The hotel industry is undoubtedly a major player in the American economy. When we look at the industry as a whole, we can see it trending up after some years of concern. The American Hotel and Lodging Association (AHLA) publishes a report each year that highlights trends in the industry and shows this upward progression. The latest figures available are for the 2014-2015 period are:
· Number of properties up by over 1,400 to approximately 53,432
· Number of rooms up by over 178,000 to approximately 4,978,705
· Tax revenue to local authorities up by over $6.5 billion to approximately $141.5 billion
· Business travelers spent 3% more and leisure travelers 6% more on their hotel stays
All encouraging news but as is often the case with statistics presented in this manner, completely misleading. Developments at city level show the effect of local factors that are not visible when considering national figures.
Commercial property taxes have risen in many cities across the country to pay for bond issues designed to finance developments such as sports stadiums and infrastructure upgrades. These increases raise occupancy taxes and depress average daily rates (ADR) as properties try to remain competitive.
Additional inventory that has become available due to the building of new properties has created a glut in many cities that reduces profitability especially for the franchisee and the independent operator. Properties rated at 3 stars and below are especially vulnerable.
Online booking engines were initially a boon for the industry, increasing access and improving the marketing exposure. In line with the evolution of highly funded online business, these perceived partners are now showing a structural bias in the way they present member properties on their sites. These are some of the more popular sites (Search Engines):
These search engines are under pressure from investors and stockholders to show not only profit but significant growth. Many are publicly traded or are parts of public corporations with structural demands for incremental market share and profit.
In order to satisfy these existential pressures, the initial design of these engines has been modified with algorithms that present certain types of properties ahead of others. Properties that provide better opportunities for cross marketing, higher commissions and better brand recognition are thus favored.
After the initial rapidity of adoption, many properties became heavily reliant on business that came from these sites. Independent marketing funds were reduced to offset the cost of commissions and onsite local networking efforts were deemed unnecessary. As bookings from these sites waned, the properties that took these steps have seen significant drops in occupancy, culminating in an income crisis.
The good news reflected in the national statistics therefore, tends to be reflected on the books of the higher end properties and brands while properties rated at three stars and below are facing some very difficult questions.
· How do we improve independent exposure to a demographic that is increasingly locked into the online booking engine?
· How do we secure business and leisure clients from outside the city and state?
· How do we identify and improve exposure to our target demographic?
· How do we manage and fund an independent marketing campaign?
The good news is that most properties retain some staff with marketing responsibilities, whether this is the General Manager (GM) or a Marketing/Sales Manager (MM on staff or contracted). Some properties may even retain a small number of sales people.
The bad news however is there are challenges that these individuals are often ill equipped to face.
· The GM position if tasked with marketing is the worst case scenario. With two divergent areas of responsibility, the GM is not an optimal resource for one or the other and often times both.
· The MM, though more focused on networking and exposure on behalf of the property, can often benefit from education and training that also provides the marketing resources for success.
This situation therefore is ideal for the introduction of a Non-Executive Director of Marketing (NXDm).
The NXDm is not a marketing resource, a networking expert or an online marketer. The NXDm’ s brief is to train and equip your staff for these functions.
The NXDm will work independently being only available on property for 1-5 days a month. This is determined by the individual urgency of your financial stress. This individual can also be available to staff on a daily basis by phone and may choose to start the day with staff via video chat. The NXDm functions as a rapid response monitor that can act to correct direction and methodology. The NXDm brings several teaching priorities.
1. Market Segmentation: Segmentation within business, leisure and event clients.
2. Data Mining: Utilizing historical data to fuel marketing efforts.
3. Resource Training: Cross training or transitioning current staff.
4. Channel Identification: Identifying online channels that match property target demographics
5. Messaging Design: Consistency in messaging is critical for effective marketing.
6. Differentiation: Competing with similar properties in your geographical location.
7. Cost Free Marketing Channels: Utilizing free marketing properties both online and offline
8. Reputation Management: Critical correction of online feedback.
In conclusion, the purpose of this piece is not to dispute the necessity of partnering with online search engines, but to resist depending on them for the majority of your revenue. A proportional local effort is critical to address the shortfall that properties experience in new business. Therefore, a structural modification of your existing team or an informed formation of a new marketing team, can go a long way to alleviating the income challenges faced in today’s environment.
Reference note from the author:
For over 20 years I have been a business and marketing consultant working in various industries and educating marketing professionals. I believe that an informed marketing professional can develop the tools to influence choice organically raising the profile of their brand and dramatically improving profitability.
My blogs and articles are based on experience gained and strategies developed using the Y-U Protocol. Over the years I have translated my experience into teachable courses that can be tailored to meet the needs of most companies.
My experience and qualifications can be viewed on my company consulting pages where my services as an independent consultant or a Non-Executive Director of Marketing (NXDm) can be contracted.