Essential Hotel Commercial Strategies for Recovery

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April 19, 2021
Revenue Strategy
Caryl Helsel

A full year after COVID changed everything for the hospitality industry, our resilience and innovative spirit have allowed some hotel properties to fare better than others. COVID has forced evolution in almost every aspect of our business. Today, we see new commercial strategy best practices and standards emerging. As we prepare for better days ahead, some key revenue management, distribution and marketing strategies can best position properties for revenue generation as we transition into recovery in 2021.

Optimize Distribution
While much has changed because of COVID, the fundamentals of sound revenue management and distribution are the same: The Right Price, At the Right Time, On the Right Channels. As demand slowly returns, optimizing your distribution strategy will be critical to recovery. Lower occupancy is an ideal time to audit your systems and integrations. Are your property management system (PMS), central reservations system (CRS), global distribution systems (GDS), and online travel agencies (OTA) optimized and fully functional using industry best practices? We've seen positive gains through strategic distribution strategies and partnerships to help capture the demand that does exist.
   Today it’s essential to have a data-informed direct distribution strategy to drive channel shift. All data and channels need to be dialed in and regularly monitored. We collect as much information as possible from guest databases, website and email analytics, booking engine metrics, and comp set analysis to develop a robust direct booking strategy. It's critical to audit and optimize the content your guests are searching for. Make it readily available on every channel you sell on. Be sure it’s detailed enough to give guests what they’re seeking.
 
Don't Forget About Your Call Center
One often overlooked yet vital conversion channel is the humble call center. It’s more important than ever today. Optimizing your call center can have an immediate impact on revenue. Make sure call center agents are trained, informed, and have vetted answers for today’s new guest questions. Many call centers aren’t converting due to the challenges of increased volume and questions about sanitation and revised policies. Make sure your phone systems can direct reservation sales calls to the highest converting salespeople. Send information calls to those who are best at customer service. Track leads coming in from your call center – each unconverted call is a potential guest. Provide call center agents with the tools they need to close the call with a reservation.
 
The Incredible Shrinking Booking Window

One of the most critical things we’ve done for our clients is to adjust strategy to account for the new short-term booking window. Before COVID, a common approach to drive business was offering mobile promotions for 72 hours, as most properties had a booking window of 3 to 20 days in advance. Today's booking window often is 72 hours only. There’s no need to deeply discount on mobile promotions 72 hours in advance when a large percentage of your bookings will happen in that short-term window. Hotels that offer discounts within 72 hours of arrival could be over-discounting. Review your bookings and optimize your last-minute promotional strategy to ensure you aren't discounting the bulk of your reservations. Think about how to change advertising and marketing plans and promotions to account for this new booking window.
 
Marketing and Website Messaging

Before the pandemic, no one could have predicted that some of the most essential content on your website, email, and marketing materials would be your housekeeping procedures and cancellation policies. New best practices for marketing messaging and positioning include: 
 
  • Make sure you have a COVID-19 FAQ webpage to reassure guests with detailed sanitation and housekeeping procedures.
  • Update all cancellation policies and offer flexible cancellation refunds.
  • Update email confirmations with new policies.
  • Update all policies and new sanitation sections on GDSs, OTAs and distribution partners.
  • Take part in any local or statewide tourism safety initiatives.
  • Advocate for the industry with local governments. 
  • Keep up-to-date with state and local policies and ordinances.
  • Focus on deals and special offers.
 
Digital Strategy and Local Strategy
Every property needs to be focused on digital strategy. Digital marketing and advertising are the best tools to build demand and drive people to bookings. We've seen significant gains result from a focus on localized digital strategy. To best take advantage of the shifting tight booking window, try segmenting databases and developing specific messages and offers to the drive and staycation markets. 
 
Creative Space Evolution
Hotels are now renting out office space, school classroom space, college-student affordable housing and quarantine space. They’re repositioning their rooftop, sidewalk, and outdoor spaces, too. To get started:
 
  • Walk your entire space and reimagine what it could be used for. What needs does your community have? (Pool passes, gym passes, private romantic dinners, etc.)
  • How can your meeting spaces and meetings evolve?
  • Develop attractive staycation opportunities for the drive market.
  • Sell gift certificates for future stays with generous expiration policies.

Check out your partners, industry organizations, and tech company resources – many have put together guides and webinars to help marketers.

Strategy in Action: A COVID Success Story:
Hammock Beach Golf Resort & Spa

Using data to shift revenue and marketing strategies helped this hotel exceed budget and the previous year in the summer of 2020. Direct booking strategies helped it increase retail BAR business by 100% and reduced dependency on OTAs by over 40%, resulting in excellent performance to budget and YOY increases.
   "The resort was essentially closed from mid-March to just after Memorial Day. Once reopened, the resort ran high occupancies and realized ADR increases of $20 to $40 monthly without actually raising rates. These results were achieved by restructuring our market mix and presenting well-timed offers to our customers who, fortunately, responded enthusiastically. We are now into the fifth month post reopening and continue to dominate not only our primary comp set but our aspirational set as well per the STR report," said Kerry Mitruska, Hammock Beach director of sales and marketing.


  “Heading into 2021, we realized that conventional budgeting methods wouldn't work as well in this new COVID world. By budgeting on a daily level, we can better optimize rates for high demand and develop future promotions for slow times. Budgets and forecasts must be day by day. You have to update them more frequently to account for industry volatility.”

Start Restructuring to Commercial Strategy
Breaking down sales, marketing and revenue silos begins with making sure everyone's goals are aligned. Instead of having different goals for different disciplines, get your entire team focused on the same goal and measure your progress. In a commercial strategy team, every decision aligns toward common revenue goals. Commercial strategy leaders can motivate individual team members by helping them understand exactly how their efforts contribute to the gross operating profit (GOP) and rev par index (RPI). Commercial strategy teams are better positioned to leverage creativity and quickly adjust to take advantage of new opportunities.
   With record-low occupancy rates, now is the perfect time to begin restructuring your team. Start with a blank canvas. Pretend you have nothing and no one in place. Think about your ideal business: What segments would you like to target, what tools and activities you need? Then ask yourself what types of people and roles you need to achieve your goals.
   Take the time to thoroughly analyze data. Use this to develop and deploy updated models, resources and strategies. This should put you on the best path to maximize revenue as demand returns this year.

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