Cutting costs is the easy part of extending the cash burn runway. The hard part is finding ways to replace all the zeroes in the revenue column. Obviously, in a COVID-19 reality, that’s going to be an uphill battle.
“There are no silver bullets. Revenue generation is one room, one dollar or euro or yen at a time,” says Chad Sorensen, managing director and chief operating officer, CHMWarnick, Beverly, Massachusetts. “Operators are going to have to make sure they thoroughly understand their specific market and can identify what demand exists now that didn’t previously.”
Contributed by Mary Scoviak
Taking a step back to reimagine how to use the space has been a fruitful exercise, Sorensen says. “One example is that we have seen good success in offering ‘an office with a view’ at our resort properties.”
Here are some other strategies to consider:
Matthew Arrants, executive vice president, Pinnacle Advisory Group, Boston
- Focus sales and marketing on generating short-term demand. “The intent is to get heads in beds as quickly as possible. So local and regional demand is critical.” Target nontraditional markets such as in-state promotions, programs to house college students and deep discounts for extended stays. “These initiatives are terrible for rate. But, right now, we are in survival mode.”
- If your balance sheet allows, renovate. “Coming out of the last recession, we saw new hotels take advantage of tired, older properties that hadn’t been updated.” Use that as a marketing tool to address travelers’ concerns about hygiene and health, as well as design and technology updates.
Dave Baswal, CFO, Ovolo Group, Hong Kong
- Offer 24-hour room-rate pricing. “It provides flexible check-in and check-out times that travelers want. That’s worked great for us.”
- Sell gift cards to prevent cancellations and generate business without having to dramatically discount or rate cut. Some new twists: Make them transferrable and combine them with upsell opportunities (such as F&B or spa services) once the guest is on property.
James Berkeley, managing director, Ellice Consulting, London
- Shelve the hard sell and focus on relationship-building. “Reach out by phone or a virtual meeting platform to every customer and just ask a simple question, ‘how can I help?’ Don’t give them a hard pitch or fill the silence. You are going to hear one of three responses: an existing or repeat business idea previously discussed, something completely new, or ‘I don’t know.’ With the latter, explain how you are valuably helping highly similar customers in their situation and offer to show them how that might apply to their immediate future. Stay in the moment. We all need partners to show up and bring valuable help. That is your priority.”
- Position the hotel as the “meeting point” in the local community’s reopening and recovery efforts. Extend concierge privileges to your best customers on a “free and fee” paid basis. If governmental protocols allow, plan a small event for local business executives to strategize options for collaborative initiatives to create demand. If not, plan a videoconference (and consider creating an “experience” by delivering a light boxed breakfast or afternoon tea). “One general manager told me that he took this approach with three local business owners. They gave him five referrals. And that translated into US$750,000 in business.”
- Expand your thinking on events to include nonprofits and the performing arts. Find out which boards or causes your best clients are involved with. “A loyal corporate client of one hotel sat the board for the local ballet company. He introduced his fellow board members to the hotel’s manager, which led not only to an event booking for 2021 but also opened up new business opportunities for smaller meetings/functions and room sales in the interim.”
- Local business is going to be the first business to return, so take advantage of it. “Why can’t customers design their own in-room experience and preferences with probable needs you can predict? For example, local dining, salons, shopping, entertainment and so on, brought into the hotel.”
- Create online seminars or paid subscriptions to bring the hotel or brand ethos into customers’ homes. Or craft an actionable blog, such as like Kimpton Hotels & Restaurants’ Life Is Suite, that provide suggestions on lifestyle tips from throwing better virtual bridal showers to planning a socially distanced meeting. “People have more time on their hands. They may feel isolated. Online initiatives can connect them with each other and with your hotel or brand. These platforms can be very cost-effective marketing tools for building new business.”
Davy Parsons, senior manager, BKD CPAs & Advisors, Nashville, Tennessee
- Make your investment in sanitation and hygiene a profit center. “Some meeting planners are asking for pop-up assessment or treatment spaces, thermal scans and other health safety protocols. Not every hotel can deliver all that; it takes some capital. Consider making the investment to provide this so that you can market your property as the premier offer in the area with the highest or broadest sanitation standards. Then, sell those features a la cart or put a premium on the cost of the event. People are clamoring to meet in person, but they want assurances they’ll be safe. Last year, they were spending up to get salmon on toast; this year, it’s the triage space. Give them what they want and charge for it.”
- Tap into travel demand from 20- and 30-somethings. “Margaritaville had a clear baby boomer demo. But that market has been a little reluctant to travel because of COVID-19. While not ignoring its customer base, the company started targeting people in their 20s and early 30s who were more willing to travel — especially with the low cost of airfares. A lot of them hadn’t had the budget to stay at a 4-star hotel. Margaritaville gave them access to that level of experience and, in the process, added a new market demographic and still got 70% to 75% of rate.”
Kim Gauthier, senior vice president, HotelAVE, Providence, Rhode Island
- Sell day packages to the pool if governmental regulations permit.
- Offer neighborhood rates to families. “People who aren’t comfortable planning a regular summer vacation may still want a night or two away from home.”