Ms. Fields

Sales & Marketing

Group Business: Three Steps to Success

By Brenda Fields, Founder, Fields & Company

Group business has historically represented a significant portion of revenues for hotels. Revenues encompass rooms, food and beverage, and all ancillary revenues, and a drop in this segment can have a tremendous impact on a property’s profitability. Group business began to plunge in January 2009, when this segment dropped 5.4 million roomnights from the previous year (per STR data). The group average rate for hotels in the United States hit its peak during 2008 at $105.37. Group average rates have dropped since, at an annual average of $103.93 during 2009 and below $100.00 through 2010, according to STR.

“The occupancy in a lot of major cities is improving or had improved. What has not jumped back up yet is the ADR,” stated Deborah Sexton, President and CEO
of the Professional Convention Management Association. As a response to this drop, most group properties significantly reduced rates to attract any group business and undercut their competition to gain back this market. But did that strategy work? All data points to the fact that this strategy did not work to reverse the downward trend or, in any meaningful way, impact business. In many cases, long-term group rates were significantly below market value as business picked up.

Are there other strategies that could cost effectively impact this segment of the business even in a struggling economy? This article will address some tips for your sales staff to penetrate this market regardless of market conditions to ensure that your property(s) is positioned for profitability.

1. Product Knowledge: Know your Product AND your Competitors

Do you know the fable about the three blind men and the elephant? The fable goes like this. Three blind men had never seen an elephant so they each touched the elephant to try to understand what it was. One man held the trunk. The second man held the tail. And the third man felt the side. When they compared notes, they each had a different version of what an elephant was like!

The relevance of this story to hotel sales is that many times, the sales person is “selling” in a vacuum and does not understand the whole picture or entire competitive marketplace. A thorough understanding of the competitors’ properties, as well as the sales person’s property, creates a position of strength for the sales person in justifying rates or conditions of booking. A luxury property offering amenities such as Frette linens, 24-hour room service, and separate shower stalls and bathtubs, competing with a standard corporate hotel, should negotiate based on the superior product it has rather than on rate alone. But that cannot happen unless the sales person is well versed in all the elements of his/her property as well as with all of its competitors.

Otherwise, rate negotiating is just a shot in the dark and there is little chance that average rates will increase.

In this age of internet dependence, it is fairly typical that a sales person will research the competition online but never personally visit the property. But that tactic is faulty as the best experience is real experience. A personal visit will enlighten the sales person on all the soft elements in a property. How was the person greeted? Were the public spaces clean? Did the staff appear professional and well groomed? That level of detail, combined with an honest assessment of his/her own property and good sales skills, will place the sales person in a better position to book the best business at the best rate.

2. Prospect for the RIGHT Business for your property

Many times, the sales person or sales leader is at a loss as to find the right prospects. The tight security of companies has made it virtually impossible to prospect thru cold calling. And phone directories rarely exist for external use and emails have security features that make it almost impossible to even leave a message. But there is business to be booked and the smart leaders will take the right steps to ensure that their sales people can uncover group leads. The product knowledge combined with good prospecting will help the sales person identify the customer best suited for his/her property.

Some tips are:

• As we know that people do business with people they know, it’s therefore important to be known. Have the sales people join industry associations where the membership is comprised of meeting planners and influencers. A few key associations are: Meeting Planners International; Hospitality Sales & Marketing Association International; International Special Events Society, and Biz Bash. In addition to joining, it is important to be an active member. To work this to the best advantage, active involvement contributes to her/his credibility and professionalism and overall image with the potential customer. These associations have directories and the chances of a sales person reaching a decision maker are greatly enhanced.
• Monitor the local news on a daily basis to know about the local business environment. Real estate deals can result in new business for a hotel. And usually by the time a new business has relocated to your area, the hotel deals are already done. The key is to be the first.
• Get involved in your local community. Being a good citizen and good community member will once again allow you to interact directly with the movers and shakers who are responsible for sending business your way.

3. Develop and Maintain Excellent Sales Skills

Although prospecting has changed over the years, the same basic sales skills are still critical. Once prospecting has uncovered a viable piece of business or a customer calls in directly, it is excellent sales skills that will convert those leads to actual business and also excellent sales skills that will produce the highest revenues. How much revenues are left on the table just because the sales person does not possess the product knowledge or great sales skills to sell a higher rate? In addition to sales training skills, it is the most successful sales person who has a good understanding of the hotel as a business. What does a 6:00pm group check out mean to the over-all business? It typically means that expenses are significantly increased to cover the additional labor costs required to clean those rooms long after the housekeeping staff has left. Armed with those sets of skills, the sales person is fully prepared to negotiate in the best interest of the hotel and simultaneously ensuring that the client’s needs are fully met through artful negotiation. That winning formula will help foster client loyalty and will help offset any problematic operational issues that may have come up during the client’s meeting.

So rather than developing strategies from all the latest technology and social media options, look at three tips to implement with your sales staff. It can be rather simple to impact business regardless of economic conditions with knowledgeable and skilled sales people who enjoy the challenge!

Brenda Fields is a strategist and sales and marketing expert honed from a successful track record in the hospitality industry. Brenda is a member of the prestigious ISHC, recently served on the Americas Board of Directors for HSMAI, and is Immediate Past President of the Hospitality Sales & Marketing Association International. Brenda was honored as one of "The Top 25 Most Extraordinary Minds in Sales and Marketing" by HSMAI as well as the "Leadership Development" award. She is an industry leader and spokesperson; a member of the Editorial Board of HotelExecutive.com; contributes regularly to international publications Hotel News Now; Hotels Online, Hotel Resource Weekly Network News, eHoteliers, and many others. For more information visit www.fieldsandcompany.net Ms. Fields can be contacted at 518-789-0117 or brenda@fieldsandcompany.net Extended Bio...

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