Staying Competitive in Changing Markets

New Product in Attractive, Established Territories Pose Both Challenges and Opportunities

By Richard Takach, Jr. President & CEO, Vesta Hospitality | March 15, 2015

Any given hotel property is subject to a broad range of challenges due to changing market conditions. These competitive factors can impact occupancy rates, the room rates a property can command in the market place, the property's overall revenue stream, and, ultimately, profitability.

Often times, challenges that can make a property vulnerable are independent of the overall supply of rooms in a given market. Examples include changing demographics and public safety issues, which may make a property less appealing to a portion of its traditional guest base; the move of a major employer or other entity that was a key demand generator; nearby commercial real estate transactions; swings in consumer tastes; sometimes, just a change in area roadways can make it more difficult for potential guests to reach your property.

At other times, the "enemy" can be strategic moves by competing hotels, or growth in the overall supply of rooms within a given market.

Regardless, we must respond, in effect, "changing our hotel," in order to preserve our cash flow, profitability, and reputation. This response can involve a wide range of approaches that impact such areas as staff recruiting, training and compensation; standards of customer service; physical plant and technology upgrades; or sales and marketing initiatives.

In this article, we consider some issues related to changing markets in general, before discussing what is on the near-term radar screens of many operators these days; the result of a peaking hospitality sector with outstanding occupancy and rates-that inevitable onslaught of new builds we see in every industry cycle.

Two sides of the challenge coin. Let's consider, for example, the situation where a major employer that was a significant demand generator for a property moves its headquarters to another city. As a result, business declines significantly. While every hotel ownership group will have a long-term asset strategy that includes prospective "sell" markers, many of the situations we are considering occur "in the interim"; often, either with little notice or due to slowly developing trends that lull us into complacency.

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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.