Profit Optimization by Boosting Hotel Selling Strategies

Throughout the years, five types of selling in the hospitality industry have emerged. This can be referred to as the 5C’s of the hotel industry. Most of the time, the changes were created as a reaction to the changing market and technological advancement. As the market is shifting, it is undeniable that some hotels were left behind while some embraced the changes. Taking a look at the past will let a hotel revenue manager know how to cope with the challenges of today’s economic condition.

It is a fact that each circumstance is unique from each other. Yet, from each generation, there are fundamental lessons that can be learned and implemented to boosts profitability and optimize yield management. Below are the most notable areas of hotel marketing and promotion that you can look into:

Cronyism – when sales methods were not yet sophisticated, the hotel sales personnel were personalized. Good service, while being provided, offers little or no differentiation. In addition, the rooms being offered are also mostly the same. In order to improve RevPAR, it is important to establish relationship and establish the right hotel rate.

Commodity Selling – the next method was commodity selling. This was usually seen during the 50’s and 60’s when hotels competed on price. Similar to the first problem, there was little differentiation among hotels. As a result, competition became mostly based on hotel rate distribution and prices.

Content Selling – it started on the 60’s and was popular until the 80’s. This type of selling involved the first efforts of the hotel industry to differentiate themselves from one another. Hotel marketers with the help of advertising created brand awareness about their product offerings. And this helped boost hotel sales and improve profitability.

Consultative Selling – hotel revenue managers then realized that while content selling may be better than its predecessors, it still does not completely provide for the needs of the consumers. This is because the hotel may be providing certain benefits the guests don’t want and missing opportunities for improvement. Consultative selling plugs this loophole because it aims to understand the deeper needs of the consumers.

Collaboration – this is the best approach to selling hotel room inventory so far. Its mentality approaches selling as a partnership between the hotel and the consumer. This results to better yield management, profit optimization, and satisfaction on the part of the hotel revenue manager and on the part of the hotel guests.

Profit Optimization for Hotel Revenue Managers

Previously, the global economic crisis was concentrated on the United States and Europe. The rest of the world remained relatively unscratched during when the turbulence was first starting out. However, it has now reached a major part of the Asia Pacific region. Asian economies including Japan, Thailand, and Taiwan had negative fourth quarter growth in 2008. Meanwhile, even big economies such as India and China experienced very little growth. As a result, the hospitality industry was one of the industries adversely affected. In fact, it took one of the worst hit and the downward trend is expected to continue until 2010.

For a hotel revenue manager, the foremost question that comes to mind is how to boost profitability in this type of environment. It is difficult to increase hotel rates in this kind of condition. With the right tools though, getting the right adjustments with regards to hotel rates, hotel distribution channel, and revenue management is possible. Highly effective tools that should be looked into include inventory software, pricing software, and hotel rate distribution software. With this type of tools, a hotel revenue manager will have an easier time monitoring market trends. In effect, software applications can make an hotelier’s job easier. It has the potential to increase hotel sales and produce profit optimization.

In Asia and the rest of the world, occupancy levels have been declining since 2007. For example, demand, occupancy, RevPAR, and ADR are reaching new levels of lows since September 2008. No one can deny that the market is definitely tough. Even the construction projects in various regions are being halted. There are simply too many rooms with not enough consumer demand because everyone is trying to save money.

To make the best of the situation, hotel revenue managers need to innovate. That is, they should think out-of-the-box for solutions. Traditional thinking will no longer work in today’s digital age. Almost all travelers will use the internet to research, reserve, or book their travels. From airlines, restaurants, to hotels, travelers know where some of the best deals are. It is possible to look at the situation in two ways: threat or opportunity. It is up to an individual hotel manager to decide which way he wants to view it.