hotel doesn’t get it right now, it may never have the chance to buy back time and make amends.

Future forecasts are frustratingly mixed. Whilst some financiers are flying the flag for recovery, naysayers continue to cast doubt with cries of a double dip recession. As long as savvy hoteliers are amply prepared with the right intelligence, they will make educated and informed decisions when developing their negotiating strategies for 2012 and enter into the year in a strong position.

Thinking outside the box

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.