LONDON—During this economic downturn, hotel operators are realizing it is necessary to find unique ways to attract customers. The escalating recession is causing serious problems for many hotels, whose managers can no longer rely upon the normal course of business or leisure travel. Both streams of travel have dropped significantly, causing less business at many hotels.
However, many properties remain optimistic. New and creative marketing ploys are becoming hugely popular worldwide with the hope that they will help ease the blow of the economic recession without reducing average daily rate.
One of the main pieces of advice being given to hotels is to maintain ADR. Historically, it has been extremely difficult to bring ADR back up if discounting occurred during a recession. In a recent study using STR Global data, Dr. Cathy Enz and Dr. Linda Canina from Cornell University’s School for Hotel Administration used a sample of over 3,000 hotels to examine the pricing strategy for competitive hotels in Europe. They found that while hotels that price below their competitive sets have modest occupancy gains, they also have decreased revenue per available room. Their results illustrate that hotels offering a rate that is higher than their competitors have substantially higher RevPARs and, in many cases, without substantial reductions in occupancy. This suggests that the hotels that choose to drop prices compared to their competitors actually experienced the lowest comparative RevPARs.
With the hospitality industry seeing large decreases in occupancy and RevPAR, it is extremely important to try new ideas. New marketing tactics will hopefully increase RevPAR without compromising value and lowering ADR. One popular package for many properties right now is offering free nights. For example, many resorts in Disney World in Orlando, Florida, are offering guests two nights free after staying for three nights. This provides incentive to travel without compromising ADR, as the free rooms do not lower ADR. Below are a few examples of creative marketing from different hotel properties:
Leisure vouchers. Following the economic stimulus package from President Obama, nine Marriott properties in the Caribbean and Mexico began to offer the “Travel Stimulus” voucher, a US$100 voucher for anything on the property that can be used on top of any other Marriott promotions and packages. In addition, to meet the needs of business travellers, they have a “Meeting Stimulus” voucher that provides 5 percent off the total room and food and beverage cost.
‘Guilt-free’ meeting packages. The Woodmark Hotel, Yacht Club and Spa in Seattle, Washington, designed a package to lure meeting and business travel. It is offering a “Guilt-Free” meeting package, which offers free meeting space, Wi-Fi and a glass of wine upon arrival. There is also a 5-percent discount on all banquet food and beverage for the meeting group and an additional glass of wine for each person at one of the restaurants. Finally, this package includes one upgrade to a suite for every 25 room nights contracted.
Free amenities. In addition to packages and promotions, many properties are offering new amenities free of charge. For example, the Halekulani Hotel in Honolulu, Hawaii, is providing free luxury car service for guests during their entire stay at the property. Another example is Courtyard by Marriott, which is offering a US$20 Target gift card for any Friday or Saturday night stay at the property.
These are just a few of the many inspired responses hotels are employing to succeed during the recession. This optimism in increasing travel will hopefully be a success for many hotels. While nothing is certain during an economic downturn, one thing is for sure: The hospitality industry is doing its best to maintain high standards and remain steady.