The Great Recession placed tremendous pressure on hotels and hotel marketing professionals to maximize profitability.

The best strategy – control costs and maximize revenue. I’ll let the bean counters take care of controlling costs – just don’t touch that marketing budget.

I’d prefer to focus on maximizing revenue which, for small luxury hotels, requires getting the greatest number of guest rooms booked at the highest possible rate.

When times get tough (desperate maybe) there is a widespread hospitality industry knee-jerk reaction that kicks rate out the window.  “Heads in Beds!” becomes the operating mantra for most while those who yell “Hold Rate!” get trampled in the stampede toward deep discounts.

There’s ample evidence showing rate doesn’t necessarily stimulate demand in a recession – or at least not enough to compensate for the discounts. People who would have stayed at a hotel anyway (and pay a higher rate) are the real beneficiaries – not the hotel. And once one hotel in a destination drops rate or deeply discounts, all the lemmings follow.

The last thing any hotel should do is get in a price war with a property that doesn’t care what it sells its rooms for.

Snazzy marketing schemes and internet based companies entice hotels to “dump rooms” at 50% – 60% off rack. And hotel marketing pros leap at the opportunity to sell rooms for 40 cents on the dollar. Could they really be that desperate? This doesn’t help achieve maximum profitability – in fact it runs counter to it.

In a recent article entitled, “Love-hate relationship: occupancy, rate” by Stephen R. Hennis, Director, STR Analytics he reports that 80% of hotels in the US experienced declines in average room rate in 2009. With all the deals floating around in the marketplace for the past two years I would have guessed the figure would have been even higher.

It’s a great article and I recommend it highly to anyone involved in hotel marketing. The research shows that hotels with the steepest discounts suffered the least amount of occupancy erosion. Sounds good.  However, “The more properties dropped rates, the worse their RevPAR index change was, indicating that the upside in occupancy performance did not compensate for the sacrifice in rate.”

Amazing as it may seem, hotels that actually increased ADR saw the best improvement in RevPAR indices.

While we have been living through some pretty desperate times, it was not a time for desperate measures.

There are many better ways to market a hotel in a recession than by deeply discounting rates. That will be the subject for the next article.

What do you think? Safe travels – Madigan Pratt

Nisbet Plantation is a 36-room luxury resort on Nevis. A tiny resort on a very small island with no direct air service from the US, UK or Canada. The resort has faced numerous challenges – it’s small size, limited budget, remote location, air access and the great recession.

Nonetheless, Nisbet has weathered the economic downturn exceptionally well and was just named the Best Caribbean Hotel by Travel + Leisure Magazine. (It was also named the 6th Best Hotel in the World!)

What’s Nisbet’s Secret?

In spite of the recession, Nisbet stayed true to its luxury brand. “Nisbet has built a reputation for delivering an exceptional vacation experience.” said Jamie Holmes, general manager. “In late 2008 we knew we were in for a difficult stretch so management and staff got together and brainstormed ways to actually enhance the guest experience. ”

Late last year Nisbet published a Case Study outlining all the steps it took to weather the great recession. Focusing on the guest experience instead of cutting staff and services has helped Nisbet become the Best Caribbean Hotel.

The Case Study is summarized below. In essence, Nisbet aligned the four P’s of marketing to ensure the best possible guest experience.

Product

On the product side management worked with staff, keeping them informed of the economic reality and involving them in future staffing decisions. Expenses were cut, but only in areas that did not effect the guest experience. Amenities were also added to enhance the experience.

Price

Nisbet decided early on not to compete on rate with hotels offering deep discounts.  Instead the property offered modest rate reductions while simultaneously creating unique value-added packages to entice and delight guests.

Place

Nisbet reviewed all available distribution channels – travel agents, wholesalers, OTAs and direct to see where they could best be strengthened to produce the greatest amount of revenue with the least amount of expense. Relationships with the best producers were enhanced through personal sales calls and follow-up direct marketing efforts.

Promotion

For nearly a decade Nisbet has embraced the principles of customer relationship marketing and has built an extensive database along with a deeply loyal and vocal customer base. All promotional tools (advertising, public relations, web, email, social media, etc.) are integrated into the promotional efforts.

The real secret to effectively marketing Nisbet Plantation – focusing on the guest experience and making sure all the marketing basics were properly aligned.

When you do you can prosper in difficult times. You could even be named the best hotel in the Caribbean – or in whatever region you are located.

Safe Travels – Madigan Pratt

If you would like a copy of the full Nisbet Case Study click here.

TripAdvisor is one of the most powerful hospitality marketing tools available today. Unfortunately more time seems to be spent complaining about it than developing ways to use it to a hotels advantage.

Perhaps that’s why last month’s article – TripAdvisor makes an “offer you can’t refuse” – generated the highest number of emails we have seen for some time. Most of the emails included questions about how to get the most out of TripAdvisor. Some even asked for “our secret!” Okay, I’ll tell you.

The truth is, there really are no secrets to getting the most out of TripAdvisor.

There are however ways to use TripAdvisor to your advantage. And they are all based on approaching TripAdvisor with the same objective marketing thinking one would expect from a smart hospitality marketing professional.

Here are seven tips on how to get the most out of TripAdvisor to improve your product, customer satisfaction, revenue, number of reviews and ultimately your ranking relative to your competitive set.

1. Take the Customer’s Perspective – A novel idea in some corners of hospitality – customer focused marketing! It doesn’t matter what you think about TripAdvisor – your customers and prospects love it and now have access to over 30 million reviews. If you have a problem with TripAdvisor – get over it. The sooner you do the better off you will be.

   Read the reviews as if you were a traveler and not a hotelier.

2. Listen To Your Customers & Take Action - Reviews are nothing more than online comment cards. You should read them and listen to what your guests have to say about the quality of your product, value for money and the delivery of your services.

   If you are one of those hoteliers who don’t like TripAdvisor, perhaps you don’t like listening to what guests have to say. Or perhaps your “issues” with TripAdvisor prevent you from hearing the many valid comments that could help you improve your product and thus your ranking versus competitive hotels.

3. Develop a Plan & Measure – I have yet to see a smart marketer inside or out of hospitality who, when faced with a potential threat hasn’t developed a plan to either minimize the threat or turn it into a competitive advantage.Your plan needs clearly defined and measurable goals. Here is a sample:
   • Be listed in the top five hotels for your destination before the end of 2010
   • Double the number of five-star reviews in 2010
   • Cut the number of 3-star (and below) ratings to less than five in 2010
   • Sensitize staff to how their actions are portrayed on the web by the end of the first quarter
   • Generate 50% more positive reviews than your nearest competitor every month for the next year

   In addition to the desired result you must set specific deadlines. Tasks with specific deadlines or timelines get done while those without do not.

   You need to measure progress to know how well you are doing. Are you tracking ahead or behind your goals? Do you need to adjust your strategy? Do you need more resources?

   I love this quote because it rings so true. You need to measure and report for the best results.

   What gets measured gets done, what gets measured and fed back gets done well, what gets rewarded gets repeated. – John E. Jones

4. Identify Strategies for Implementation - Goals will never be achieved without an effective implementation plan.The first step is to make someone ultimately responsible and accountable for achieving the goals. It will be up to that individual to marshal the human and financial resources necessary to succeed.

   Normally it shouldn’t take much, but if a part-time or full-time person is needed then hire someone. Obama will love you! Better TripAdvisor reviews and the resulting revenue it should generate will more than pay for a dedicated individual. Putting the onus of generating and managing TripAdvisor reviews to an already overworked or frazzled salesperson is doomed to failure.

5. Be Proactive & Be Creative – If you want more (and more favorable) reviews of your hotel then actively ask each guest to write one. (It’s okay if you forget to ask the fellow in 314 who you know had “issues.”)

   This is where you can get really creative. Many hoteliers ask guests to post reviews when talking to them on property. Guess what? Everyone says they will and very few ever do.

   Ever thought about calling them, thanking then for staying with you, asking how their vacation was (actually engaging them) and then asking if they would post a review? How about making it easy for them and sending an email with a link to your page?

   Sure it takes time and time is money. But what are positive TripAdvisor reviews really worth to your bottom line? Smart hospitality marketing pros know the answer. And those who complain vehemently about TripAdvisor seem to understand how negative reviews impact occupancy and revenue.

6. Understand TripAdvisor – You really do need to know the ins and outs of TripAdvisor and make sure you don’t violate any of their policies when implementing your plan. Violate these policies and your hotel could be penalized with significant downward movement in popularity. You also risk having a red badge added to your listing warning travelers to be suspicious of your reviews.

   With Management Responses you should know when to respond and when to just butt out. TripAdvisor is a social media tool – a way for guests and potential guests to exchange ideas. Hotels shouldn’t be seen as interfering with (or taking over) the conversation.

   The Track Performance tab in the owners’ center makes it easy to track both your performance and your competitions – the number of reviews is compared along with the Customer Satisfaction Index (CSI) – measuring the 7 top criteria that track to guest satisfaction.

7. Take Advantage of TripAdvisor Whenever Possible – A great example is the new Business Listings that allow you to include a link to your hotel’s web site, your reservations 800# and email. This is new and I think it’s a great marketing opportunity for hotels. Drive consumers directly to your hotel when they are in the buying mode. Why let the biggest travel web site out there send visitors to third party booking engines without giving up a fight?

   Sign-up before February 28th and get 50% OFF their published rates. Time is short – only 3 days left to save. (Editor’s Note: The Introductory 50% OFF Special is over, but TripAdvisor does run other Specials from time to time.)

   Just click Business Listings to take advantage of TripAdvisor.

There are many different ways to implement a TripAdvisor strategy. And there are no “secrets to success.” If you approach TripAdvisor from a marketing perspective your chances of increasing your rating and ranking vis-à-vis your competitive set will definitely improve.

Set specific goals, marshal your resources, measure and report performance and adjust where necessary to succeed. It’s basic hospitality marketing.

What do you think?

Safe Travels – Madigan Pratt

What hospitality marketing professional hasn’t been caught up to some degree in Twitter Mania?  Let’s sell some rooms!  So & So just sold 400 room nights through a promotion on Twitter.  We should be out there.

I’ve read the same articles you have about a hotel that unloaded gobs of rooms through Twitter (usually at a steep discount).  But what I haven’t read yet is an authoritative Twitter Case Study showing the manpower investment actually provided an acceptable ROI.

Sometimes it’s best to step back and see what others are doing.

I did read an interesting story in Brand Week saying major marketers are somewhat underwhelmed with Twitter. According to the article:

• Hyundai, which was named “Marketer of The Year” by Advertising Age is ready to write the microblogging service off.  Joel Ewanick, group VP of Marketing says he finds Facebook, which has copied most of Twitter’s best features, to be a superior platform.
• Procter & Gamble execs recently told venture capitalists that they didn’t think Twitter was “particularly relevant to what they’re doing on the brand-building and advertising side.”
• Verizon, a company that spent more than $1 billion on advertising in 2009, has around 5,000 followers. Coca-Cola has 15,000.
• Apple’s not even on Twitter.
• Some corporate Twitter accounts suffer from prolonged neglect. Delta Airlines’ Twitter page went from June 17 to December 22 last year without a single Tweet.

One Twitter success story cited in the article comes from Dell Computer which traces $6.5 million in 2009 revenue to its outlet store as a result of Twitter – an asterisk in the balance sheet for a company with $50 billion in sales last year.

The article does point out that companies like Dell, Comcast and Best Buy are using Twitter successfully for customer service.  And others like Dell are using it to promote specials.

It’s true the number of followers for celebrities like Ashton Kutcher or Oprah Winfrey have helped create Twitter Mania. Someecards which has 1.7 million followers vs. Hallmark’s 2,000 shows how a small company can use Twitter to outflank an older, bigger rival. But Someecards has a “voice,” a definitive edge to its Tweets that few hospitality marketers might find appropriate for their properties. You’ll have to read the article for more on this.

Now I’m not saying Twitter can’t find a place in your overall hotel marketing program.  But remember – it’s a marketing tool.  Evaluate it like you would any other tool.  Set objectives.  Determine how it will impact your customers. Decide what resources are required.  The service may be free, but the manpower requirements to create and manage a successful program are not.  How will you measure success?  What’s an acceptable ROI?

Safe Travels – Madigan Pratt

PS – If you know of a great Twitter Success Story – one with proven ROI, please let me know.  I will be glad to feature it in a future post.

TripAdvisor may be the most controversial service in hospitality marketing today. Some hoteliers love it, while others have issues.

No matter what you think, TripAdvisor is making an offer you can’t refuse. A Business Listing on your TripAdvisor page at half off the regular rate. Sounds like they’re in the hotel business, doesn’t it? In any case, the listing includes 1) a direct link to your site, 2) your 800# and 3) an e-mail link to reservations.

Here’s what we’re advising clients:

1. Get a Business Listing on TripAdvisor and do it today! This is a limited time offer.

Our research shows nearly 100% of guests in small- to mid-size luxury hotels read TripAdvisor reviews before booking. How much is it worth to have your hotel’s direct contact information right in front of travelers when they are seriously shopping and want to book a trip? Priceless!

2. Measure your marketing ROI.

Anyone can track where Web visitors are coming from, but now you can track what marketing is driving phone calls to reservations and impacting your bottom line. And it’s surprisingly affordable.

Track your TripAdvisor listing and measure the effectiveness of all your marketing efforts – PPC, PR, advertising, direct mail, banner ads and e-mail newsletters - with Marketing Tracker. Detailed real-time reporting and call recording help you identify what marketing and sales efforts are working.

If you want to take advantage of this TripAdvisor offer, you better hurry and act now. The offer expires January 31, 2010.

The cost for a TripAdvisor Business Listing varies depending on teh size of your hotel. Click here to see your rate and sign up. Have your credit card ready!

And don’t get stuck wondering what you’re getting for your money. Measure your marketing ROI with a program like Marketing Tracker. So when it comes time to allocate marketing funds you will know what works.

Your decision to advertise on TripAdvisor again or anyplace else will then be based on the proven value your hotel receives – not simply the price of the media. It’s a much better way to approach hospitality marketing decision making.

Safe Travels – Madigan Pratt

Many readers have ask which Hospitality Marketing Blog posts were the most widely read in 2009.  So, by popular request, here is a list of the Magnificent Seven.  Please enjoy the practical advice and marketing insights as you gear up for 2010.

1. Hotel Case Study – Prospering in difficult Times – Good news was hard to come by in hospitality marketing circles in 2009.  Here’s a story about a small luxury hotel on an island difficult to get to that offers inspiration and hope.  Very worthwhile.
2. 85% of Hoteliers Just Don’t Get It – Back in August I reported on a Market Metrics’ Research Report that found only 15% of hotels have policies or guidelines for how to manage user-generated reviews (aka TripAdvisor).  Can you imagine that?
3. The Media Are Killing Us – The most overused hospitality phrase for 2009 may well be (unfortunately) “The AIG Effect.”  One bad move by a major government bailout recipient created a media frenzy followed by a Congressional dog pile that literally destroyed the meetings and conventions business.  Government was trying to create jobs on one hand while simultaneously throwing tens of thousands of loyal hospitality employees out of work.  Go figure!
4. Are All Hoteliers Liars? – I like this one too.  Oyster.com, a new online hotel review site launched in July and called hoteliers and hospitality marketing professionals liars.  It sure created headlines, but couldn’t save a failed business plan.  They ended up letting most of their staff go some six months later – read No Pearl in this Oyster.  Just rewards.
5. Thinking Beyond Hospitality – Many found this story about John Wallis, Head of Marketing and Brand Strategy for Hyatt eye-opening.  His goal – to become a database driven company that’s in the hotel business. Revolutionary in hospitality marketing?  Yes, but it shouldn’t be.
6. Why I Hate TripAdvisor Sometimes – You gotta have fun when you can and it’s not often you have a chance to poke TripAdvisor in the eye.  Here’s what makes me mad about TripAdvisor – sometimes.
7. Marketing To Succeed In Difficult Times – A practical guide of proven strategies that have helped companies survive and even excel in past recessions.  Written back in February, 2009 there is still some good advice to help 2010 planning.

Thank you for reading and commenting on Hospitality Marketing Blog.  It has been a real pleasure for me to publish this blog and I look forward to continuing into 2010 and beyond.

Wishing you a very Happy, Healthy and Prosperous New Year.

Safe Travels – Madigan Pratt

PS – if you would like to receive a short email whenever a new article is posted simply subscribe on the right.

Last July I posted an article entitled, “Are All Hotel Marketers Liars?”  It talked about the launch of a new and different hotel review site called Oyster.com.

The article outlined numerous reasons why Oyster.com would not “fundamentally change the way people make hotel decisions,” as the site’s founder claimed.  Basically it had a failed business plan.  Imagine hiring 10 “professional” reviewers to travel throughout the country, stay in (and pay for!) each hotel night.

I mean, what were these guys thinking.  It was like a time warp to the Internet Bubble Hay Days when business plans were written on the backs of cocktail napkins and investors threw millions at boy wonders.

How could they possibly afford to pay salary and travel costs for reviews when TripAdvisor gets millions of reviews for free?

Well Oyster.com hasn’t gone out of business…at least not yet.  But Gawker recently reported Oyster is going through a major consolidation and firing  a good portion of its staff.

As a hospitality marketing professional it may be a good time to update your TripAdvisor Strategy.

What do you think the chances are Oyster will be with us in 2010?

Safe Travels – Madigan Pratt

As promised – here’s the Nisbet Plantation Case Study that Jamie Holmes and I presented at the Caribbean Hotel and Tourism Association meeting in St. Thomas last month.

It’s good news that proves you can market your way around a recession.

Here’s what Nisbet Plantation Beach Club, an intimate luxury resort in the Caribbean, did to outperform other hotels in the region. As a result of following best practices and adhering to customer relationship marketing, Nisbet is also well positioned to flourish as the recession subsides.

You can download the complete article here.  Here’s a top-line summary.

• Focus on Marketing Basics – A recession is not the time to experiment – especially if you have a very limited marketing budget. Make sure your 4-P’s of Marketing – Product, Place, Price and Promotion – are performing perfectly. Experiment only if there are any opportunistic funds left in your budget.

• Don’t Deep Discount – Study after study show deep discounting is easily copied, doesn’t stimulate demand and hurts RevPAR over the short term.Long term revenue also suffers. STR estimates it will take between five to ten years for hotels to return to pre-recession pricing once inflation is factored in. Used to cheap rates, the trade and consumers will resist your attempts to raise them.

• Deliver a Great Guest Experience/Provide Value – Hotels need to cut expenses, but caution needs to be taken to cut those that will least impact the overall guest experience.Cutting staff to skeleton crews, draining the pool, closing the spa and shuttering restaurants are not what a guest expects. And most likely their displeasure will be shared with others on TripAdvisor.

• Maintain Marketing Spending – Hospitality marketing budgets are always easy targets for budget reductions in recessionary times. It is the tool that will help convince potential guests that your hotel is better than competition, provides good value and is certainly worth a few more dollars a night than the other hotels that are using Price as their primary marketing tool.McGraw-Hill did a study of companies during the last Great Recession of 1981-82 and found that those who maintained or increased advertising spending outperformed competition during the recession and recovered more quickly than those who cut spending.

Click here for the complete Nisbet Plantation Hotel Case Study.

Safe Travels – Madigan Pratt

Speaking before a conference of luxury Italian companies, luxury hotel operator Rocco Forte offered a stunningly concise summary of the toxic hospitality marketing strategies used by far too many hotels in these recessionary times.

“What happens in a hotel cycle [during a recession] is always exactly the same.  Revenue dissipates, occupancies go down, hoteliers then sacrifice rates, discounting to boost occupancy.  As they discount rates, they also decrease services and they cut back on every item of expense.  Rates continue to fall as occupancy rises.” [Bloomberg Report]

Despite research from Cornell University, Smith Travel Research, PKF Consulting and others stressing that this is absolutely the wrong approach, hospitality marketing professionals continue to follow the same tired, brand destroying marketing strategies every time a recession comes along.

While travelers are looking to save money, they still expect a quality experience – especially luxury travelers.  The experience is what most hotels advertised before the recession and what they built their brands upon.  But is it being delivered now?  With fewer staff to take care of their needs, reduced amenities, and more hidden charges, the quality of the experience is waning.  Also waning, no doubt, is guest loyalty.

The Price of a Poor Experience

On the Harvard Business Publishing Blog author Peter Bregman recently wrote a great article entitled, “The Price of a Poor Experience.”  In it Mr. Bregman presents interesting findings from research among hundreds of non-profit organizations and their successes and challenges to retaining members during the current economic downturn.

This is pretty much the same challenge luxury hoteliers face.  They want to retain customers, encourage repeat visits and generate positive word-of-mouth – the most powerful form of advertising.

Here’s what the research showed:

1. There is no correlation between membership and price increases.  In other words, customers didn’t leave simply because an organization raised its prices.
2.  There is a direct correlation between membership and how likely a customer is to recommend the organization to a friend.  This is known as the net promoter score – think of it as your word-of-mouth score.

If customers like an organization’s products or services enough to recommend them to others, then that organization could raise prices, even in a down economy, without losing customers.  But if the organization downgraded the customer experience, then even lower prices would not prevent customers from abandoning it.

One could argue hospitality is drastically different, but human nature is the same across all categories.  In the highly competitive hotel industry, people may be looking to pay less today but still expect to receive good value.  Cutting rates while diminishing the guest experience will decrease a hotel’s “net promoter score” and brand value, which makes it more difficult to recover when the recession subsides.

Following a toxic hospitality marketing strategy can prove fatal.  Cornell University, Smith Travel Research and PKF Consulting have written extensively on the topic recently.

Stay tuned to next post to learn what hospitality marketing strategies are successful in a recession and helped a small luxury hotel prosper in difficult times.

Okay, so the research study didn’t actually come out and say it, but anyone reading the recent Market Metrics’ Research on user generated content (aka TripAdvisor) could easily draw that conclusion.  For several years Market Metrics has been tracking the rising popularity of user generated reviews.  Here are a few of the key findings from their most recent study:

• 90% of hotel managers think online reviews are very important
• 81% visit review sites at least weekly (TripAdvisor, Expedia, Hotels.com, etc.) TripAdvisor is believed to have the biggest influence on guests
• 70% of hotel managers are familiar with TripAdvisor’s Popularity Index that ranks hotels by city, and 90% of which believe the index is important and follow it regularly

Now here’s the number that I find astonishing:

• Only 15% of hotels have policies or guidelines for how to manage user-generated reviews.  In other words 85% just don’t “get it!”

How can this be? 90% of hoteliers think online reviews are important yet 85% are doing nothing about it?

Are they allowing their hospitality marketing professionals to spend money on advertising and promotion while doing nothing about TripAdvisor? Think about this – Market Metrics’ research indicates that all the money hotels spend on advertising and promotion is less effective than online reviews.

Need more?  As far back as 2007 (ancient history by Internet standards) Nielsen Internet survey concluded, “Despite the ever expanding array of advertising platforms and sources, consumers around the world place their highest levels of trust in other consumers.”

Now I have seen plenty of articles offering ideas hospitality marketing professionals can use to develop a TripAdvisor strategy.  The majority of the ideas are helpful, but the truth is each hotel needs to tailor their own strategy.  It has to reflect their particular market situation, and match the available manpower and expertise.

What do you think?  Safe travels – Madigan Pratt