By Jim VanDevander
When we talk about small hotels, we have to make a distinction between boutique/luxury small properties, and small select service properties. Select service hotels are typically categorized as having fewer amenities and smaller rooms and were once confined to the suburbs, small towns and the areas surrounding airports. Of course, both share some basic common needs when it comes to filling guest rooms with groups and meetings, but they go about it in very different ways. This is because boutique/luxury and select service hotels appeal to different audiences.
For example, a small boutique/luxury hotel is interested in the board meetings and smaller corporate events still able to pay their premiums, whereas a small select service property can do quite well capturing SMERF business with groups more focused on their budget but who also like that dedicated attention. Regardless of hotel class, small hotels give up on group because they don’t believe there is enough small meeting need. We think it is because small hotels do not see the potential or know where to hunt.
Outsmart your competition and optimize your group revenue with the small groups looking to meet at hotels like yours. Learn more.
Small hotels have spent the last several years reinventing themselves, blurring chain scale lines, and have become the darling of eager investors with money to spend. How do we know all of this? Our friends at JLL recently surveyed 4,500 investors and/or owners of select service properties in the U.S. Investors and owners are still fond of the select service category and citing “enhanced portfolio returns” and “resilient” to describe their perspective of U.S. select service hotels. Investors, however, have also become more guarded as to the performance of the select service segment of the market.
Between August 2018 and August 2019, roughly 75% of the total number of hotel rooms that have opened have been select service. In 2019, small select service hotels supply growth surpassed the national supply growth averaging 2.7 percent. Demand for these select service properties fell slightly 2.5 percent. Overall, for select service properties, supply was pretty neck and neck with demand. Because of their performance, JLL’s survey also found that 42% of investors are starting to build these properties in secondary markets. And the reality is there are thousands of select service hotels in the construction phase, poised to open in 2020.
Needless to say, industry competition is fierce. So how do small hotels compete in this environment? Here are four tips to get you focused back on group and get your year off to a great start:
- Arm Your Limited Resources—Smaller hotels naturally have smaller sales teams. The limited team they do have has to be armed with the best resources and the best data in order to meet their group goals.
- Upskill Your Sales Skills – Smaller hotels need to rely on a proactive group sales strategy leveraging their Hunter sales skills. They cannot rely on unqualified, generic inbound RFPs with their typical low conversion rates and expect to compete.
- Focus Your Budget on Greater Returns – Small hotels don’t have as many discretionary budget dollars to spend in chasing after all market segments like their larger counterparts do. They have to be more focused and targeted. They need to spend their sales and marketing budget on what will yield the biggest return. Here are Proven Strategies for Winning More Group Business.
- Broaden Your Scope – Sourcing group business from beyond your comp set and your backyard will yield richer “ponds” from which to “fish.” “Best-fit” groups can be found outside of the local area. With a focused and targeted approach to selling to the right groups, it will yield a higher booking rate, positioning you above the competition.
Smaller hotels have unique attributes, and with the right tools and data, there is no reason they can’t win in Group. They just have to know where to hunt and what to hunt for.
