Buckle your Seatbelt: Horsepower for the Rebound
By Paige Duke Founder, Duke Consulting, LLC | June 27, 2021
Lately, everybody is "here for you" – the bank, the skincare retail shop, and even the furniture store. It is coming from all angles. At the same time, we no longer want to discuss the "need to pivot" or experience "unprecedented times." As of this writing, we are coming up on a year since the major shutdown and beginning of the pandemic. It is exhausting.
Empty lobbies echo with these well-worn phrases as hotel owners, asset managers, management companies, and property executives wonder what to do next and how to capitalize on demand when "normalcy" returns. The challenges inherent in this are abundant, and I haven't even referenced the "new normal" yet. From the sales and marketing perspective, there are many hurdles on the path to recovery.
Limited Brand Support
Many hotel brands have limited the services they offer franchisees as a result of multiple rounds of lay-offs and furloughs. Global sales and digital marketing are crucial support systems, essential to a property's success, and these departments are shrunken imitations of their former size. As a result, hotels have lost any potential "leg up" on group business because of the loss of those relationships.
So many of our industry colleagues have been displaced, and we may not be able to "opt in" on pre-designed digital marketing campaigns for leisure and group with no above-property resources left to support them. In terms of financial resources for this work, we no longer know if the budget dollars we saved can even be spent, if they should just be put into reserves, or if the property can afford an outside vendor.
For hotel owners, the unanswerable questions swirl around:
"Do we create our own above-property sales force if we have multiple properties?"
"Should we engage a marketing agency?"
"What happened to the EASY button?"
Less Seasoned Sales Force
A large percentage of hotel sales people were in grade school when the September 11, 2001, attacks halted travel, and some were just starting their careers in 2008 at the start of the Great Recession. Put another way, the Millennial Generation of professionals aged 25 to 40 most likely missed one or both of the biggest downturns to ever hit hotels.
Certainly, nothing could have prepared our industry for the pandemic's decimation of our industry. However, the experience of going through one or two downturns taught grit and the importance of sales skills, prospecting, and relationships. It also means that Millennials, whether they are sellers or leaders, have not been exposed to as much sales training and upskilling. As a result, proactive sales can feel mysterious and out of reach.
In contrast, older hoteliers remember a not-too-distant time when hotels did not rely on electronic RFPs, so they have "analog" skills to fall back on. (Side note: This is both positive and negative. While Gen Xers and Boomers have the skills to "go manual," they potentially have not embraced technology as a source for developing market share.)
Conflicting Data and Forecasts
Furthermore, we have conflicting data points and forecasts about what segments of travel are coming back and when. Bill Gates basically told us that business travel will never get back to what it was in 2019…. In fact, he predicted a 50% total decline (gulp!). The American Hotel and Lodging Association (AHLA) paints a much rosier picture for business travel at a full recovery to 2019 levels by 2024. Convention/Group will start coming back in Q3. No…. wait… Q4, or whenever at least 70% of vaccinations have been completed. How many meetings will be hybrid? All these broad industry statements leave us confused and unsure of what to believe.
Is there a lump in your throat? Don't despair because the good news is that you are aware and watching the trends. You are at least one step ahead in that you have thought through the obstacles. "Know thy enemy" is the first rule of war.
Solution 1: A Larger Market Study
"Knowing what you don't know is more useful than being brilliant." – Charlie Munger
Hotels have relied heavily on data resources as our business has evolved. Why stop now? With all the changes and challenges we face, it may be time to review the information in a new way. Pre-COVID we would focus on a STR report with a selected comp set. Perhaps post-COVID is the time to focus on the entire market.
There are essential trends such as the market segments showing demand yet there are also hotels that remain closed and/or perhaps are changing flags. Perhaps this is the time to reflect on an update or outright overhaul to your primary competitive set. Neighboring cities and suburbs could provide interesting intel on demand as well. A secondary comp set is a helpful addition, as travelers may be buying up or down the hotel chain scale compared to previous years.
Solution 2: Segment Review and Projections
"A goal without a plan is just a wish." – Antoine de Saint-Exupery
Typically, once a hotel looks at overall projections, it would be reasonable to make educated assumptions about segment mix based on history and trend. Unfortunately, this year segment demand will be ever-changing and fluid. 2021 is shaping up to be the epitome of a VUCA (Volatile, Uncertain, Complex, and Ambiguous) environment. This year, it is important that hotels look at every segment for potential and review for changes on a more regular basis than an annual budget.
For example, elements of leisure travel are returning as people treat their cabin fever with shorter, drive-market trips. If your hotel is traditionally a corporate hot spot and only reviewed segmentation once or twice of year, you could have missed this trend.
Business travel has been increasing, and group WILL be back. It is just a question of when. Every hotel will have a different reliance and strategy, based on hotel tier, location, local and state regulations, and other market dynamics.
This is where the goal vs. a wish comes in. Does the hotel have the tactics (execution) to back up the goal? This would be digital, online, branding, and social. This year, you may need to reach out to resources you never have in the past. This leads to the staffing conundrum.
Solution 3: Staffing, Outside Resources, and Deployment
"If we build it [staffing] will they [guests] come?" – a twist on Field of Dreams
There is no doubt that the hotel industry has been hit the hardest not only in loss of revenue but also in loss of talent. The bad news is that many wonderful salespeople have moved on to other industries. The good news is there are still many great people out there to recruit.
Additionally, there are so many more staffing options than ever before, and hotels can test the waters without making an expensive, irrevocable commitment using task force or temporary hires. This flexibility is particularly valuable as demand expands and contracts, making a hotel's staffing needs much more fluid than in a stable marketplace.
Meeting planners and travel managers say they are having trouble reaching salespeople, and while they understand the industry's predicament, a hotel that can respond quickly with either above-property or dedicated resources has a major competitive advantage in today's environment.
Solution 4: Social Messaging / Voice of the Customer
"Don't use the pandemic as an excuse to give terrible service." – Hotel asset manager in an eCornell webinar.
It is extremely difficult to balance the economic pressure to cut back on staffing with the operational needs of hotels to care for guests. It is even harder when associates, while most likely relieved to still have a job, still have fears, concerns, and personal issues at home to balance. It can be challenging enough to provide excellent service in the best of times.
This calls for more of an effort to take care of your associates and engage them in the social messaging of the hotel. Just like the customers won't give a good review if you offer them cookies and milk on arrival, donuts in the employee breakroom will not improve scores. The connection must be supported with personalized moments and open communication.
Social media reviews are more essential to the hotel's success than ever in this climate. It is a delicate balance between scoring well with guest reviews while caring for hotel teams. The best course is to engage the entire hotel team in the process, and then celebrate anything and everything, from small wins to an improvement in negative trends. Make the celebration and reward meaningful.
In the end, a hotel will not win in the marketplace with poor reviews, particularly with demand being so low. Review scores can also support all the digital and overall marketing efforts.
Success in the battle for pandemic-era market share is dependent on implementing these solutions and continually refining your sales and marketing strategy. While demand reversion and fighting for business feel familiar for those that sold through Sept. 11 and the Great Recession, know that the road to recovery will have unfamiliar twists and turns this time around.
In conclusion, this article may not have broken completely new ground for you, but it most likely surfaced some ideas or tasks that you know need to be done and that keep getting postponed for later. It is daunting to think about the action steps, given limited corporate staff and hundreds of other items on your checklist.
Going back to one of the earlier quotes – knowing what you don't know – is the biggest takeaway for success. Bringing in an outside resource to drive these initiatives in the short term may be an excellent investment in future success. And you ever know: What feels like a really long U-shaped recovery will turn up at lightning speed when it happens. Buckle your seatbelt!
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