After several years as a Director of Revenue, I am reminded of two important concepts: the first is the value of knowing the local market, and the second is the necessity of understanding global competition and impact. Both are essential to maximizing revenue.
We often talk about demand over citywide conventions and events. However, living through a few annual cycles and different economic scenarios allows a Director of Revenue to “get to know” a client’s behavioral buying pattern. This in turn, enables the hotel to use that knowledge, turning information into greater profit and occupancy. For example, take two similar events: the Boston Marathon and the Head of the Charles Regatta. With the exception of 1918, the Boston Marathon has occurred yearly since 1897. Neither weather nor current events have cancelled the world’s oldest annual Marathon. It is a safe assumption to say that “the guests are coming.” Conversely, the Head of the Charles Regatta is the world’s largest annual rowing event. Because it occurs in the latter half of October, however, the attendance will vary based on the weather. This means that the majority of drive-market reservations happen at the eleventh-hour. Hotels can fill their rooms farther out at higher rates, but need to keep an eye on the weather and be able to pick up as many last-minute bookings as possible.
New England has always been a volatile market, and while we cannot control “force majeures” that make living in this area ever-changing, we can learn how to react to them. In order to do that, I recommend using the second concept that I mentioned above, which is: to understand our global competition and the way global changes have a direct effect on the local market.
When a Sales Manager presents prospective business, the questions typically asked are: their history, budget, industry, meeting needs, program dates, and what other hotels are being shopped. All of these factors are important when quoting a competitive and fair price, but there is one more question that must be asked: “Is this the only city they are considering, or are there other areas being sourced?” In this technological age, travel planners can check availability for dozens of locations with just a few clicks of the mouse. They are keeping their options open to different destinations, factoring in airfare, food/lodging/AV costs, and travel time, to come out with the program that best suits their client’s needs. This key information will allow you to compete most effectively – and to sell the strengths of your location to its best advantage.
In addition to my past role as a Director of Revenue, I now work as a trainer visiting hotels and resorts around the world each year. While I do hope that the staff at these locations learn from me, I can assure you that I learn far more from them. Knowing about Houston’s Quilter’s Convention, LA’s Award Shows, or DC’s Cherry Blossom Season, might not seem relevant until you hear that the groups you would like to lure to your area are considering those cities too! Knowing the average rates of some of these locales (not just the published rates, but what guests are actually paying) gives you the courage to quote competitively without undercutting – and thus undervaluing – your own property too steeply. I have worked for luxury hotel brands that are the rate leaders in my market, yet knowing the prices other hotels are quoting in top-tier cities like New York makes New England appear a relative bargain.
Aside from traveling and gaining first-hand experience, there are other sources of information to turn to when seeking a better understanding of another city: Smith Travel Research, Pinnacle Advisory Group, and the HSMAI. As well, reading articles in industry magazines continually gives me insight into the trends and topics that I need to further research. Having reliable contacts in key markets is another excellent source of information. And, last but certainly not least, having a seasoned team of diverse colleagues likewise helps me gain a better understanding of this unpredictable time. As the supply of hotel rooms increase and demand continues to fluctuate, understanding the global market is sure to become more important than ever.