How to Survive in a Down Market - Getting Back to the Basics

By Brenda Fields Founder, Fields & Company | March 06, 2010

The emphasis in boutique hotels is on selling guest rooms (where the profit margins are significantly higher than in banquets and meetings) by enticing a guest with its high design, the promise of a unique experience, and lower rates.

With a public ready for change, combined with a strong economy and unprecedented demand, the formula worked. Independent boutique hotels flourished and owners enjoyed tremendous ROIs. Riding the wave of high demand in urban markets, independent boutique hotels were able to capture business without incurring significant marketing expenses, such as marketing representation companies, reservation companies, and a large direct sales force. Working with a few third party, commission based companies and placing listings in appropriate venues was usually enough to put the hotel on the radar screen. As a result of the high demand and great success, little, if any attention was given to knowing who the customer was, where he or she came from, and why the hotel was selected.

After eight years of "feast", the depressed economy, coupled with tumultuous world events, has contributed to a dramatic drop in demand and many independent boutique hotels are operating at significant losses. To respond to the changed conditions, most hoteliers lowered rates and reduced expenses. Although that is a necessary short-term strategy, on its own, it is not enough to generate profits and to compete with large chains and brands that have the greater financial resources and staying power.

The key to success is to lay a solid foundation, based on business and marketing basics, which will withstand changing marketing conditions; and to incorporate any new or emerging trends into those fundamentals.

Those basics are:

  1. Positioning - Before going forward with a plan to reverse the downward business trend, 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. With an economic downturn, it is easy to rush into decisions in order to generate business, based on what the competitors are doing. But a clear focus and clear understanding of your position, will avert costly mistakes for both the short term and the long term.

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Coming up in June 2019...

Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.