Did you happen to catch CNBC’s December documentary “Behind closed doors at Marriott?”
When asked about “fade rates” or “the Fade”—a term used to describe the act of potential guests without reservations negotiating for heavily discounted rates at the front desk for a room that same night—Marriott revenue management guru David Roberts told CNBC reporter Scott Wapner that Marriott “never does that.”
“If you do that,” Roberts said, the hotel has just trained the customer, “Don’t book in advance.”
In a recent article, David K. Hayes and Allisha A. Miller underscored Marriott’s policy further and described the “four revenue optimization errors” associated with the use of fade rates.
The practice undermines the concept that the hotel’s rooms have an express value.
It requires unrealistic front office training.
It miscalculates costs.
It seeks only to optimize short-term revenue for the property.
Hotel owners and operators have been debating the pros and cons of negotiating discounted rates at the front desk long before I started in the business 50 years ago. I was taught to honor and protect hotel rate integrity from the very beginning of my sales career.
Even today, as a professional consultant, I experience prospective client pushback on my established fees.
The Picasso principle
Whenever I need reminding of the value and importance of established rates and professional fees, I read “The Picasso Principle” chapter from Harry Beckwith’s “Selling the Invisible.”
Beckwith uses a story about Pablo Picasso to demonstrate what talent and thought are really worth.
“Picasso, one of the greatest and most influential artists of the 20th Century, lived most of his adult life in France. A woman was strolling along a street in Paris when she spotted Picasso sketching at a sidewalk café. Not so thrilled that she could not be slightly presumptuous, the woman asked Picasso if he might sketch her, and charge ‘accordingly’. Picasso obliged and in just a few minutes, there she was: an original Picasso.
‘And what do I owe you?’ she asked.
‘Five thousand francs,’ he answered.
‘But it only took you three minutes,’ she politely reminded him.
‘No,’ Picasso said. ‘It took me all my life.’”
Beckwith’s message to his readers: “Don’t charge by the hour. Charge by the years.”
Penn State student takeaways
The above is one of many lessons I have learned from my hospitality industry experiences, some of which I was honored to share last fall when I addressed students at the Penn State School of Hospitality Management.
The students were required to submit written takeaways from my presentation. Here is a sample of what they recorded:
• We live by relationships with support from technology.
• Clients are acquired through personal credibility, knowledge and trustworthiness.
• Be proactive, form relationships, keep in touch by networking.
• Recognize your passion and follow it.
• Never stop learning more about the business and the customer.
• Take risks; those can be some of the very best experiences.
• Longevity in any career can be attributed to an ability to stay current and adapt.
And here are some added tips for those potential consultants among the PSU students:
• Better to do pro bono work than to discount fees.
• Treat the dollars your client spends on your advice as if it were your own money.
• Always attempt to exceed client expectations.
• Master the art of quick turnaround time.
• Always ask satisfied clients for referrals—but know when to ask.
• Whenever in doubt on a pending engagement’s status, never delay; make the call now.
I thank John O’Neill, the school’s director, and Brian Black, hospitality industry relations director, for the invitation. I was very impressed with the school’s program and, in particular, the interaction with the students.
Two other highlights of my time on campus: my stay at the beautiful Nittany Lion Inn and a trip to the Creamery for some delicious ice cream. I very much look forward to returning soon to not only share more lessons but to do some learning of my own.
David M. Brudney (David@DavidBrudney.com, 760-476-0830) is a charter member of the International Society of Hospitality Consultants and a veteran sales-and-marketing professional concluding his fourth decade of service to the hospitality industry. Brudney advises lodging owners, lenders, asset managers and operators about hotel sales and marketing best practices and conducts reviews of sales-and-marketing operations throughout the world. His website is www.davidbrudney.com.
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