11.03.2009
Hotel marketing online global reservations
As Hotels are entering into the crucial stage of setting their strategies for 2010, one of the biggest dangers is the continuing uncertainty about the future state of the economy. While economists around the world are declaring an imminent end to the global recession, the biggest global chains continue to announce double digit drops in RevPar and ever increasing losses, indicating that "we can't see anything in our numbers at the moment to suggest we've hit the bottom". In this period of uncertainty, how is a Hotel to set long term strategies for 2010? Who can predict how next year's economy is going to shape up and when demand is going to return if even the world's best economists are having difficulties predicting global economies for the next few months? Interestingly, a recent report from Accenture had the following to say on the trend to mass discounts, when faced with weaker business conditions:
In many situations, business leaders listen to sales people who insist that the sky is falling, so they must have pricing relief. But savvy managers push back with queries about where exactly the sky is falling and where it isn't. They continue probing until they learn where, in which markets, and with which customers and which product lines there is cause to be confident. Savy owners, operators and managers therefore should not only push back on dooms-day scenario's, but put in place two key strategies for a successful 2010:
1. Maximize the revenue opportunities throughout the entire customer journey
Even with lower occupancy levels experienced during the current economic crisis, there are plenty of opportunities for Hotels to increase revenues from existing customers."In developing a strategy for the 2010 pricing year, the executive team at any hotel needs to ensure that they really have a full understanding of the revenue opportunities available to them. More than ever, it is a time for "total hotel revenue management so that all sources are maximised" commented Bernadette A Dennis, Managing Director of the Asia Pacific Chapter of the Hotel Sales & Marketing Association International (HSMAI).
A "race to the bottom" is a short-term pricing strategy with a potential long-term impact. Once a mass discounting strategy is implemented, it is hard for a hotel to return to normal rates when demand increases, given lost brand prestige and market position.
2. Maintaining flexibility to adjust revenue optimization tactics as demand changes
With 81% of procurement departments of multinational companies believing that cost reductions in travel can be achieved mostly from hotels, the pressure to further reduce or at least maintain corporate rates for 2010 will increase. A recent study by CWT in the US market confirms this expectation, with negotiated rates to fall by around USD 10.00 from current levels. Companies know that this is probably the last opportunity to get decent rate reductions. They will exploit this opportunity.As long as demand remains weak, Hotel Sales Executives will continue to suffer from a lack of pricing and negotiation power, making any proposals for rate increases in most markets nearly impossible. Industry experts believe that Accounts will start seeing the benefits from a range of dynamic rates. Larger companies will begin to make noise about it, and smaller companies will then follow in their operations.
With the eyes firmly set at maximizing the revenue opportunities throughout the entire customer journey and sales strategies in place to maintaining flexibility to adjust revenue optimization tactics as demand changes, the industry should be able to avoid making 2010 the year of the missed opportunities.
(Source: By Klaus Kohlmayr, Director IDeaS Advantage)
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