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IHC PUBLISHED ARTICLES

IHC (1)  "WHAT IS YOUR HOTEL'S MARKET SHARE AND MARKET PENETRATION?"

(2)  "A CLEAN HOTEL WILL LEAD TO MORE BUSINESS"

(3)  "A WORD ABOUT BREAKFAST"

(4)  "BUSINESS APPRECIATION DAY"

 


What is Your Hotel’s Market Share and Market Penetration?

First there was Occupancy Percentage (Total Rooms Occupied divided by Total Rooms Available for Rent) and Average Daily Rate (Total Rooms Revenue divided by Total Rooms Occupied) as the hotel’s base measurements of success.

Then along came RevPar (Total Rooms Revenue divided by Total Rooms Available for Rent). Now that we have grasped the importance of this measurement, we have Market Share and Market Penetration also as a tool to gauge our hotel’s Marketing success.

What is Market Share?

Market Share is the number of rooms in our hotel as a percentage of the rooms in our hotel’s competitive market set. Market Set is the total number of rooms we are in direct competition with, within our area’s market and/or segment.

Assume:

We are a full-service, 200-room Holiday Inn. Our Market Set is other full-service hotels that we are in direct competition with–i.e., Ramada Inn, Hilton Inn, etc. Not included in the market set would be high-end–Hyatt and Marriott–or the lower end of the market segment of limited-service, such as Super 8 or Motel 6.

A survey of the area reveals the total rooms of our competitive Market Set is 1,000.

Our Holiday Inn (200 rooms) divided by Total Market Set (1,000) equals our Market Share of 20%.

As upper mid-priced, full-service hotels are added or leave our Market Set, or our room count is adjusted, our Market Share percentage will change. The larger the Market Share percentage, the bigger player we are in the market.

What is Market Penetration?

Market Penetration is the percentage of demand for rooms actually accruing to our Holiday Inn. It is calculated as the ratio between the Total Rooms Occupied in our hotel against the Total Rooms Occupied collectively attributed to our hotel’s Market Set.

Assume:

  1. Research of our competitive Market Set of 1,000 rooms revealed an average aggregate Market Occupancy of 70%.
  2. Our Holiday Inn is experiencing an occupancy of 65%.

Step One:

Total Market Set of rooms = 1,000

Market Occupancy = 70%

365 days = Total Rooms Occupied

of the Market Set 255,500 our Market Share = 20%

= our goal of Rooms Occupied we should be achieving 51,000

Step Two:

Convert our actual occupancy of 65% into 47,450 Rooms Occupied. Divide our actual number of 47,450 Rooms Occupied by our goal of 51,000 Room Occupied, thus our Market Penetration is 93%.

Not good. We must strive to be equal to or better than our competi-tors. Market Penetration must be at least 100%, and to be the leader in the Market Set, well over 100%. What is wrong?

  • Location, fixed – no solution, signage may help.
  • Wrong franchise–possible.
  • Wrong data in determining the primary guest market.
  • Lack of marketing dollars to reach that primary market.
  • Lack of management sales effort.
  • Lack of sales tools.
  • Wrong room mix.
  • Old decor.
  • Wrong amenity mix.
  • Unfortunate reputation.

The list can go on. However, when certain key wrongs are corrected and the property achieves an occupancy of 82%, the Market Penetration will be 117.4%, and possibly the leader of the pack!

There are hotel management com-panies requiring a Market Penetration percentage each week from their hotels as a measurement of the hotel’s total marketing success. However, month-end monitoring seems reasonable, and we can even enroll in the Smith Travel Accommodations Report (STAR program), which will calculate and track our hotel’s Market Share and Market Penetration each month. To enroll in the STAR program, contact Smith Travel Research, 615/824-8664, who will need from you:

1. Our list of competitive hotels in our Market Set (STR will obtain the occupancy of these

         competitive hotels from their parent chains); and

2. Our Total Rooms Available for Rent and Total Rooms Occupied.

Star Travel Research will only report the aggregate occupancy of our Market Set. They never release or divulge information on an individual property or chain.

If we wish to calculate Market Penetration for ourselves, the key is obtaining our Market Set competitors’ occupancy. In certain cities, the Convention and Visitors Bureau collects the individual property data and disseminates the occupancy in requested Market Sets (not by individual hotels). In other locations, hotels share their occupancy percentages on a nightly and weekly basis. And in other areas, the hotels are fierce competitors and share nothing.

If that is our case, then count our competitors’ cars within our Market Set. We used to count closed windows draperies, but with room energy savings techniques, this is no longer accurate. Fellow AAHOA member Tek Chand of Augusta, Georgia, has car-counting down to a science within his portfolio of hotels.

He has either the Night Auditor count the competitors’ cars at 10:30 p.m. or the Evening Desk Clerk at the end of the previous shift. Then the car count (bus = 20 rooms) along with weather and special events, is recorded in his computer. His accuracy and confidence is well documented in that he will retain retired persons to count cars at hotels in various locations for up to a year prior to the building a new hotel and lenders have inquired to him as to hotel market conditions in specific locations.

After we have obtained the occupancy data of our competitive Market Set, then we can complete the calculations. Market Penetration graphically tells us how we measure up to our competition regardless of market conditions.

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A CLEAN HOTEL WILL LEAD TO MORE BUSINESS

"What is the Curb Appeal

to your potential Guest?"

"If 1995 and 1996 have been so good in the hotel industry, why can't I get more rooms sold?" We hear this question every day when managers and owners get together. Possibly they are only looking at the rooms occupied and not at the vacant rooms, or why they are vacant.

Each month high occupancies are reported in all regions of the United States and in all hotel segments. Now is the time for you to maximize your occupancy by filling these vacant rooms without spending additional money.

Target Marketing, Yield Management, and Use of Franchise Marketing Programs are all subjects that must be addressed to top off at 100% each day. But none of these strategies will work effectively if the hotel is not clean and does not have good services.

Through the Guests' Eyes

Stop and look at your hotel through your guests' eyes. Is the hotel clean, and do you provide good services? Are the billboards painted and are all the lights working? The same goes for the property signage. That may be highway or city land at your entrance and their road crews will clean it up once or twice a year, but it is your entrance, your image of your hotel. Mow the grass, edge the sidewalks, pick up the daily trash.

Is the parking lot clean? Is it restriped once a year and are pot holes filled? An unkempt exterior means dirty rooms to a customer. What is your curb appeal to your potential guest? Are the light fixtures at the front door filled with dead bugs? Is the entrance door handle worn out and are the windows filled with credit card decals? Every hotel accepts credit cards; why advertise for them? You don't see the decals on Hilton and Marriott doors.

Is the lobby warm and inviting? Remember, this is where you welcome guests into your hotel. Use sofas, easy chairs, and table lamps (warm white fluorescent light bulbs instead of cool white for a softer glow).

Is the front desk uncluttered, with only the hotel logo or an appropriate picture on the back wall of the desk? Only four signs should be posted, and all tastefully done.

1. Ownership License Agreement.

2. Manager on Duty.

3. Checkout time.

4. Credit cards accepted.

Don't Tell the Guest "NO"

An owner will spend thousands of dollars in franchise fees, marketing, and advertising, and will furnish great rooms--all to have the guest come to his hotel so that he can tell the guest "NO."

NO CHECKS ACCEPTED. Why? Use Telecheck Inc. (800/835-3243). It costs you the same as a credit card, uses the same verification machine, and not all guests use a credit card.

NO PETS. Why? You have rooms designated for guests who smoke; why not two or three rooms for guests with small pets? Thousands of AARP members have pets with them when they travel. You solicit AARP business--keep it all.

NO FREE LOCAL CALLS. Why? If you want commercial business guests, then make it cost effective to them. It normally costs you nothing to give free local and 800/888 access calls.

The Clean Room

Every guest expects a clean room. In fact, it is a hotel owner's requirement by state law to provide a clean room. Guest room decor may be old or new, contemporary or traditional, bright or subdued, but it must be clean and comfortable.

The comfortable part is the beds. Regardless of the number of chairs, guests will sit on the edge of the bed, thus requiring the turning and flipping of mattresses on a regular basis. Most chains require that this be done four times a year. Also, be sure to rotate the box springs once a year. These simple procedures will:

1. Extend the life of your bedding, saving you money.

2. Provide your guests with a more comfortable bed, and thus increase your repeat business,

        making you money.

How often do you clean the carpets? Possibly only when required by an accident or according to your general cleaning schedule. An owner once stated that the room carpets were fine, as he had the same carpet in his apartment. However, after he was requested to walk in guest rooms with clean white socks, he had visible evidence of the dirt in the carpets, validating guest complaints. In high-occupancy hotels, try to clean a room carpet every six weeks.

The "sanitized" paper band placed on commodes is a waste of time and money. That is why the most noted chains do not require them. What they do require is a sparkling, shining clean commode, and that is accomplished only by using bowl cleaner and a commode brush. Clean the bathtub, shine the chrome, and don't forget the paper trash under the bed and behind the dresser.

$10 for a Housekeeper

All chains provide instructional video tapes and printed materials on how to clean a guest room for housekeeping personnel. Independent hotels can obtain the same information from the American Hotel Motel Association Educational Institute at 800/752-4567. After the training sessions have been held, follow up the classes with individual testing.

This testing of the housekeeping training and in effect a determination of a clean guest room, should be done on a random day and room. The housekeeper who cleaned the vacant room, along with the supervisor, is asked to observe the inspection.

Ten one-dollar bills are placed on the bed. The owner or general manager then inspects the room, picking up one dollar for each defect found. The inspection should follow the instructions from the class. At the end, the housekeeper corrects all defects and is awarded the balance of the remaining money. This procedure has been proven extremely effective, if done on a consistent weekly basis, in training, employee morale, and having clean rooms in everyone's eyes, especially your guests'.

"I need more business; I must fill the vacant rooms." You will get more business and fill the vacant rooms if your hotel and the vacant rooms are CLEAN.

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"A WORD ABOUT BREAKFAST"

"Offering free food is sometimes

a game of one-upsmanship —

I can do better than you."

I stayed at a hotel recently where the owner was commenting that he was having trouble building repeat business in a highly competitive market. He had an 80-room national limited-service franchise with a $57 ADR at 53% in 1995. Above-average decor in the guest rooms greeted the guest. His occupancy should have been much higher.

However, at the complimentary continental breakfast, the owner demanded that the manager cut all costs.

1. Purchased from a local grocery store were instant coffee and a powdered orange drink. The

        night auditor reconstituted the products by 6:00 a.m., but there was no hot plate for the 

        coffee, or ice for the orange drink--all was served warm.

2. Donuts and other baked goods were purchased at a bakery thrift shop and served cold--two to

        three days old.

The owner stated that he did not eat breakfast and that the franchise requirements were satisfied. There was only one free USA Today provided, along with a sign: "Do not take the paper from the lobby." At 9:00 a.m. a maid saved the leftover food for the next day, and cleaned the lobby. Chairs were inverted onto table tops until the night auditor reset them the next day. And the owner wondered why his occupancy was decreasing!

We trust your hotel breakfast is served fresh, at the appropriate temperature, meeting and/or exceeding all franchise requirements to meet the competition while building repeat room business.

How Much to Offer

Offering free food to your hotel guests began as, and sometimes remains, a game of one-upsmanship--I can do better than you. I can take care of my guests, and keep them coming back, because I give them free coffee in the Lobby 24 hours a day!

The hotel next door said, "I will give them coffee and a donut," and at the next corner, the hotel's management added orange juice; and the beat goes on--and on to a full hot breakfast to order (Embassy Suites, among others).

Bradbury Inns of Atlanta offers a hot breakfast of scrambled eggs, sausage, toast, oatmeal/grits, pancakes/Eggo waffles, cereals, Danish, fruit, juice, coffee--all without a full production kitchen.

Now Homewood Suites is offering two soups (a clear and a cream) each evening, along with serve-yourself draft beer and wine (where permitted by law).

Cookies--we've got hot, fresh-from-the-oven cookies. Not only can Doubletree Hotels offer free cookies at the front desk from 3 p.m. to 9 p.m., now you can too. Bake your own in your equipment, using your grandmother's favorite recipe, or call Otis Spunkmeyer (800/938-1900 in San Leandro, CA) for the oven (about the size of a large microwave) and the ready-to-use cookie dough. In theory, this dough helps you make more dough through repeat business, and it works!

I know of a hotel at an interstate interchange, visible from the highway, only once you get off the interstate you cannot see the hotel, and by zoning no signs are permitted to direct you to the property. As a way of building business, the property markets large, fresh, hot, morning muffins in orange, blueberry, bran, and chocolate, and cookies in the evening of chocolate chip and raisin oatmeal. They use billboards, AAA Tour Books, AARP magazines, local radio and television (remember, they could not buy or rent the expensive signs). Their reputation and occupancy are excellent; the manager and sales personnel take muffins along on morning sales calls, and cookies in the afternoon. Recently, a competitive hotel on the corner added free half pints of cold milk to their cookie program--and the one-upsmanship beat goes on.

Whether you offer cold continental breakfast/full hot breakfast; beer and wine/cocktails to order; fresh hot muffins/soup du jour--first meet the requirements of your franchise, and then exceed your competition through the best products and service that are cost effective.

Remember--whatever you offer, you are offering it to increase occupancy and happy guests.

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 Every owner and hotel general manager wishes to say thank you to his guests for using the hotel. However, the majority of the time he is too busy with the daily routine. The Business Appreciation Day is one method for professional hoteliers to say thank you. 

A Business Appreciation Day is a concentrated sales effort designed not only to demonstrate appreciation to past clientele, but also to
generate new sources of business. 

To plan, organize, and follow up such a day, the following 12 points should be followed. 

1.  Establish a client list from sales history files of individuals and firms that have generated business for the hotel in the past year. The list should also include names of local elected officials and members of the local newspaper and television media. Take particular care not to duplicate more than two names from any one firm. The maximum number should be 500 names typed on labels that are easily duplicated, by photocopying machines, for future use. 

2.  Select a date: either Tuesday, Wednesday or Thursday. Also consider the time of the year to avoid the hotel's peak season or the December holiday season. 

3.  Print engraved invitations, inviting the mailing list to a reception. Mail the invitations approximately 2 to 3 weeks before the Business Appreciation Day. On the invitation, there should be a "regrets only" telephone number (possibly to the sales or general manager's office). 

4. A list of sales calls should be developed by the sales department from the mailed invitations. Care should be taken to group businesses together, with no more than 15 on one particular list, from the same geographic region.

5. The general manager should ask department managers, supervisors and key employees to represent the hotel on Business Appreciation Day. He should try to make two-person teams of male/female. Care should be taken to team an extroverted personality with an introverted personality. No care should be taken as to matching specific departments. It has proven very beneficial to have a representative of the sales department teamed with the executive chef, or a representative from the accounting office teamed with the executive housekeeper. This is a fun and innovative part of the Business Appreciation Day having department managers and employees represent the hotel as sales ambassadors.

On the Business Appreciation Day, a key department manager should be left at the hotel as the Manager on Duty. 

6. The sales department should assimilate 20 sales packets per team. The packet should include banquet menus, meeting room diagrams, guest room rates, sales brochures and any other information on the Food and Beverage Department or general information concerning the hotel. The packets will be distributed by the sales teams and be available to guests at the Business Appreciation Day reception. 

7. The day itself has arrived. Kick off the day with a breakfast in the hotel for the sales teams. Give each team 15 to 20 calls that they are to make. Also include 20 sales call report forms. Be sure to reimburse those employees driving their own automobiles for their mileage.

By 9:00 a.m. the sales teams should be making their calls. They are thanking your clients for their business at your hotel, reinviting them to that evening's reception and inquiring about immediate or future needs that the hotel could provide. 

When the calls are being made, two additional points can be stressed: 

  • Try to obtain two business cards from the meeting planner of the firm you are calling on, for later use. 
  • Obtain the correct name and title of the individual who books your hotel's guest rooms for out-of-town visitors. These names will eventually be used to develop a list for membership in a club that promotes their sense of belonging and special relationship to your hotel. 

8.  At noon the sales teams must not return to the hotel, or they will become involved in the day-to-day business of the hotel. Have them meet at a special restaurant or your competitor's hotel for lunch.

At lunch, each team should give a verbal report of how the morning sales calls progressed. It is quite interesting to see that those teams that were extremely apprehensive at breakfast, now display the confidence of veteran sales people. 

After lunch, the teams should continue making the balance of their calls, while encouraging those who are more adept to make the cold calls and invite the cold-call people to that evening's reception.

After all of the teams have completed their calls, they should return to the hotel by 4:00 p.m. Guest rooms should be set aside for the team members to use for changing clothes and freshening themselves for the evening's reception. 

9.  At 5:00 p.m. the Business Appreciation Day Reception begins. The Reception can be held in the Ballrooms, Meeting Rooms, Poolside or a tent in the Parking Lot It should be as elaborate as the hotel can conduct and the budget will allow. If your hotel does not have a Food and Beverage Department, then have the Reception catered by a very professional firm. This is the hotel's day to thank the business community for the support they have given the hotel. The sales team members should attend this function and circulate throughout the room thanking the people for their business. You will receive many comments from your clients stating that they have had hotel sales people call upon them for years; but have never had any one thank them for business. It is very important that the service department managers know the need for sales.

Have a guest book at the reception, along with name tags for all attending guests, and continue to collect business cards from those clientele missed earlier in the day. 

Be sure to have meeting rooms set up in such a manner that tours of the hotel can be given by the sales team members. How many times has a person booked rooms at the hotel, but has never seen one? Have guest rooms of various styles set aside for tours. This is the time to show off the hotel. Even if it was done at the grand opening party, do it again to reinforce their awareness of the hotel. 

10. By the end of the week following the Business Appreciation Day, the sales department should have reviewed the sales report forms. The calls should be listed as to: 

  • a possible interest,
  • tentative business, and 
  • definite business. 

Follow-up calls should be made by the sales staff within two weeks. 

11. Two additional benefits of this day are: 

  • Use the collected business cards as a thank you gift. Purchase a luggage-tag machine and make the business cards into luggage tags. Mail them out within 7-10 days after the Business Appreciation Day, again thanking your clients for their business and giving them a personal token they can keep on a year-round basis, reminding them of your hotel. 
  • With your list of names of personnel who make reservations for out-of-town guests, establish a special club which recognizes and encourages their continuing recommendations and referrals for your hotel. Such clubs can have many names, but their mission is a necessary function of every hotel's marketing program.

A friend of mine has suggested that club names be selected which enhance the member's image of himself/herself as a respected member of your informal sales team. With that rule of thumb in mind, she rejects the generalization of a "Secretaries Club," the double-entendre of "Executive Sweets," and the chauvinism of "Ramada Girls" or Sheraton's "Selective Service." "If you can't pay commissions," she reasons, "you can at least pay compliments." Why not call them "Encore Clubs," she suggests, "for encouraging repeat reservations?" 

12. How much does it take to invest in thanking your clientele? Your basic costs will include printing and postage for the invitations, hourly wages of the sales team members, transportation costs for those who drove their personal cars and their breakfast and lunch, along with the total wholesale cost of the food, liquor, flowers and decorations for the reception. An extra cost would be for the luggage tags or other suitable souvenirs and their mailing.

Approximately two months after the Business Appreciation Day, the sales department should total, on a definite and tentative basis, that business sold that can be directly attributed to this sales effort. When the cost of the Business Appreciation Day is divided against its booked sales, an Acquisition of Sales cost should be 15 to 20 percent. 

There are many times we wish to say thank you to our clients who are using the hotel. The Business Appreciation Day is but one method, a proven method that works extremely well on a one-time basis, or as an annual event.

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Edward L. Xanders, CHA, President
Interim Hospitality Consultants, LLC
4145 Yardley Circle
Tallahassee, FL 32309-2942
Phone: (850) 893-6010
Fax: (850) 893-8345
Cell: (850) 443-5010
www.interimhospitality.com
ihcex@comcast.net

American Hotel Lodging Association, Member
• Extended-Stay Hotel Council, AHLA, Member
• International Association of Hospitality Advisors, Member
• National Association of Black Hotel Owners, Operators and
   Developers, Member
Authored articles for AAHOA publications for the Asian
  American Hotel Owners Association
• Superior Small Lodging of America, Member
• Florida Bed and Breakfast Association, Member



Bunny Nocera
Senior Research Analyst
bunnocera@aol.com

Alan Walker
Phone: (850) 445-2204
alan.walker@insadj.com

Ronald K. McLaughlin
Administrative Assistant
ronmachsd@earthlink.com

Western Office
Mary Barton
Research Analyst
Oklahoma City, OK
Cell: (405) 574-2618


Copyright 2006

 

 

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