Independents Day: How Independent Hotels Can Win

By Mike Kistner President, Chief Executive Officer & Chairman of the Board, Pegasus Solutions | March 18, 2012

Recessionary economies historically lead to the demise of small businesses faced with the challenge of competing against industry giants. Hospitality isn't immune. The recent downturn has affected everyone, including the major brands. But, the independent hotels are faced with potentially making already lean budgets or staff even leaner. As major brands trim a portion of a large budget to adapt to diminished demand, the independent is often faced with eliminating key business building operations altogether. In the down market, when demand reaches historically low levels, how does the independent hotel cope as supply outstrips thinning demand? The answer is to refocus and invest - in revenue management, distribution, rate structures and strategies, travel agent programs, marketing programs, online strategies, corporate travel programs...securing and building their core business to ensure they obtain at least their fair share of the market. How does the independent hotel invest when their budget is under so much pressure?

Some seek the security of a major brand, where fees can amount to 11 percent of revenue, which does not include the cost of meeting brand standards on property upgrades. Others opt for global hotel representation with a company like Utell Hotels & Resorts or Preferred Hotels & Resorts? And the rest maintain their solidarity, relying on their own brand, financial resources and team to manage what business building operations they deem necessary and possible. Each option has its benefits, which are both dependent on and determined by hotel culture, audience and, as always, budget.

Online Booking

In today's travel marketplace, a large part of the discussion centers on online booking, which accounts for a third of total travel bookings according to PhoCusWright's 2009 forecast. Conventional wisdom says online travel booking has leveled the playing field for the global hotel company and the independent or small group hotel. But, ask independent hoteliers, and they'll tell you it has become yet another area where size - of budgets and dedicated staff resources - matters. Take the Centennial Inn Hotel in Farmington, Connecticut for example. The hotel, an independent 96-room property that caters to business and leisure travelers visiting Hartford, recently ramped up its Web site to allow customers to make bookings directly on it. In asking the director of sales, Victoria Freeman, about how the Internet has affected the hotel's business, she said its opened a Pandora's Box of new marketing, revenue management and sales opportunities for the property and its Web site. "Take the meta-search sites alone," Freeman added. "For a hotel like ours, it is important to appear prominently on the search engine results pages, so we may have to invest as much as our major brand competitors in the Hartford area do. Most online bookers don't understand the model - as far as they're concerned, the properties returned first are their best options, which, as we all know, may not be the case at all."

Revenue Management and Competitive Intelligence

For the Centennial Inn Hotel, and countless other independents like it, sophisticated technology and distribution can pose a challenge to competing on a global level. In a competitive marketplace, technology considerations for the independent hotel also extend to revenue management. Industry sources recently reported that the online hotel sector is proving more resilient than expected in terms of volume, but that rates have dropped 12 percent. With effective competitive intelligence, independent hotels can recognize changes to market conditions and react with appropriate market rates to ensure they capture their share of business that still exists. Various products allow independent hotels to measure performance against their competition. Comprehensive market intelligence tools are available that offer integrated insight into market performance with available measures based on revenue, net reservations, room nights, average daily rate (ADR), market share, average lead time and average length of stay. Additionally, booking patterns can be analyzed and reported, both historically and as far out as 120 days, to help guide sales, marketing and revenue management decisions, thus allowing independent hotels to dynamically see and act against competitor performance. We are currently seeing a high level of interest in competitive intelligence from our independent hotel customers and we are now working with growing numbers of them to assist in this important arena of business planning.

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Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.