Why Do You Need a Hotel Sales Strategy?
A sales strategy is vital for any hospitality business. From rural B&Bs, to high-end boutique hotels, you cannot compete without clearly defining your sales goals and planning how you’ll achieve them.
For many businesses, developing a sales strategy can be quite straightforward. They have tangible products at fixed prices. They can keep stock on hand and focus on one clear goal: sell more. Hotel sales strategies are often far more complex. We work with inventory that is time dependent. We cannot sell the same room twice, and we cannot sell an unfilled room at a later date. With that in mind, developing an effective sales strategy needs to work hand in hand with revenue management theory. Follow our guide to find out how to do
Let Market Research Guide Your Sales Strategy
Start By Segmenting Your Market
The first step to developing an effective hotel sales strategies is to analyse your market. In order to maximize revenue, you need to understand the volume of sales and RevPAR for each group.
Analyse B2B and B2C market segments:
- Transient: independent travellers making an individual booking through OTAs and direct
- Corporate/Negotiated : travellers who come to the hotel through their company’s negotiated rate contracts
- Group: a group (reservation for 10 or more people) who stay at the hotel for leisure or business travel
- Wholesale: rooms provided in bulk to tour operates and booking agents
Once you understand your priorities, you can create tailored sales and marketing plans for each segment. These will include insights into different needs, pricing sensitivity and booking behaviours.
Identify Your Most Profitable Distribution Channels
To ensure profitability, you must look at the sales volume, revenue and cost of acquisition per distribution channel. As with segmentation, we should consider B2C and B2B sales channels:
- Direct: bookings done directly with your hotel over phone calls or emails.
- Website: reservations made through the hotel reservation system on your website
- OTAs: third party travel agencies that sell various hotels room on their platform
- GDS: Global distribution system which passes inventory and rates to travel sites (ex: Amadeus, Galileo, Sabre, Worldspan).
Direct bookings often deliver the highest revenue contribution for hotels, but can be low volume. Selling through OTAs and Metasearch can offer far greater reach, but come with high commission fees. One important performance indicator to monitor is the Net RevPAR after deducting the acquisition costs (marketing and distribution). There is not one perfect blend here. You will need to fine tune the mix to maximise sales and revenue for your hotel.
Hotel Sales Strategies
B2B Hotel Sales Strategies for Groups, Corporate Accounts & Wholesalers
It is important to get your B2B sales on strong foundations. Hotel B2B sales have changed a lot in recent years, evolving to a more digitized area. However, we believe that the basics and traditional concepts still stand. Here are some of our most effective strategies that you can apply in your property:
Diversification is key
Analyse your business mix and identify ways of optimization. Do you have a specific segment which is weighting heavily in your mix? For example: a hotel with too much corporate business (even worse if it’s a single corporate account) over mid week could suffer a major hit in revenue if the negotiated account decides to move to another property from one year to another. The pandemic has told us that it is very important not to have all your eggs in one basket and to remain diversified in order to survive any change in customer behaviours or trends in the market.
The Paradox of Risk:
(1) Don’t put all your eggs in one basket. If you lose the basket, you lose it all.
(2) Don’t put your eggs in too many baskets. The more baskets you manage, the less energy you can put into each one. It’s risky to do things halfway.
Diversified, but focused.
Start by analysing your data and historical performance, then start planning your tactics and strategies to diversify your business mix for optimal performance and manage current and future risk.
Bill Gates is predicting that over 50% of business travel and over 30% of days in the office will disappear in a post-coronavirus world. This has been a key segment for city centre hotels, driving most of the high demand over week days (Tuesdays and Wednesdays mostly). The possibility of a drop of 50% from one moment to the next will definitely negatively impact the overall city occupancy and performance. More supply, less demand, resulting in a significant drop of revenue performance.
Take this opportunity to renegotiate your corporate accounts for next year as well as reinforce your relationship with key account managers. Slowly but surely reconnect with your key contacts to better understand what their needs and requirements are for the coming months, years.
A Wish/Want/Walk grid could help you renegotiate your contracts. This is a simple method to better negotiating:
WISH: your dream rate. Your dream result for this account
WANT: the rate that you want. Your want is where you think the negotiation will end up according to external marketplace forces. It is where the vast majority of deals are closed.
WALK: Your walk rate is the point at which you will walk away from the deal because it is simply not worth it (you may end up displacing more or damaging your brand positioning for example).
This method is a powerful tool in any negotiation: Corporate, Wholesaler, Groups, M&A or Strategic Partnership.
Leisure individuals are predicted to be the first market to bounce back once the coronavirus crisis is over. While in normal times we would recommend being careful with Wholesaler contracts (or at least be very strict) to ensure rate parity and avoid wild distribution, wholesaler and other traditional Travel Agency models could make a comeback in the next months.
Look for quality over quantity here. Sign up with key players in this field and test the water. Make sure you always remain focused and that your rate parity is respected. Prefer the dynamic rate model rather than the fixed rate approach, but once again don’t be afraid to experiment with the different models and see what is working for you and what isn’t. Is there any niche TA, DMC or Wholesaler in your area that you could partner with?
Flexible terms and conditions
Many hotel chains have introduced their “Book with confidence” or “book with flexibility” to encourage group bookings. Customers are indeed looking for flexibility and don’t want to commit to anything at this stage with the risk of new lockdowns and travel restrictions. Therefore it is important to boost their confidence by offering flexible terms and conditions in case of unavoidable last minute changes. Can you have lower deposit requirements for groups? A longer release date? Anything to show them that they have your support and that you are on their side in case something happens. It will gain you points in the short term, but also in the long term by reinforcing the relationship with them.
Improve Your RFP Process For More Group Business
With modern tools, as soon as a planner knows their group’s needs, they can fire out multiple RFPs around the world with the click of a button. For hotels, this has meant a threefold increase in RFPs over the last five years alone. More RFPs sounds great, but the reality is that your sales team can easily become overwhelmed. The result is they can end up chasing poor quality leads and submitting proposals that aren’t right for your hotel. Fine tuning your RFP process can help you win more business, save time and cut costs.
Save Time with RFP Software
With 75% of contracts going to the first five properties to respond, time is of the essence. As with so many aspects of hotel management, this is where technology can help. By implementing hotel RFP software, you can assess every incoming RFP, route it to the relevant team, and respond appropriately within minutes. You can also create template responses for common RFPs, cutting out the manual work. However, it’s still very important to add personalisation to show that you care, understand and can fulfill their specific needs.
Score Leads Appropriately
Software will increase efficiency, but it cannot replace the knowledge your sales team provides. One of their biggest contributions is to determine which leads are good for your hotel. Criteria can include your target segments, your facilities and amenities, as well as seasonality and performance. A huge conference is of no value if you cannot realistically host it. Likewise a small group booking may be overlooked at peak season, but perfect for low season. Lead scoring will allow the sales team to prioritize RFPs, focusing energy and resources on those which are most valuable and most likely to be won.
Be Proactive With Sales Outreach
Reach prospects and leads directly and you can put your competitors on the back foot before the RFP process begins. Consider marketing channels where planners are likely to communicate and research their options. Google is a go to tool for just about every search on the internet. SEO and Google Ads are some of the most cost effective marketing tactics to try. However, LinkedIn allows you to show ads to people based on their company and job titles. You can also list your hotel with local chambers of commerce, destination marketing partnerships and online venue marketplaces to increase your online visibility.
Use Your CRM Data
Your past data has a big role to play in securing new and repeat business. Use it to leverage personal relationships if you’ve already worked with the group. Reinforce your knowledge and highlight selling points you know matter to them. For proposals you didn’t win, highlight improvements that might change the outcome.
To take this further, consider proactive outreach ahead of the RFP. Take note of the timelines and processes customers follow. Then when you know they will be ready to start planning, contact them with a personalized message or re-booking offer.
B2C Hotel Sales Strategies to Maximize Direct Bookings
As with B2B sales, reaching and influencing consumers involves an ever increasing digital focus. Once you have a clear understanding of your market, distribution channels and pricing options, it’s time to start developing your tactics. Here are some of our most effective hotel sales strategies for reach consumers.
Improve Your Hotel’s Online Visibility
It’s vital to improve your hotel’s online visibility and website conversion rate with digital marketing. Consider your search engine optimization, Google Ads, and social media to grow awareness and drive direct sales. You should also grow your presence on metasearch websites. These platforms give you huge reach without the commission paid to OTAs
Tailor Your Message for Each Segment
Your hotel sales strategies should always target different customer segments with messaging tailored to their behaviours, wants and needs. For group bookings, you might focus on meeting rooms, facilities, in-house dining and transport links. For transient bookings, you can sell the experience and enjoyment, nearby attractions and activities.
Fine Tune Your Booking Process
The booking process needs to be simple and fast. Your website must provide clear information, be well-designed and technically sound. This applies to desktop and mobile visits. You should also integrate a direct booking engine to process reservations. Once the engine is plugged in, it is synced with the hotel website as well as with your Facebook page for instance. The data is then passed onto your PMS so you can manage the bookings.
You can test value-added promotions against pricing offers. This can include discounts, late check-out options, upgrades, welcome drinks, and additional facilities. Use limited-time offers which push visitors to take action by creating a sense of urgency. And most importantly, when you run a promotion, ensure the details are clear and consistent across every sales channel.
Make the most of your CRM. Hoteliers have a much stronger customer data profile than OTAs. Use a CRM system to keep in touch, customize the booking and be sure to sell the right product to the right customer. Personalized service encourages repeat visits.
Reward loyal customers and personalize their offers. Knowing your customers allows you to better understand their lead times and needs.
Think Beyond Room Sales
Focus on the Total RevPAR, rather than room bookings alone. Leisure groups are likely to visit the bar and use hotel dining. Individuals may be more interested in the gym, health treatments and in-room dining. A strong food and beverage offer can drastically increase hotel revenue. Tailor your offer and test the effectiveness of upselling at the point of purchase, or during the stay.
Consider an Open Pricing Strategy
Open pricing strategy optimises revenue during both peak and low periods. It opens all channels to maximise your hotel’s market reach. With open pricing, you set independent rates for each segment, channel and room type. Instead of offering a percentage discount off your BAR, the discounts can be flexed based on the demand. The result is that the price difference between a king-size room or a double room for example will depend on the demand level and inventory. With the same system, hoteliers can yield the level of discounts for each segment and channel.
Be Contactable 24/7
Following on from the previous point, if you can save people time, you will increase your hotel sales. Being the first to respond to an offer is a key element in winning group business. And ensuring your team provides first-rate customer service throughout the event will help you retain clients year after year.
Perfect Your Product
There is no doubt that it’s far easier to sell a good product. For every guest, the hotel facilities, decor and atmosphere are paramount. As is the service and experience. However, there are plenty of small wins which can make all the difference. Provide easy transportation, quick (or virtual) check-in/out, small gifts and other add value.
Continually Review & Improve Your Hotel Sales Strategy
Whatever hotel sales strategies you implement, one key theme prevails: continuous improvement. Your teams should always test, measure and learn. Sales and Marketing teams should work closely with Revenue Managers to analyse the sales volume, revenue and profitability of each segment and channel. Conducting channel audits and analysing booking behaviours can help to ensure the best mix and maximize Total RevPAR.
If you would like help with any aspects or your hotel sales strategies, please don’t hesitate to contact us. Visit the Contact page to get in touch now.
We also offer a free revenue management audit on any topic of your choosing. We can review your current sales strategies and book a short call with you to discuss actionable improvements.