Counterpoint: Direct Group Sales Over Indirect Platforms
More passive RFP platforms are not the answer. Intelligence-based Direct Sales drives 8X ROI for Hotel Group Sales.
By Robert Post CEO, Knowland | September 08, 2019
Several industry publications recently asked me for my view on the $50M investment by major chains in the new group booking platform, Groups360, and what it means for Hotel Group business. So, I am taking the opportunity to share my perspective on this major collaborative investment with a wider audience.
Any investment of this magnitude would appear positive for the industry. It indicates Brands at least recognize the threat inbound RFPs and the CVENT model represent to their profitability and market cap – and are taking action. However, the idea that investing in a "slimmed-down version" of an existing business model would solve the problem is questionable.
Good news: The major brands are finally waking up! Leaders like the ones in this recent deal are beginning to recognize that the passive inbound RFP model is a threat to their business. Brands understand they need to change their Group selling behaviors and take control. The first step is to free themselves from the limitations of relying on increasingly lower-margin business obtained through the stale business model of the Group industry gorilla, CVENT.
Bad news: This new OTA-like group booking platform is setting the hotel industry up for yet another race to the bottom on both price and profit. Just like the consumer-focused OTAs, this platform focuses on price, not value or guest experience, which continues to put the meeting planner at a disadvantage when comparing venues. Price-based selling is self-defeating for hotels and continues to commoditize Group business as well as reduce overall margin. Even if you win the business, your hotel loses because you are training your meeting planner clients -- and the market overall -- that price is the dominant criteria for booking a Group.
The Missed Opportunity
Meeting planners all agree. A top pain point is the inbound RFP process. It is time consuming, cumbersome and often limits the ability to deliver the best experience. There are many qualitative criteria that go into planning a successful Group that the inbound quantitative process does not/cannot address. Additionally, because Sales is often focused on being the first or fastest to respond to a request, RFP information is typically inadequate and incomplete. So, in absence of adequate information, decisions focus solely on price.
If the Brands' goal is to reinforce price as the key criteria, then this approach is a resounding success. If customer satisfaction and an overall better customer experience and profitable sale is the goal, then they've woefully missed the mark.
It's time for the Brands and the industry as a whole to discover/re-discover the value of proactive Group selling, where properties gain control of their pipeline, their repeat business, and their profitability. This is the strategy that will move the needle for the Brands, their franchisees and provide greater customer satisfaction.
Give Planners What They Want: Hotels to Do the Work
According to the 2019 CVENT Planner Sourcing Report, meeting planners said hotels need to do more to personalize responses to event inquiries and "level up" by providing proactive solutions to planner needs.
Meeting planners want hotels to go beyond dates, rates, and space. They want a collaborative partner! Special services, proximity to airlift, food experiences, health and wellness, nightlife, and technology features all elevate the Group event beyond an impersonal 'room in a city.' This has always been the foundation of how meeting planners approach the business and their dissatisfaction with creating inbound RFPs is evident in our discussions with them. They want a Brand level disruption that answers all of their meeting demands – not just price.
So, I ask, how is creating another inbound channel (which is severely under-capitalized compared to the resources of CVENT) to replicate an already unsatisfactory process really going to create value and something better for planners and hotels?
The industry approach of a consortium to invest has been tried numerous times... most people remember Room Key, Thisco, as well as others. They also remember the overwhelming failure from these efforts. The hotel industry is poised for – and capable of – a better solution for their meeting planner customers and themselves.
How Intelligence-Driven Direct Sales Wins
Knowland has always known the most effective and profitable approach for hotels is a Proactive Group Sales Strategy. This strategy, powered by the right data, can predict the best Groups to target for your hotel and position your salespeople to aggressively sell into them before an RFP is issued. Shifting focus to proactive outbound selling results in repeat business with 8X the return value of Groups procured through inbound RFPs. Today's highest performing hotels have a Group business mix that is driven by outbound Direct Sales with inbound RFPs as an important, but secondary contribution.
At the end of the day, this new platform won't solve the booking volume and margin challenges of Hotel Group Sales departments. It will certainly put additional price pressure on the Brands themselves by focusing on yet another indirect price-driven sales tool. The future of high value Hotel Group Business is intelligent, focused Direct Sales efforts targeting proven opportunities defined by date, location, value, and desired experience. That is the far better strategy for building long term value and brand equity for hotel meetings and events.
Knowland is the leader in predictive market data and analytics for meetings and events, proactively generating more bookings and revenue for every segment of the hospitality industry. For more information on how Knowland can provide insights on meetings that fit your hotel target audience, email us at firstname.lastname@example.org, call 202-312-5880 or visit us at knowland.com. Follow this thread at #DirectGroupSalesWins.
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