Autor teksta:
Klaus R. Rauter, Managing DirectorMai-BS (Thailand)
Hotel Consultant and Training Company
I am writing down these “top 10” mistakes in a hope that this list might help some developers and owners.
As we are hotel consultants, we sincerely believe that a consultant must be the most honest, transparent, straight-forward and therefore most trustworthy person close to the owners and investors.
A consultant’s intention should NEVER be to keep hotel owners and investors ‘in the dark’! A true consultant must educate advice and provide samples of good and bad practices. A hotel consultant must also be a good teacher – not a lecturer! We must guide and use all channels of communication to pass on knowledge to others. We choose to write articles in a hope that it helps and inspires others.
Mistake No 1 - Vision and Mission.
Honestly, it is hard to understand that so many hotels and resorts open their doors without a proper written vision and mission statement. OR, the vision and mission is most of the times not clear at all, or only clear in the mind of the owners. On top of that, nobody communicates the vision and mission to managers and employees. How the employees will know what is expected and understand the ‘big picture’? As mentioned in one of our earlier articles, this silly mistake ensures that the business ends up following the habits of senior managers and owners and not the organizational vision and mission.
Mistake No 2 - Sales and Marketing? – No need now!
“I have many friends and they are well connected. I and my relatives are well known people who are VIP. We will all ensure that we will have many guests using the hotel and our facilities!”
Yes, don’t be shocked! - The above sayings are what I did hear from several hotel owners. Those VIP hotel guests did come, yes, but they never paid their bills as they almost always expected to be invited since they are good friend of the owners. The result of non-existing Sales and Marketing is very costly.
Mistake No 3 - Hiring of Departmental Managers.
Surprisingly, some new hotels and resorts do hire their Hotel Manager and Department Head Team just weeks before the opening and strongly believe that this will be fine. After all, they are manager, expensive and should be able to get it right in a few days…… some owners think!
To my knowledge and from my experience, this is mostly done to save some hotel pre-opening costs as the needed money has been already lost during the construction process because of bad planning and ongoing adjustments to drawings and the building.
At one occasion I have seen that the whole management team for a 150 room hotel here in Thailand to be hired just 2 weeks before the opening. The owner kindly fired the team after 2 months as in his opinion, the team was not able to implement proper systems and service standards fast enough. Some of the best employees did resign as well, as the pressure working without a proper pre-opening was too much. I say it again, if you don’t work professionally, your most capable employees will leave you first!
Mistake No 4 - Purchasing.
The purchasing process for equipment, utensils and amenities is all done by the owner without any hotel manager and departmental manager comments, input and specifications. Once the manager and departmental leaders joined the hotel for the opening, there was no budget left for any additional purchases, as most of what owners choose are to serve their own preference and style, but not functional or practical to the workers and guest use. So, the hotel or resort did end up with equipment and utensils which are not always usable, have wrong specifications, over-specs or under-specs.
Again, the owners or senior managers never stopped wondering why professional people left the company and why the quality of products and service are not up to any standard!
Mistake No 5 - Employee Restaurant and Facilities
Strangely, employees, employee facilities and welfare seem to be the least and least important thing on owners and developers minds. I know one hotel where the owner had even meetings with the employees, right after the opening, lecturing them how good the hotel will be, explaining how professional and generous the owners are as they did buy only the best qualities and products for the guests.
He said he is not stingy and use only the best and most comfortable furniture, amenities, cars, etc. The owner also asked staff to work harder and be more committed to have a good hotel forgetting that all employees worked 2 months without a day off! The employees listen and wondered what he is talking about while sitting on a dusty concrete floor inside a badly ventilated and non-air conditioned concrete shell of room, eating from a Styrofoam food box with plastic cutlery and without any proper uniforms and only one rest-room for 100 employees. I am sure I don’t have to write down here what those employees did think and even say to each other about this owner after the meeting was over.
Mistake No 6 - Training
So far I found only 3 independent hotel owners and investors who actually provided proper facilities and time to have proper staff orientations and training for employees before opening the business.
Although EVERY single hotel developer said in the beginning that they fully agree and fully understand that training is very important and that they fully understand that people need to be trained before opening the hotel, the fact is that only the true professional owners did what they say.
Most of the time, employees did not go through any orientation program or basic training. And then, on the first day of operation the managers and owners complain the staff directly that they know nothing about the hotel, that they don’t follow hotel systems, that they don’t provide good service etc.
Mistake No 7 - Human Resource
In my humble opinion, any hotel that opening / running their property without a proper HR person, HR manual and HR systems are operationally committing suicide!!!
I have seen businesses where the majority of staff has been hired without having a written employee benefit list, written rules and regulations, written basic systems etc. Employees have been verbally promised different benefits by different managers etc. The result was simply a disaster!
And then, once the management started to implement some standardized benefits for each level of employees and some standard rules and regulations, the Human Resource nightmares become did become reality as many employees complained that they only joined this particular hotel because of benefits verbally promised by managers. Not everyone promised the same…..
Mistake No 8 - Back of the House Design
Seldom is this area given good attention. In most cases, back-of –house areas have been assigned based on vacant areas. I wonder so much why proper storage, proper offices with strategic locations, proper restrooms, proper walkways etc. are almost never important to developers and owners. It is hard, and sometimes almost impossible to explain how the hospitality industry could make money from providing a good and smooth service and for this, within a rough back-of-house workflow. It is not only the waiter and the front office staff who provide a service! EVERYONE in the hotel provides a service and ALL Departments and employees work somehow inter-connected.
Mistake No 9 - Back of the House areas
Why some people believe that that staff dormitories not need proper restrooms, showers and a common room?
Why some people believe that employees don’t need proper food and variety of food?
Why some people believe that employees will not have cars and bikes which need to be parked somewhere?
Why some people believe that a proper Training Room is a waste of space?
Why some people believe that employees don’t need comfort?
Mistake No 10 - Good managers and staff are easy to find!!!!!
Those are some nice actual sentences from owners and developers to think about:
Spa Therapist not need training, just hire some sexy girls and let them massage the guests.
My gardener at my home can make up Bed’s; please consider him as Housekeeping Manager.
Don’t worry about Accouting and Purchasing; I have someone who works for me since 10 years and he is very good with figures. Right now he controls all my drivers in the transportation company.
I found a good Human Resource Manager for our 5-star hotel. She is the wife of the local police Chief. Nobody will dare to complain.
My Son will be the General Manager; he just graduated and is very knowledgeable!
Just go to the local market, there are 100 of local people who would be happy to work at our hotel even below minimum wage!
Mistake No 11 - Hotel Opening Support from owners or developers other companies.
Yes, many business owners forgot to focus on some if not all of the above mentioned points and now they are very nervous and scared about the operation of the hotel. So, they ask some family members and employees from other owned businesses which are most of the time not from the hospitality and service industry, to come and help to do the following:
- Sales and Marketing,
- Purchasing,
- Finance Department,
- Human Resources,
“I, my family and staff from the factory only like to help! You should not complaint, be happy about it!”
I am sure you noticed that I did end up with a “TOP 11” and not “TOP 10” list! Who cares! J
As a matter of fact, it should be a “TOP 100” list as there are so many areas and subjects to discuss about.
среда, 10. март 2010.
понедељак, 1. март 2010.
Avoid a lose-lose pricing position
By Cathy EnzHotelNewsNow.com columnist
Playing the pricing game can be a challenging task. According to game theory, originally developed in the 1940s by two Nobel Prize winning academics, success depends on knowing how to play the right game. One key to success in any game is to look forward and then reason backward to figure out the best action to take today, considering what your competition might do tomorrow. This perspective requires you, as a strategic thinker, to get in the head of your competitors and consider how they’re likely to play the game. Let’s look at a simple hotel-pricing game.
Assume we have two 100-room, limited-service hotels in direct competition, each with 3,000 rooms available for sale in the month of April (100 rooms X 30 days = 3,000 rooms available). The managers of the two hotels are trying to determine whether discounting will result in more net operating income for the hotel. The ADR for this segment was US$86.09, and the occupancy was 57.9 percent during the week of 22 March 2009, according to the STR Weekly Hotel Review.
Suppose each hotel has current ADR of US$86 and occupancy of 58 percent. Let’s also assume the hotels are in close proximity and have the same amenities. Additionally, they both have operating costs of US$40 per occupied room (this includes distributed and undistributed operating costs based on the 2008 STR Host survey). If each hotel is priced at its current ADR of US$86, given the US$40 operating costs and occupancies of 58 percent, each hotel would have a net operating income of US$80,040 [(US$86 – US$40) X (3,000 x 0.58)] in April.
Discounting by one competitor (win-lose)
The manager of Hotel A wants to lower prices to gain occupancy and is considering dropping rate to US$80 for the next month. If Hotel B keeps its rate the same, let’s assume Hotel A, the discounter, gains an additional 300 occupied rooms—240 rooms stolen from Hotel B and 60 rooms from new customers attracted by the lower rate. Hotel A now has occupancy of 68 percent, while Hotel B has occupancy of 56 percent. In this scenario, Hotel A has net operating income of US$81,600 [(80-40) x (3,000 X .68)]. The net operating income for Hotel B dropped to US$69,000 [(86-40) x (3,000 X .56)]. Although Hotel A has benefited from this discounting strategy for the month of April, it’s likely the manager of Hotel B also will drop price to gain occupancy and reduce the loss of income.
Both hotels discount (lose – lose)
Hotel B has lost occupancy and net operating income because of its competitor’s moves, and the most logical move is for the manager of Hotel B to drop price also. Looking at this likely move, if both hotels decide to discount their rates to stimulate demand by each dropping their price to US$80, the stealing of occupancy is a wash, and both hotels might gain 60 occupied rooms from new customers attracted by the lower rates. In this scenario, both hotels will have lower net operating income than had they maintained rate integrity. Net operating income for both hotels is now US$72,000 [(80-40) X (3,000 x .60)], assuming the market share steal is a wash, and they each raise occupancies to 60 percent because of more demand from new customers.
In game theory, we can create a payoff matrix (see below) that provides the net operating income (hence payoffs) for each hotel. The payoff for Hotel A is in the northeast corner of each box, and the payoff for Hotel B is in the southwest corner of the box. If we compare the payoff pairs, we begin to understand the dilemmas operators face when discounting relative to their comparative sets.
Playing the pricing game can be a challenging task. According to game theory, originally developed in the 1940s by two Nobel Prize winning academics, success depends on knowing how to play the right game. One key to success in any game is to look forward and then reason backward to figure out the best action to take today, considering what your competition might do tomorrow. This perspective requires you, as a strategic thinker, to get in the head of your competitors and consider how they’re likely to play the game. Let’s look at a simple hotel-pricing game.
Assume we have two 100-room, limited-service hotels in direct competition, each with 3,000 rooms available for sale in the month of April (100 rooms X 30 days = 3,000 rooms available). The managers of the two hotels are trying to determine whether discounting will result in more net operating income for the hotel. The ADR for this segment was US$86.09, and the occupancy was 57.9 percent during the week of 22 March 2009, according to the STR Weekly Hotel Review.
Suppose each hotel has current ADR of US$86 and occupancy of 58 percent. Let’s also assume the hotels are in close proximity and have the same amenities. Additionally, they both have operating costs of US$40 per occupied room (this includes distributed and undistributed operating costs based on the 2008 STR Host survey). If each hotel is priced at its current ADR of US$86, given the US$40 operating costs and occupancies of 58 percent, each hotel would have a net operating income of US$80,040 [(US$86 – US$40) X (3,000 x 0.58)] in April.
Discounting by one competitor (win-lose)
The manager of Hotel A wants to lower prices to gain occupancy and is considering dropping rate to US$80 for the next month. If Hotel B keeps its rate the same, let’s assume Hotel A, the discounter, gains an additional 300 occupied rooms—240 rooms stolen from Hotel B and 60 rooms from new customers attracted by the lower rate. Hotel A now has occupancy of 68 percent, while Hotel B has occupancy of 56 percent. In this scenario, Hotel A has net operating income of US$81,600 [(80-40) x (3,000 X .68)]. The net operating income for Hotel B dropped to US$69,000 [(86-40) x (3,000 X .56)]. Although Hotel A has benefited from this discounting strategy for the month of April, it’s likely the manager of Hotel B also will drop price to gain occupancy and reduce the loss of income.
Both hotels discount (lose – lose)
Hotel B has lost occupancy and net operating income because of its competitor’s moves, and the most logical move is for the manager of Hotel B to drop price also. Looking at this likely move, if both hotels decide to discount their rates to stimulate demand by each dropping their price to US$80, the stealing of occupancy is a wash, and both hotels might gain 60 occupied rooms from new customers attracted by the lower rates. In this scenario, both hotels will have lower net operating income than had they maintained rate integrity. Net operating income for both hotels is now US$72,000 [(80-40) X (3,000 x .60)], assuming the market share steal is a wash, and they each raise occupancies to 60 percent because of more demand from new customers.
In game theory, we can create a payoff matrix (see below) that provides the net operating income (hence payoffs) for each hotel. The payoff for Hotel A is in the northeast corner of each box, and the payoff for Hotel B is in the southwest corner of the box. If we compare the payoff pairs, we begin to understand the dilemmas operators face when discounting relative to their comparative sets.
Net operating income payoff matrix for price discounting
the net operating income in the payoff matrix shows, Hotel A can obtain a temporary benefit from discounting so long as Hotel B keeps its price high. If Hotel B matches the cuts of Hotel A, then both hotels will lose profit (US$8,040) establishing a new lower price point for both competitors. The unfortunate consequence of this price war is that both competitors lose. If both had maintained rate integrity, they both would have higher income. The effort to discount is most likely to result in a response from the hotel faced with a win-lose situation, resulting in everyone losing. This is a classic prisoner’s dilemma. While both hotels do poorly when they price at US$80, it’s easy to see how this decision is the most rational when faced with a competitor that lowers their price and grabs occupancy.
This simple example derived from game theory using payoff matrices helps illustrate that hoteliers in difficult times must be careful to not create win-lose competitive situations that provide temporary advantage but then lead to the only logical course of action for a competitor—a reduction in their rate, resulting in a lose-lose outcome.
This simple example derived from game theory using payoff matrices helps illustrate that hoteliers in difficult times must be careful to not create win-lose competitive situations that provide temporary advantage but then lead to the only logical course of action for a competitor—a reduction in their rate, resulting in a lose-lose outcome.
уторак, 16. фебруар 2010.
Fundamentals of YIELD Management
Anyone who has booked a flight is familiar with yield management. In fact, yield management was conceived by American Airlines in the late 1970’s as a result of deregulation. American Airlines saved an estimated $1.4 billion and earned a profit of $893 million from 1989-1992 by using yield management techniques. By analyzing past trends and the competitive landscape, the airline industry strives to keep its planes as fully occupied as possible, thus increasing or reducing fares based on the day of the week and time of the year. The goal is to not only maximize revenue during periods of high demand, but also to ensure the greatest amount of revenue is realized during non-peak times, thereby greatly increasing overall profit. Because of this
technique, yield management can actually alter the behavior of consumers. For example, vacation travelers that are not necessarily time sensitive will alter their travel plans and fly on days of the week that are less expensive.
The illustration shows the concept of yield management for an
airplane.
While selling each seat for the maximum amount (A) would generate the most revenue, the reality is that only 25 of the seats will be purchased at that price (B). Using yield management by offering early or bulk purchasers discounts on full fares will result in greatly increased revenue (C) even if every seat isn’t sold (D).
The hotel industry also sets a good example of how successful yield management is exercised. For instance, resort hotels may set their rates at a premium during peak seasons and offer attractive reduced rates at non-peak times. A downtown hotel that focuses on business travel may actually offer specially discounted packages over the weekend to increase non-business related occupancy.
There is a clear set of attributes that determine how successful yield management will work in any particular industry.
The criteria for an industry considering yield management are:
− Perishable Inventory
− Variable Demand, Fixed Capacity
− Sales via Reservations
− Multi-Pricing Capability
− Low Variable Costs
− Pricing is a Powerful Driver
Perishable Inventory
One of the criteria for implementing yield management is that the inventory of the item being sold or service being performed is perishable.
Variable Demand, Fixed Capacity
Yield management is effective in industries that have a combination of variable demand. For example, peak periods of activity such as weekends vs. weekdays, and fixed capacity, which means the inventory available for sale at any one time is constant.
Most spas have some sort of fluctuating demand, whether they are in a seasonal resort or day spa, and nearly all spas have a fixed number of rooms. The combination of these two factors can be greatly influenced by a yield management strategy.
Sales via Reservations
Industries enhanced by yield management strategies conduct the majority of their business through advanced reservations.
Multi-Pricing Capacity
Another aspect to consider is ability to segment customer base. This means different types of guests are willing to pay different prices at different times. For example, a resort hotel may offer preferential pricing to local residents during nonpeak periods.
Low Variable Costs
So an increase in utilization, even at lower rates, will have a positive affect on overall margins because of the low variable costs and generally high gross margin per service.
Pricing is a Powerful Driver
The last attribute to evaluate is whether or not price will influence purchasing behavior. Because price can increase purchasing, strategies can be developed that offer price reductions in non-peak periods, thereby influencing overall revenue.
YIELD MANAGEMENT TECHNIQUES
This section will describe the various ways a hotel operation can implement yield management techniques, including the issues that must be considered and how they can impact the success of a specific strategy.
Dynamic Pricing
Dynamic pricing is the technique of altering the price based on capacity, time or both, similar to the model employed by hotels and airlines. For example, an airline will typically offer a percentage of its fares for a reduced rate. Once those lower fares are purchased, only higher rates will be available until the plane is completely sold out. During a specific time-frame, such as the holiday or high traffic season, the rules can be constrained. No low fares are offered because the demand for seats during that time period, guarantees all inventory will consumed at a premium price.
In a hotel, services can be offered at a reduced price point during non-peak times to encourage an increase in volume. This can be done by creating a menu with price ranges for the services versus set prices. The lowest price would be applied during nonpeak times, while the highest price would be for peak periods. While on the surface this sounds intuitive, it can be a very complex balance between price reductions and what the subsequent increase in volume needs to be to positively impact the overall margins.
Let’s take a simple example of a room that costs $100 with a margin of 25%. If we were to lower the price by $20 during non-peak hours, and assume that the 25% margin does not scale down proportionately with the price (since the bulk of variable cost associated with a service is salary), a hotel would have to sell 5 rooms at the reduced price to match the margin of a single room performed at full price. One alternative to a reduction model would be to increase the price of room during peak periods and keep the ‘standard’ price available at all other times.
For services with higher margins, the impact of a price reduction is less severe to the overall profit. As such, those services can be discounted to stimulate activity in non-peak periods with greater success.
The key to this approach is a thorough understanding of the margins on services and the impact pricing changes will make on the total number of services sold. Without this clear understanding, it is possible for a hotel to increase revenue but decrease overall profit.
Dynamic Availability
Increased profitability can also be achieved by managing the mix of services sold. By altering the types of services offered during peak periods, a hotel overall margin can greatly increase without a significant change in revenue or overall capacity. If a hotel is at capacity on weekends, one alternative for increasing profit would be to offer higher margin services during those times. This technique is known as dynamic availability and is an effective approach to selling higher margin rather than lower margin services during peak periods.
This technique is somewhat similar to how airlines limit certain fares during peak periods. They understand high demand will consume their capacity without having to reduce pricing significantly.
technique, yield management can actually alter the behavior of consumers. For example, vacation travelers that are not necessarily time sensitive will alter their travel plans and fly on days of the week that are less expensive.
The illustration shows the concept of yield management for an
airplane.
While selling each seat for the maximum amount (A) would generate the most revenue, the reality is that only 25 of the seats will be purchased at that price (B). Using yield management by offering early or bulk purchasers discounts on full fares will result in greatly increased revenue (C) even if every seat isn’t sold (D).
The hotel industry also sets a good example of how successful yield management is exercised. For instance, resort hotels may set their rates at a premium during peak seasons and offer attractive reduced rates at non-peak times. A downtown hotel that focuses on business travel may actually offer specially discounted packages over the weekend to increase non-business related occupancy.
There is a clear set of attributes that determine how successful yield management will work in any particular industry.
The criteria for an industry considering yield management are:
− Perishable Inventory
− Variable Demand, Fixed Capacity
− Sales via Reservations
− Multi-Pricing Capability
− Low Variable Costs
− Pricing is a Powerful Driver
Perishable Inventory
One of the criteria for implementing yield management is that the inventory of the item being sold or service being performed is perishable.
Variable Demand, Fixed Capacity
Yield management is effective in industries that have a combination of variable demand. For example, peak periods of activity such as weekends vs. weekdays, and fixed capacity, which means the inventory available for sale at any one time is constant.
Most spas have some sort of fluctuating demand, whether they are in a seasonal resort or day spa, and nearly all spas have a fixed number of rooms. The combination of these two factors can be greatly influenced by a yield management strategy.
Sales via Reservations
Industries enhanced by yield management strategies conduct the majority of their business through advanced reservations.
Multi-Pricing Capacity
Another aspect to consider is ability to segment customer base. This means different types of guests are willing to pay different prices at different times. For example, a resort hotel may offer preferential pricing to local residents during nonpeak periods.
Low Variable Costs
So an increase in utilization, even at lower rates, will have a positive affect on overall margins because of the low variable costs and generally high gross margin per service.
Pricing is a Powerful Driver
The last attribute to evaluate is whether or not price will influence purchasing behavior. Because price can increase purchasing, strategies can be developed that offer price reductions in non-peak periods, thereby influencing overall revenue.
YIELD MANAGEMENT TECHNIQUES
This section will describe the various ways a hotel operation can implement yield management techniques, including the issues that must be considered and how they can impact the success of a specific strategy.
Dynamic Pricing
Dynamic pricing is the technique of altering the price based on capacity, time or both, similar to the model employed by hotels and airlines. For example, an airline will typically offer a percentage of its fares for a reduced rate. Once those lower fares are purchased, only higher rates will be available until the plane is completely sold out. During a specific time-frame, such as the holiday or high traffic season, the rules can be constrained. No low fares are offered because the demand for seats during that time period, guarantees all inventory will consumed at a premium price.
In a hotel, services can be offered at a reduced price point during non-peak times to encourage an increase in volume. This can be done by creating a menu with price ranges for the services versus set prices. The lowest price would be applied during nonpeak times, while the highest price would be for peak periods. While on the surface this sounds intuitive, it can be a very complex balance between price reductions and what the subsequent increase in volume needs to be to positively impact the overall margins.
Let’s take a simple example of a room that costs $100 with a margin of 25%. If we were to lower the price by $20 during non-peak hours, and assume that the 25% margin does not scale down proportionately with the price (since the bulk of variable cost associated with a service is salary), a hotel would have to sell 5 rooms at the reduced price to match the margin of a single room performed at full price. One alternative to a reduction model would be to increase the price of room during peak periods and keep the ‘standard’ price available at all other times.
For services with higher margins, the impact of a price reduction is less severe to the overall profit. As such, those services can be discounted to stimulate activity in non-peak periods with greater success.
The key to this approach is a thorough understanding of the margins on services and the impact pricing changes will make on the total number of services sold. Without this clear understanding, it is possible for a hotel to increase revenue but decrease overall profit.
Dynamic Availability
Increased profitability can also be achieved by managing the mix of services sold. By altering the types of services offered during peak periods, a hotel overall margin can greatly increase without a significant change in revenue or overall capacity. If a hotel is at capacity on weekends, one alternative for increasing profit would be to offer higher margin services during those times. This technique is known as dynamic availability and is an effective approach to selling higher margin rather than lower margin services during peak periods.
This technique is somewhat similar to how airlines limit certain fares during peak periods. They understand high demand will consume their capacity without having to reduce pricing significantly.
A Practical Guide to Hotel Marketing Budget Planning
by Josiah Mackenzie on September 8, 2009
Many hotels are working on their marketing budgets right now. I have received multiple requests for advice on budgeting this week, and wanted to put together this practical, straightforward guide. We will examine the biggest factors to consider when planning your Internet marketing budget, 11 major categories hotels should budget for, and finally 3 basic hotel budgeting approaches.
This advice comes from my own real-world experience as the marketing manager or consultant for dozens of leading organizations around the world — and also as the owner of three companies. When your own company’s money is on the line, you tend to take a very pragmatic approach to marketing, and that’s what I intend to do in this article.
Factors to consider while planning your hotel marketing budget
Many industry professionals recommend you start with the industry average marketing budget. I disagree. Every business success I’ve been involved with has been contrarian. If you spend your resources like everyone else, you’ll get average results. Breakthrough campaigns often require unusual approaches. You decide what works for you.
Be aware of industry standards, but don’t feel bound by them. It can be helpful to know the average prices hotels are paying for individual marketing tactics — if only for a point of reference.
Start with an internet marketing plan for the year. Sounds simple, but true. If you don’t know how you want to spend your money, calculating the amount will be extremely difficult! Some tactics to include are explained below.
A good budget will take into mind past results your company experienced — but will also realize that things change. What worked five years ago may not work over the next five years.
Remember your primary business objective. Do you want more overall sales, to build your brand, or consolidate your profits? Each requires a different approach, which we’ll cover later.
Know your marketing priorities. Separate the “musts” from the “wants.” So many things can happen along the way that cause you to deviate from a plan made months ago. Having priorities ensures the essential gets done.
Identify which marketing strategies you don’t need to implement. There are a seemingly unlimited number of marketing tactics you could try, so identifying the non-essential helps you focus and cut costs. Every hotel doesn’t need to do every tactic out there.
Be aware of trends, and budget appropriately. Some organizations on annual budget cycles approve money for trends way too late — and missed the boat. Make sure the resources that you’re dedicating to a tactic or strategy will be valid 1, 2, 5 years from now. You don’t want to outdate yourself.
I personally recommend most hotels abandon all traditional marketing and advertising in favor of any Internet focused strategy: 75% of budget for web-based communications, 25% for PR. You can discount this advice as someone who has worked in web marketing his entire career, but the numbers don’t lie. In the campaigns that I’ve been involved in, we have achieved phenomenal return on investment… and received media coverage an organization our size shouldn’t normally be entitled to.
Separate your marketing costs into two categories. Initial development costs include research and strategy development, website design, content creation, marketing systems set up. Ongoing expenses and maintenance include e-mail marketing, pay per click advertising, search visibility improvement, website maintenance and development, consulting fees, and analytics and tracking analysis.
Ensure that you are sufficiently capitalized. Many marketing tactics will take several months to show results, and often the best results are obtained by sticking with your marketing plan month after month — for the next 12 months. You may have to adjust your marketing plan to enable this, but make sure your budget is sufficient to accommodate consistent execution.
Be aware that your most important marketing investments may not even be under the traditional ‘marketing’ budget category. For example, introducing a fabulous collection of guest amenities can cause your guests to promote your hotel for you. At the end of the day, your guest experience is the marketing. Money you spend to create an amazing guest experience at your hotel has some of best ROI.
Finally, think of your marketing program as an investment. If you are promoting properly, every dollar that you spend on marketing will come back to you many times over. Good hotel marketing budgets are never an expense, and it’s important we remember this.
11 most important hotel marketing budget categories
Staffing expenses. Whether it’s a content writer or social media marketing assistant, a major shift in marketing strategy usually requires a shift in HR priorities. These salaries can be a big expense. But it’s important to remember that good employees are always free: they earn your company more money than you pay them in salary.
Training fees. I personally spend a large portion of my money to train and educate my employees. This includes everything from paying them read articles and important books to registration fees for workshops and seminars. Your people are one of your most important resources, and an investment into making them more effective marketing professionals will always pay off.
Consulting fees. There will always be times when you cannot do everything in-house. If you have a short-term assignment, it can make sense to bring in outside expertise to help. Look at your Internet marketing plan and budget for this type of help appropriately.
Website optimization. The vast majority of hotels have at least a halfway decent website up. The big challenge is making sure it runs well: turning browsers into bookings. This is website optimization, making sure your website sells well and is easy to find in search engines. It’s an ongoing process, but your biggest investment will be at the start — having a professional analyze and make the changes.
Search visibility improvement. Earning top rankings in search engine results is important for bringing new visitors to your website. It needs to be an ongoing part of your Internet marketing campaign: both to improve position and to keep up with competitors that are doing the same thing. Top budgeting priorities for hotels include adjusting the website for important keywords, and building links through various tactics.
Pay-per-click advertising. This is one of the only advertising methods I recommend most hotels budget for. The flexibility and return on investment can be impressive. You’ll need to budget for campaign management, and the actual clicks that you purchase from search engines. This can cost several thousand each month, but the return on investment is typically much better than other advertising options.
Online reputation management. I tend to talk a lot about this on this blog, and you are probably aware, this falls into two major categories: monitoring your Web presence, and proactively encouraging positive content. Monitoring expenses include software and/0r someone to scour the web for data. Reputation building requires the development of a savvy outreach program.
E-mail communications. E-mail software is usually a relatively small expense, so your investment in e-mail marketing will be in people. Specifically, two types of people: the content writers and the marketing specialists. E-mail is a writing-intensive medium, so you need to allow someone to spend the time to develop this content. The marketing expertise is important to make sure your communications are effective — reaching the right people and generating the right response.
Content development. This includes all of the information you publish on and off the web. It includes blogs, websites, articles, and more. Many hospitality companies hire outside freelance journalists to help them with this. The good news is that much of it can be re-purposed for other formats.
Media production. Producing high-quality photos and videos of your hotel is more or less a one-time expense, but very important for future marketing efforts. You can reuse great photography and videos in many ways, online and off.
Press relations & media outreach. This category includes outbound communications such as press releases and media kits, the development of content that interests the media, and relationship building with journalists and media outlets. Even for mid-sized properties this can be a full-time job — but the return can be excellent. When your hotel gets positive coverage in the media, you get credibility and increased awareness that you cannot buy. This is the reason I spend a full 25% of my marketing budgets on media relations. This figure is typically higher if you are a new business.
3 marketing budgeting approaches I’ve observed
The ‘increase overall sales’ hotel budget. This strategy is often used by companies that are brand-new and want to get the word out. In this case, the budgeting focus is on tactics that bring in immediate new sales now. As long as the campaign is profitable, there is less focus on low cost marketing, and more priority on high volume. Advertising and media relations take priority over content-based tactics.
The ‘build our brand’ hotel budget. This strategy is used for hotels that want to establish a great reputation and word-of-mouth. The budget will reflects this with low cost, but labor-intensive content marketing tactics. You either need to have a great team of people in house, or hire an outside agency to develop this. The great thing? Once the campaign is developed, your ongoing cost is usually quite low.
The ’save our profits’ hotel budget. Several older, established hotels I’ve worked with seem to be on marketing cruise control. They already have an outstanding reputation among their target audience, and they’re not in a big hurry to try new things. This can be one of the cheapest strategies, but also the least likely to increase sales.The big challenge here is to make sure their online presence matches their great off-line presence. Hotels using this strategy may invest in guest relationship management tactics such as e-mail. The spending priority is more on people that can manage this, and less on new technology.
The hotel marketing budget approach I recommend
As mentioned earlier, companies I own or manage have obtained excellent results through a hybrid online communications and media outreach system.
But every hotel and organization is different. You need to take into consideration factors I described earlier, along with your hotel’s unique priorities, and put together a budget to meets your needs.
Many hotels are working on their marketing budgets right now. I have received multiple requests for advice on budgeting this week, and wanted to put together this practical, straightforward guide. We will examine the biggest factors to consider when planning your Internet marketing budget, 11 major categories hotels should budget for, and finally 3 basic hotel budgeting approaches.
This advice comes from my own real-world experience as the marketing manager or consultant for dozens of leading organizations around the world — and also as the owner of three companies. When your own company’s money is on the line, you tend to take a very pragmatic approach to marketing, and that’s what I intend to do in this article.
Factors to consider while planning your hotel marketing budget
Many industry professionals recommend you start with the industry average marketing budget. I disagree. Every business success I’ve been involved with has been contrarian. If you spend your resources like everyone else, you’ll get average results. Breakthrough campaigns often require unusual approaches. You decide what works for you.
Be aware of industry standards, but don’t feel bound by them. It can be helpful to know the average prices hotels are paying for individual marketing tactics — if only for a point of reference.
Start with an internet marketing plan for the year. Sounds simple, but true. If you don’t know how you want to spend your money, calculating the amount will be extremely difficult! Some tactics to include are explained below.
A good budget will take into mind past results your company experienced — but will also realize that things change. What worked five years ago may not work over the next five years.
Remember your primary business objective. Do you want more overall sales, to build your brand, or consolidate your profits? Each requires a different approach, which we’ll cover later.
Know your marketing priorities. Separate the “musts” from the “wants.” So many things can happen along the way that cause you to deviate from a plan made months ago. Having priorities ensures the essential gets done.
Identify which marketing strategies you don’t need to implement. There are a seemingly unlimited number of marketing tactics you could try, so identifying the non-essential helps you focus and cut costs. Every hotel doesn’t need to do every tactic out there.
Be aware of trends, and budget appropriately. Some organizations on annual budget cycles approve money for trends way too late — and missed the boat. Make sure the resources that you’re dedicating to a tactic or strategy will be valid 1, 2, 5 years from now. You don’t want to outdate yourself.
I personally recommend most hotels abandon all traditional marketing and advertising in favor of any Internet focused strategy: 75% of budget for web-based communications, 25% for PR. You can discount this advice as someone who has worked in web marketing his entire career, but the numbers don’t lie. In the campaigns that I’ve been involved in, we have achieved phenomenal return on investment… and received media coverage an organization our size shouldn’t normally be entitled to.
Separate your marketing costs into two categories. Initial development costs include research and strategy development, website design, content creation, marketing systems set up. Ongoing expenses and maintenance include e-mail marketing, pay per click advertising, search visibility improvement, website maintenance and development, consulting fees, and analytics and tracking analysis.
Ensure that you are sufficiently capitalized. Many marketing tactics will take several months to show results, and often the best results are obtained by sticking with your marketing plan month after month — for the next 12 months. You may have to adjust your marketing plan to enable this, but make sure your budget is sufficient to accommodate consistent execution.
Be aware that your most important marketing investments may not even be under the traditional ‘marketing’ budget category. For example, introducing a fabulous collection of guest amenities can cause your guests to promote your hotel for you. At the end of the day, your guest experience is the marketing. Money you spend to create an amazing guest experience at your hotel has some of best ROI.
Finally, think of your marketing program as an investment. If you are promoting properly, every dollar that you spend on marketing will come back to you many times over. Good hotel marketing budgets are never an expense, and it’s important we remember this.
11 most important hotel marketing budget categories
Staffing expenses. Whether it’s a content writer or social media marketing assistant, a major shift in marketing strategy usually requires a shift in HR priorities. These salaries can be a big expense. But it’s important to remember that good employees are always free: they earn your company more money than you pay them in salary.
Training fees. I personally spend a large portion of my money to train and educate my employees. This includes everything from paying them read articles and important books to registration fees for workshops and seminars. Your people are one of your most important resources, and an investment into making them more effective marketing professionals will always pay off.
Consulting fees. There will always be times when you cannot do everything in-house. If you have a short-term assignment, it can make sense to bring in outside expertise to help. Look at your Internet marketing plan and budget for this type of help appropriately.
Website optimization. The vast majority of hotels have at least a halfway decent website up. The big challenge is making sure it runs well: turning browsers into bookings. This is website optimization, making sure your website sells well and is easy to find in search engines. It’s an ongoing process, but your biggest investment will be at the start — having a professional analyze and make the changes.
Search visibility improvement. Earning top rankings in search engine results is important for bringing new visitors to your website. It needs to be an ongoing part of your Internet marketing campaign: both to improve position and to keep up with competitors that are doing the same thing. Top budgeting priorities for hotels include adjusting the website for important keywords, and building links through various tactics.
Pay-per-click advertising. This is one of the only advertising methods I recommend most hotels budget for. The flexibility and return on investment can be impressive. You’ll need to budget for campaign management, and the actual clicks that you purchase from search engines. This can cost several thousand each month, but the return on investment is typically much better than other advertising options.
Online reputation management. I tend to talk a lot about this on this blog, and you are probably aware, this falls into two major categories: monitoring your Web presence, and proactively encouraging positive content. Monitoring expenses include software and/0r someone to scour the web for data. Reputation building requires the development of a savvy outreach program.
E-mail communications. E-mail software is usually a relatively small expense, so your investment in e-mail marketing will be in people. Specifically, two types of people: the content writers and the marketing specialists. E-mail is a writing-intensive medium, so you need to allow someone to spend the time to develop this content. The marketing expertise is important to make sure your communications are effective — reaching the right people and generating the right response.
Content development. This includes all of the information you publish on and off the web. It includes blogs, websites, articles, and more. Many hospitality companies hire outside freelance journalists to help them with this. The good news is that much of it can be re-purposed for other formats.
Media production. Producing high-quality photos and videos of your hotel is more or less a one-time expense, but very important for future marketing efforts. You can reuse great photography and videos in many ways, online and off.
Press relations & media outreach. This category includes outbound communications such as press releases and media kits, the development of content that interests the media, and relationship building with journalists and media outlets. Even for mid-sized properties this can be a full-time job — but the return can be excellent. When your hotel gets positive coverage in the media, you get credibility and increased awareness that you cannot buy. This is the reason I spend a full 25% of my marketing budgets on media relations. This figure is typically higher if you are a new business.
3 marketing budgeting approaches I’ve observed
The ‘increase overall sales’ hotel budget. This strategy is often used by companies that are brand-new and want to get the word out. In this case, the budgeting focus is on tactics that bring in immediate new sales now. As long as the campaign is profitable, there is less focus on low cost marketing, and more priority on high volume. Advertising and media relations take priority over content-based tactics.
The ‘build our brand’ hotel budget. This strategy is used for hotels that want to establish a great reputation and word-of-mouth. The budget will reflects this with low cost, but labor-intensive content marketing tactics. You either need to have a great team of people in house, or hire an outside agency to develop this. The great thing? Once the campaign is developed, your ongoing cost is usually quite low.
The ’save our profits’ hotel budget. Several older, established hotels I’ve worked with seem to be on marketing cruise control. They already have an outstanding reputation among their target audience, and they’re not in a big hurry to try new things. This can be one of the cheapest strategies, but also the least likely to increase sales.The big challenge here is to make sure their online presence matches their great off-line presence. Hotels using this strategy may invest in guest relationship management tactics such as e-mail. The spending priority is more on people that can manage this, and less on new technology.
The hotel marketing budget approach I recommend
As mentioned earlier, companies I own or manage have obtained excellent results through a hybrid online communications and media outreach system.
But every hotel and organization is different. You need to take into consideration factors I described earlier, along with your hotel’s unique priorities, and put together a budget to meets your needs.
Пријавите се на:
Постови (Atom)