By Jim VanDevender
With room inventory getting higher every month in the US, smart hotels are looking beyond their traditional comp set, are fending off the “new” emerging competition while adopting a more proactive group sales strategy.
The group market has been moving along for years now at a fast clip fueled by unprecedented demand. However, change, like with anything, is inevitable. The group market is in the midst of a revolution of sorts as it begins to adjust to a healthy new supply of rooms pouring into almost every American market. Hotels that wait too long to plan for this influx in supply may have quite a shock when they realize they should have prepared sooner.
In a recent Knowland webcast poll, 75% of hotels said that as of June 2019 their hotels were not on pace to meet their group goal. Hotels are seeing dips in their forecasted transient numbers and many report their small groups seem to be thinning out. From new hotels and unlikely hotels taking share to relying too heavily on inbound RFPs, many hotels are starting to feel the heat.
So, what can be done about this? Here are a few strategies to consider:
Strategy #1: Unlikely Competition: Hotels have viewed their competition in the same way since the beginning of time. This antiquated way of looking at your competitors is holding you back. An historic number of hotels have poured out of the hotel construction pipeline with more coming every day. The abundance of new supply is slowly, but surely, taking its toll on occupancy and ADR and will continue to do so. Many of our customers are saying, “Yes, but those hotels are not in my comp set.” or “Those hotels are smaller than us and not even in our chain scale.” Here is the wake-up call: If you are only looking at your traditional comp set as your primary focus to battle over group business, then you are going to fall behind.
Strategy #2: Traditional Comp Sets: The chain scale lines have blurred. Many brands in the upper midscale, upscale and independent categories, for example, have reinvented themselves. Cutting edge design and rebranding of the core elements have made it difficult for meeting planners and the average guest to distinguish between an Upscale Hyatt House and an Upper Midscale Hampton Inn or even an upper upscale major brand. Brands in higher chain scales are seeing this as well. When the lobby of a Hilton Garden Inn makes you stop in your tracks and look twice, it’s time to take the newbies in your market a bit more seriously. And remember, you may not be taking them seriously as a competitor, but they are looking at you that way. It’s highly likely that this is where your transient and small meetings are disappearing to. A small hotel with 2,600 square feet of space is looking at the small meetings in a hotel with 40,000 square feet of space as fair game. If the group fits, it fits. So, think beyond your traditional comp set or else you lunch will continue to be eaten.
The “rules” of traditional comp sets and what types of hotels a planner or guest prefer are moving all over the chess board. Today its about proactive selling in a smarter way. You need to rethink your comp set and identify who is actually taking your business, and stop underestimating hotels simply on meeting space comparisons or where they fall on the chain scale list. To keep ahead of softening occupancy and sluggish increases in ADR, hotels will have to color WAY outside of the lines and toss the 1999 Rule Book of Group Selling in the trash can.
Strategy #3: Inbound RFPs. You have been fed well for years on inbound RFPs, but let me say it loud and proud – times are changing and you must be prepared. And honestly, not just for the softening in demand but for the greater good of your hotel revenue and profit long-term. Do the math…for every group booked via an inbound lead, it is costing your hotel. Verses proactively identifying groups that would be a good fit for your property and directly sourcing them and nurturing them, your bottom line is bolstered. (Learn more about using business intelligence to sell smarter.) I know which path leadership would recommend you take.
