To some extent, accurately assessing your hotel’s revenue performance is more of an art than a science. But, as an owner, how do you make sure the product of that artistry is a masterpiece and not a paint-by-numbers disaster? How do you account for all the variables and complexities of the marketplace, sifting through the chaos of product, location, competition, price sensitivity and demand generators to paint an accurate portrait of where you stand?
Structuring your budget and creating an optimal mix of business for the hotel based on such disparate factors is hard enough, but once you have established these key items and goals for the property, evaluating your progress can be even trickier. It all comes down to one very important question: Are you getting your fair share? Determining whether your financial and operational priorities are delivering the maximum possible profit relative to your market and your competition is a question that is often asked but rarely answered with a high degree of precision.
What follows are some key guidelines and insights that can help generate an accurate and informative answer to that fundamental question. These are strategies that not only will help you determine whether you are getting your fair share but also give you some important insight into what it takes to increase your share.
Who: Understand your competition
It is tough to know how you are doing if you do not know who you are competing against. First and foremost, determine whether or not your STAR benchmark is set to your true competitors. The ability to track your property’s occupancy, average daily rate and revenue per available room against the competition is a tremendous asset, but the value of that asset goes down significantly if the competitors accounted for in the program are not your true competition. When was the last time your STAR status was evaluated? Is new supply taken into account, or have old hotels seen big renovations? You will never know if you are receiving your fair share if you are not looking at who you are really up against for transient, group and contract business. In some cases, it might be helpful—even necessary—to consider a second or third comp set to truly understand your market performance.
What: Tracking and coding
Any accurate analysis begins with good information. And the quality of your data is critically important. Ensure there is an accurate system in place at your hotel to track and code all business that is booked and consumed. Determine whether that system is reliable and accessible and can be analyzed at any time. Make sure your system is capable of breaking down the details of specific rate plans to gauge where business is coming from, enabling you to target new opportunities for more potential revenue. Part of quality tracking is quality training, as well. Make sure front desk and sales team personnel are trained and knowledgeable in accurately coding business. You will never know what your fair share is if your own mix of business is not accurate. Once an accurate coding system is in place, you are then able to establish benchmarks and set goals to show growth and market penetration.
Where: Market intelligence
Make sure your team is using all available resources to identify what type of business is going to your competitors. There are a number of effective tools out there (Hotelligence360, Knowland Group and Rubicon demand position reports and Brand City Wide Volume Reports, which identify key corporate account producers in the marketplace) that can give you invaluable insight into where guests are staying and what they are paying. Rubicon MarketVision reports help ensure you are priced competitively to your market. If you are in a leisure-driven market, then consistently shopping your competitors’ brand and independent websites, as well as the online-travel agencies, can alert you to specific packages and promotions that might be impacting your share of transient business. Other sites that can stimulate and drive transient business during need times and should always be monitored for specific transient advertising for hotels include: Kayak, Travelzoo, Hotwire Travel Ticker and Dealbase.com for your area.
How: Create a plan of attack
A flexible, strategic and detailed plan of attack is essential. Be willing to continue to make improvements and adjustments to your plan as needed. Keep abreast of distribution channel production and associated costs attached to each channel in order to maintain strict control of your inventory and pricing. Be alert for targeted opportunities that can provide easily traceable return on investment (global distribution systems’ preferred placement or point-of-sale advertising can often provide immediate short-term measureable results). Remember that a plan is a guide not a restriction or an excuse for complacency—recognize room for growth and be willing to adopt creative strategies on the fly to get ahead of your competitors. Whether it is through unique sales proposals or blitzes, online sponsored ads or even a crazy 24-hour sale, there are always opportunities to increase your share.
Why: Evaluate and measure results
All of the strategies and programs provide some practical tools for evaluating your hotel’s performance. What is equally important, however, are the intangibles: the professional culture you impart to your employees and your willingness to gather and act on quality information. Your commitment to always look for improvement, to avoid complacency, to be creative and think outside the box is important. The more you can maintain a sense of urgency and vigilance regarding your competition’s strategies, the better you will be able to leverage that information—along with market knowledge and conditions—to develop a “counterattack” mentality and maintain the upper hand over your competitors. If you use the tools available, and keep that aggressive, entrepreneurial edge at all times, you won’t just be confident that you are getting your fair share—you will be getting some of your competitors’ share as well.
Headquartered in Greenbelt, Maryland, just outside of Washington, D.C., Chesapeake Hospitality is a mid-sized, third-party hotel management company with a proven track record in both full- and select-service hotels. Ranked in the top 50 largest independent operators, the company manages properties under the Hilton, Starwood and InterContinental Hotel Group brand families. For additional information, visit the company’s website: www.chesapeakehospitality.com.
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