By Jim VanDevender
Supply threatens to surpass demand in 2020, and many markets are feeling the heat. Hoteliers industry-wide are anxiously waiting for 2019 year-end reports, cautiously anticipating just how robust their markets will remain. With hotel construction projects booming in major markets such as Dallas, New York, and Houston, many markets are feeling the pressure and wondering how supply outpacing demand will affect RevPAR, ADR and Occupancy.
The State of Supply vs. Demand
Here are those crucial three metrics as of November 2019 according to STR:
- According to STR, occupancy and average daily rate (ADR) averaged 61.8% and $125.55, respectively, as of the year-to-date period ending November 2019, reflecting a RevPAR of $77.62.
- RevPAR increased at a sluggish <1.0% in 2019 as supply and demand growth remained largely in balance and ADR grew at a meager pace.
- In the United States during Q1 to Q3 2019 according to Lodging Econometrics:
- 704 new hotels with 81,111 rooms opened
- 5,704 hotels are in the hotel construction pipeline
- 1,704 hotels are under construction with many expected to open in 2020
Dallas, New York, and Houston opened the most hotels in the past three years, followed by Nashville and Atlanta, which opened 62 and 58 hotels, respectively. All those markets but Nashville show supply growth in excess of demand growth year-to-date in 2019. (Source: Lodging Econometrics)
Since last May, we have said that hotels are feeling the heat of demand ebb in the transient and small meetings sectors, and the only sure defense is a stronger group base. While you may continue to receive inbound leads somewhat steadily, all the new inventory in your market is very likely getting those same leads. More hotels than ever will be chasing these very same leads that already have low conversion rates. As if there weren’t enough stumbling blocks, the alternative lodging market (i.e. Airbnb) is increasing in supply as well, and they are targeting your transient business, including both business travel and leisure.
With all this competitive heat, how can you stay cool?
Group is the best choice to gain a competitive advantage. Group business, when pursued proactively, puts you back in control of the sales process. Below are five proactive strategies you can practice today to stay cool under the fire of changing market conditions:
- Cast your group business net beyond your comp set. Your traditional comp set may be your competition when it comes to your STR rankings; however, there are many hotels outside of your comp set—and your market—that offer more qualified groups from which you can target. Let your competitors limit their group options by remaining in your immediate market while you target other pools of better-fitting groups.
- Identify groups with booking patterns that coincide with your hotel. If you notice a group that consistently holds meetings in a similar market, loyally books with your brand, or favors booking your type of hotel, say boutique hotel, then they have repeatedly demonstrated their willingness to book with a hotel like yours. Consider reaching out to the meeting planner using their booking pattern as a launchpad for your conversation.
- Target groups that favor your hotel’s features. Extend your search for the perfect group even further by taking your hotel’s amenities into account; for example, some groups are inclined to book at airport locations or lean towards resorts. Others prefer smaller, more intimate hotels. Save planners the trouble of hunting for the perfect meeting space that accommodates their specific needs by presenting your hotel ahead of the search.
- Sell your destination first, then your hotel. Your hotel could be the event space of a planner’s dreams, but that won’t matter if they aren’t sold on the location. Use probing questions to understand what drew the group to certain locations for their previous events, and to understand what was missing. With this consultative approach, you will have built a good rapport with the planner by the time they decide to host their event in your market, and your hotel will have a head start in securing their business. Furthermore, if you discover your market truly is not a good fit for the group, then you can rule them out before spinning your wheels on selling your hotel.
- Elevate your messaging and conversations with meeting planners. No one likes receiving a generic cold call. A beautifully crafted tailored message that speaks to your prospect’s needs, on the other hand, is sales gold. Separate yourself from other group sales professionals by taking a collaborative approach with meeting planners, demonstrating that you are a partner in their success rather than just another salesperson order-taker.
SmartSearch makes these tips possible for group sales professionals who are serious about tackling the 2020 market head-on. Knowland’s cutting-edge search engine identifies accounts that meet the criteria you set and therefore have the highest potential for conversion.
For more tips on proactive selling, learn from the best group sales professionals in the industry in our upcoming webcast, Trailblazer Tips & Tricks from the Industry’s Top Group Sales Professionals on Wednesday, January 29 at 1:00 PM ET. Click here to register.