The Key to REVPAR Recovery – New Business Development

By. Carol Verrt 08th Dec 2001

Smith Travel just reported the REVPAR numbers for October and they are not pretty.  Overall REVPAR declined by 18% from 2000 led by large declines in major markets such as New York and Hawaii.  The segment to feel the decline most severely is the upscale market that posted an overall decline of 26%. (Denver Post, November 30, 2001).

The initial reaction on the part of hotel managers and sales staff is to shrug their shoulders and blame it on the market as though they have little control.  The inevitable result of that attitude is to find that you or your hotel is on the block, as some managers and sales people with Adam’s Mark are about to discover. (See related articles HotelOnline, November 29, 2001).  This transaction is only the tip of the iceberg.  For those companies wise enough to retain some of their profits, the time has never been better to acquire hotels.   (Does anyone recall the nursery tale of the grasshopper and the ant?)

During the last eight years, demand was sufficient that many sales departments of hotels, CVBs and other tourism related industries responded to inquiries and decided whether the piece of business fit their revenue parameters.  If so, the contract was sent and the client was often grateful to be accepted by the venue for the time period it preferred.   It is now a buyer’s market.

It is back to the philosophy of “no excuses.”  An hotelier I know always said that if you have a 200-room hotel and there are 200 rooms occupied in the market, there is no reason why your hotel isn’t full.

Sales people and managers need to rediscover the art of new business development or prospecting.  I can hear it now – “but businesses and individuals and groups are all cutting back on travel” or “ we can’t adjust our rate structure to the levels of the other hotels”.  Sounds like excuses to me.  How many new clients did the sales department ask for business this week?

In deference to those sales people who entered the industry within the last decade, many of them don’t know how to find new business.  In my practice, I see sales people telemarketing the ‘dead files’ looking for leads.  They are named the ‘dead files’ for a reason and the ratio of time expended to business booked is not a profitable percentage.  I have heard of people using the Dunn and Bradstreet lists and there is a place for cold calling the local market for corporate transient and group business.  However, if the companies in your local market are part of the segments of the economy that are sagging, your efforts will be frustrating and you ought to be familiar with your local accounts anyway.

None of this works very well for conventions and groups that originate outside of the local market.  There are other lists for that and designating an individual to cold call these lists also has some benefit but who are you looking for?  What does your potential client look like in this segment and, for that matter, all of your other market segments?

Most wise managers and sales staffs have strategically redistributed their percentages of business per market segment to reflect current economic conditions and not past history.  This means that if your local corporate market is down, reduce that percentage and replace it with groups or individual leisure.  The discount segment right now is exceeding projections made prior to the economic downturn, which means lower average rates but potentially higher volume.  Can the rate be made up by other developing new business in other market segments?

The first step is to decide who your potential clients are in all market segments if calling efforts are to be maximized.  In these economic conditions, the call to closing ratios have increased tremendously.  It pays to have sales people and telemarketers calling on qualified lists of prospects.

Take the time to develop a ‘client profile’ for each market segment that you want to solicit.  The client profile is composed of the following elements:

 Geography –
Where do your clients in a given market segment originate?  This information may be available through your franchise SOB or feeder market reports.  Audit the existing files for that segment and tally up their markets of origin.  Are your clients for this segment national, regional, intrastate or local?

 Demographics –
What is the size of the average company, group or tour that currently uses your facility?  How large a group can the facility accommodate?  In order to maximize the utilization of the function space, what is the size and configuration of the ideal group?  Is most of your group business corporate, association, SMERF or leisure?  What mix of those segments represents the maximization of revenue?  Does your corporate business originate with Fortune 100, 500 or 1000 companies?   What is the demographic of your leisure business – families, seniors, DINKS?

 Fiscal Profile –
What rate does your ideal client want to pay?  How flexible are you on rates on a case-by-case basis?  What is your preferred form of payment?  Does your ideal client pay their bills on time? What value can you add to the package for this client that can justify additional rate?  What additional value-adds or features are they willing to pay a premium for?

Until we know who we are looking for, it is difficult to go and find them.  Many lists are available but they need to be ‘sliced’ by the parameters of the ‘ideal client’ profile.  There are few things more discouraging than to have a relatively inexperienced sales person (and we never assign this task to the sales people with seniority) cold call on a list that is not qualified.  After the first several hundred calls with no firm leads, they become pretty discouraged.

This is the strategic first piece of the process.  Once the profiles have been used to slice the lists and target other prospecting activities, the rest is dependent on training in the rest of steps of the sales process.

Taking the time to develop an ideal client profile for each market segment will save time and energy in the long run as your calling efforts will be targeted.  The ideal client profile should change with time as economic and market conditions change.  The properties goals and objectives change.  However, without a client profile you are shooting scatter shot into a flock of ducks hoping to hit one.   With a client profile you are aiming and shooting at a specified target.  If I were hungry, I think I would prefer the latter approach to getting dinner.

About Carol Verrt

Carol Verret was the founder of Carol Verret Consulting & Training provides consulting and training services to companies and organizations in the areas of customer service and sales and marketing. Carol Verret passed away in Dec. 5th , 2012 after long 8 years battle with breast cancer

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