The pandemic has changed the dynamics of marketing and sales, distribution, franchising, SEO tactics and social media and how productive are these historical channels in an age where hotels may not see any signs of recovery until 2022 and 2023.  “CBRE forecasts that demand for the US hospitality industry will return to pre-pandemic levels towards the end of 2022. The team at Luxury Hotel Advisors is taking a hard look at these expenses to make sure efforts are refocused based on the changes we see in demand.

GROUP HOTELS WILL HAVE THE MOST DIFFICULT RECOVERY

Hotels and resorts catering primarily to the group and events market will be further affected as meeting planners will be careful to mitigate risks as a result of large gatherings, events despite the CDC rulings.” It’s time to dissect all our marketing and distribution costs and assess your costs on a per room basis and develop a fresh approach to market directly to the consumer.

Here is an example:

COST BASIS TO DEVELOP GROUP BUSINESS

With 6 to 12 months’ lead-time and with no sign of recovery until 2022 can you really justify three Group Sales Managers, a Catering DOS as well as a Director of Marketing for a 200-room property.  That alone could be $700,000 TO $800,000 in payroll including benefits. 

What percentage of your sales team efforts is dedicated in developing group business versus servicing requests from CVent, Helms Briscoe, Conference Direct, ALHI and others.  20%, 40%, 60%?  Can a sales coordinator be just as effective in booking and servicing that business?  Isn’t it time for a reality check?

MEETING PLANNERS DO NOT REALLY WANT TO TALK TO YOU!

Most meeting planners prefer working directly with a booking source or a travel agent in selecting a meeting site. It saves them time and multiple calls from all the hotels. In this scenario, the hotel will have to compensate the booking agent at 5%, the meeting planner or travel agent another 10% of room sales and possibly process the bill through a credit card that is another 3%. And how much SELLING actually took place?

OUR RECENT FINDINGS

We recently audited a property that hosted 80 meetings per year, we found that as many as 60% of all group bookings were generated by a third party or booking agent and not through the on-property sales team directly.

I am not implying that we should eliminate the active sales role from a group hotel property, but we need to zero in and determine the value that each sales executive brings to the bottom line and at what cost. Hotels need to leverage technology to be more efficient and at the same time understand what true value a Sales Manager can bring to the table and hold them accountable for that contribution.

For more insights, visit LHA Articles on hotel investments, asset management, acquisitions and sales.

About the Author

Prior to becoming a Managing Principal for Luxury Hotel Advisors, Inc, Carlos served as Vice President & Managing Director of Hotel Bel-Air and the Palace in New York as well as EVP and COO of Olympus Hospitality responsible for directing hotel operations, marketing, and branding strategies for eight Rock Resort properties.

Carlos co-founded Unique Hotels and the Bel-Air Hotel Company. Over a period of five years with partner Eric Prevette, he successfully repositioned and managed over 50 luxury hotels and assisted in the sale of properties valued in excess of $500 million.

Previous to that, he served as Senior Vice President at Rosewood Hotels and responsibilities included operations, branding, centralizing marketing, and distribution initiatives. He also served as Sr. Vice President of Marketing of Four Seasons Hotels during their primary expansion which included new hotels in Washington, San Francisco, Vancouver, Newport Beach and New York.

Recently, Carlos redeveloped the new iconic Hotel Californian, one of the newest luxury lifestyle hotels on the west coast.

News for
Hotel Owners and Investors

Sign up to receive updates on trends in hospitality ownership and investment opportunities.

We will never sell or share your contact information.

Scroll Up