The Chesapeake Point of View

How To Effectively Deploy Hotel Management Resources For Maximum Bottom-Line Impact

How To Effectively Deploy Hotel Management Resources For Maximum Bottom-Line Impact

May 13, 2013

It is not exactly a revelation that hotel owners and operators are always looking to drive sales, increase operational efficiencies and maximize revenue. For all but the best hotel management companies, however, the proverbial pot of revenue gold at the end of the rainbow can sometimes be elusive.
At a time when many hotel management companies are engaged in or have recently completed meetings with their sales teams— dissecting performances, evaluating 2012 accomplishments, and reviewing goals for 2013 and beyond—this might be an appropriate time to look at some of the specific strategies and techniques that hotel professionals can use to achieve those goals.
For most companies and for most properties, that means beginning by asking some very fundamental questions: how are you deployed towards achieving your goals and results? Whether you are taking over a hotel or are committed to boosting your current performance, what are you going to do differently to make it work? Are you properly staffed with the right people? What specific strategies and techniques should your sales team(s) be implementing to effectively and efficiently leverage resources to impact the bottom line? And what can hotel management companies do to provide those sales professionals with the support and structure that they need to make that happen?

Size-up Your Asset
Every meaningful management turnaround begins with (and is foundationally reliant upon) a detailed and high-quality market analysis. The market assessment is broadbased, pulling city/regional volume reports that show all the rooms and rates that are produced in that particular market for transient travel. That information shows which corporations are producing the largest amount of rooms for that market, and allows the hotel manager and sales team to evaluate overall market potential. Utilize contacts with the local chambers of commerce and convention & visitors bureau for information and reports. Understanding what feeder cities have an impact on your market is essential, and knowing who and where the demand generators are in your market is also important. As you begin to refine and narrow your analysis, assess more detailed information, whether through proprietary brand reports or products provided through third-party vendors such as TravelCLICK’s Hotelligence 360.
Regardless of where it comes from, securing detailed information with a breakdown of where hotel business is coming from, what the average room rates are, and what channels guests have booked through provides hotel managers a better sense of what kind of potential exists in the market and wherein lies the opportunity. Looking at how the overall volume of business breaks down into group or individual and leisure or business bookings also begins to give a more detailed picture of where that market potential might come from. The bottom line is that it is impossible to create a truly optimized management/ sales strategy to boost revenue without first achieving an intimate understanding of every feature on the landscape of your marketplace. The best hotel management companies have developed their own in-house tools for evaluating this information and developing a corresponding strategic plan to leverage it to their advantage.

Own Your Position
The next step to assessing your hotel’s potential revenue opportunity is to identify the competition and define how your property is positioned within it. Hotel owners, managers and brand representatives should work through the relevant STAR data and determine together who their competitors are (or, at least, who they should be). With that information in hand, you can begin to get a better sense of the strengths, weaknesses, threats and opportunities that exist in the marketplace, and it is possible to develop a more targeted and successful strategy to favorably position your property to capture more business.
The key point here is that the process of understanding who your competitors are is an exercise in figuring out precisely who you are. If you know who you are and you understand your place in the market, you can staff and deploy resources much more efficiently and strategically, and can implement a strategy aimed at making inroads in spaces in the market where the greatest potential for your hotel exists. Understanding who is capturing what percentage of local business in different verticals can help you determine what you need to do to compete—or even if you can compete. In some cases, it might not be operationally or financially feasible to do so. For example, if your property does not have the appropriate meeting space or the requisite business facilities for a hotel of your size, pursuing additional business travel and convention bookings is ultimately going to be an exercise in futility. A hotel manager who finds himself or herself in such a situation needs to understand those limitations and adapt accordingly to boost bookings that do not require meeting space. Perhaps that means building a relationship with a nearby hotel to handle overflow business (thereby locking into business with an important demand generator), or perhaps that means enhancing focus and staffing/strategy on the travel and leisure market. A simple shift of playing to your strengths, instead of trying to backfill unavoidable weaknesses, can result in a dramatic revenue spike.
Another important element of understanding your position in the market is to know your customer—the best hotel managers take every opportunity to gather information and deepen their understanding of where they are, how they can grow, and where they can go. What is your online reputation and how are you perceived: has this process been managed, how do you rank with your competitors? How is that perception manifested in online bookings? With every negative, there is an opportunity. Identify what channels your customer is booking through— central reservation office, your independent website, GDS, the corporate website—and structure your online presence accordingly. Online strategy has some inherent flexibility, and can be modified relatively easily as/ when appropriate.

The Right Team, Held Accountable
When leveraging resources for maximum revenue impact, it is imperative that you develop a great sales team that is held accountable and receives top-down managerial support. The director of sales is a key position at any hotel, a vital pivot point between managerial strategy and successful implementation/execution. Selecting the right type of director of sales that complements your hotel’s business situation is imperative for a successful operation. In the most basic of scenarios there are two kinds of director of sales – business creation and business maintenance. If your hotel is in a turnaround situation that involves aggressive new account development, you better have a business creation director of sales to drive your team or your asset could experience challenges in top line revenue. In a more stable environment, a business maintenance director of sales may be ideal to nurture an existing client base and provide long-term success and stability.
When your sales team is ineffective or underperforming, it frequently goes back to management structure and creating accountability within your sales team. The structure does not need to be complex and definitely not intrusive; after all, you want your sales people selling. An effective sales and catering software program accompanied by daily, weekly and monthly sales meetings should be focused on reinforcing the sales goals and objectives of the asset. Most effective directors of sales begin their day with a brief daily business review with their team to discuss production; what business turned definite, tentative or is in prospect from the day prior. They want to immediately celebrate the successes while also assisting any sales members who may be struggling to produce. The weekly and monthly sales meetings progress in detail and provide the sales team with the guidance and training to promote accountability, reinforce strategic goals and keep motivation at a high level.

Define Your Success
Marketing plans are an important ingredient in the planning and preparation of any sophisticated hotel sales strategy. Any marketing or sales plan should be a core document that is very specific: this is not a vague statement of intentions or something that can be stuck in a drawer and forgotten about—this is a document that managerial and sales team members have to live with and execute every day. A strong plan should not just set forth a specific set of goals, but should also outline a way to track and measure those goals on a daily, weekly and monthly basis. The most effective management companies make it a priority to review that progress every week as a regular part of their mission.
Evaluating a well-conceived marketing or sales plan is all about determining how accurately you can measure the results. The sales team must be held accountable for their numbers, but the ability to monitor and measure execution is where the rubber meets the road. Hotel managers can provide all the support in the world, but if they do not follow through and verify and stay in touch with field teams, optimizing performance will be close to impossible. It is also important to remember that simply drafting a quality marketing or sales plan is not enough; it is a first step, not a final product. Such a document should describe what success looks like, and should clearly identify where the hotel could and should be if the plan is executed successfully. One often overlooked point when looking to make a dramatic and immediate bottomline impact on revenue is to get the greatest possible bang for your buck by ensuring that all marketing and advertising expenses are precisely targeted: they should directly support or address those market segments that you are trying to build.

Resource Allocation
Hotel sales—like all sales—starts with knowing who your customer is and where that customer comes from. Experienced hotel management professionals understand that it is wasteful and inefficient to deploy resources until you know who you are going to deploy for. As obvious as it may seem, this is a critical and all-too-often overlooked point: many hotels are not just leaving business on the table, but find themselves sitting at the wrong table altogether. Managers always need to be asking themselves: “Where should I be spending my time and allocating my resources in order to get the best results?”
A large part of maximizing efficiency is to ensure that members of the sales teams are being held accountable. Hotel managers need to ask tough questions of their sales teams, but they also need to ask tough questions of themselves. Did you set fair and achievable goals? Are you tracking those goals? What are you/they doing about it when those goals are not met? If the numbers are not realistic, managers will have to look in the mirror. If they are realistic, and they still are not being reached, it is necessary to dig in further and find out where the failures are and why business is being lost. Is every member of your sales team a strong prospector, negotiator and closer? What is your response time on leads? Of course, it is not always someone’s “fault”; events on the ground and changes in the market are sometime unavoidable. But as long as the managerial team is making sure that expectations are both clear and fair, and as long as no one is content to accept mediocrity, you will be set up for success.
Finally, avoid the common seniority trap wherein the sales professional that has been there the longest ends up (by default) carrying a disproportionate share of the sales load. Also, try to be wary of a counterproductive workplace dynamic where more sales team members are handling and processing existing business instead of working to bring in new clientele. You might be booking business, but how much more business could you be booking if you were allocating your resources more effectively?

A Deep Toolbox
The most consistently successful hotel management companies utilize all the tools that are out there, whether they are brand assets, proprietary management tools, or independent resources from proven industry sources. Use all of these tools to conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats), and develop a marketing plan to help define your position in the market. Every property has some type of sales monitoring system that breaks down business into market segments and allows managers to evaluate how strong various market segments have been over time. Once those trends have been identified, managers can work to pinpoint the reasons for that trend, and (in the case of negative trends) determine what can be done to go after those customers again.
Quality, actionable information all starts with proper accounting and tracking. Many times, the managers of underperforming hotels do not have a strong grasp on who is staying in their hotel, how they found their hotel, or what channels those guests booked through. Every managerial understanding of a hotel should start with an answer to the question of: who are my guests? Digging down deep into rate data can help answer that question in greater depth. From the negotiated rates of national corporate accounts, to local corporate rates, to flex rates and online rates, breaking it all down to see where the revenue is coming from often yields further insights about which segments in the market are working for that particular hotel. A market segment report (which includes rate codes, monthly breakdown by account, rate category, and corporate ID number if it is a corporate account) is a treasure trove of data in this regard, making it easier to identify market segments where growth is possible and enabling managers to structure their deployment to promote that growth.

Avoid Complacency
If you have followed the preceding suggested course of action, chances are your sales team is producing results. But to continue your success, it is imperative that you continually track, measure and re-evaluate your sales team’s performance to continue taking market revenue share from the competition.
The minute your team relaxes, your best competitor will be there to take advantage of the lapse. Stay focused and driven, avoid the trap of complacency. The result will be a game-changing outcome: a dramatic ROI with maximum bottom-line impact.