The urge to drop room rates may be strong in times of crisis but as we learned in our chat with Palm Holdings’ VP Revenue, Ryan MacDonald, it’s not the best solution.
“So when things like that would happen, everybody’s first reaction, unfortunately, was to go into panic mode and be like, ‘Oh my G-d, what are we going to do to sustain business? How are we going to get through this? Do we start doing more stuff with OTAs?’” Ryan explained. “There really wasn’t a push on brand-direct or loyalty programs or things like that. So as an industry, back when these things used to happen, we would look to third parties. We would give our inventory and better rates to Expedia or Booking.com or Priceline. Don’t get me wrong, everybody has their fair space to live in the hospitality industry but, when we started doing that and heavily discounting rates it took the industry years to get back to where we should have been. Whereas if we had to kind of hold rates and not panic and do the race to the bottom, because I think everybody went for a ‘heads in beds’ mentality, rather than looking at sustainability.”
Ryan then went on to say that room rates still haven’t fully recovered to pre-911 levels even in the pre-COVID pandemic era of 2019. “We’re still climbing to get back because we dropped so low when those things happened. I remember at some properties that I was working at, like during SARS and things like that, we were putting on ‘buy one room and get your second room for $1’. We were doing some crazy guerrilla tactics to get things in. Because we all went into panic mode, it’s taking us forever to get back to where we should have been, whereas if we had held rates you normally get your 3-5% rate increase for inflation, year over year, we’re just slowly bridging that gap.”
Ryan continued to say, “we’ve had quite a few hotels in our markets that were undercutting 20%, 30%, 40% below where the rest of the market was priced because they were going for that heads in beds mentality. Now that things are starting to bounce back in their certain markets, it’s really hard for them to grow at that rate. When they were charging, say, $59 in last time this year and now they put their rate up to $159 – guests are like ‘well, what’s the deal, it’s still the same product and all the policies are still in place for cleanliness.’ So, it’s a harder thing to swallow, and we did see some of our competitors play heavily in the third party market. Don’t get me wrong, we still made sure that our content was up to date but we were not getting heavily involved in those deep discounts, because again it’s just going to take forever to bounce back.”
“I think as an industry, we’ve learned from the mistakes we made in the past, and I think that we got smarter when it comes to rates, especially our public-facing rates” Ryan explained. “When it comes to group, military, and hospital rates – yes, we were more flexible and we were putting some special qualified offers out there, but we were not dropping our bar rate down to a minimum and we were not running heavy promos on the third parties to try to do that race to the bottom. I think, as an industry, we are coming out of this a lot better than we did in previous instances because again, we’ve learned from those mistakes and I think we all knew that if we did this again we know the repercussions on how long it took us to try to build right back up.”
Alternative strategies to dropping rates during a time of crisis can include leveraging automation, creativity, adding value in other services, reaching out to the community, and using other distribution avenues.
Mobile check-ins, messaging automation, and text message marketing are ways to help relieve some pressure from the staff, triage potential issues, and encourage bookings. One of the things that Ryan started leveraging during the pandemic was text message marketing because it’s crucial when communicating with younger generations, for offering information, and for being transparent about safety and cleaning protocols.
To refocus efforts on driving revenue look to your current services and see if there are any that can be added or improved. Some ideas include spas, room service offerings, yoga classes, internet fees, parking fees, or adding a gift shop to the hotel.
Reach out to the community
Travel could be next to impossible during some times of crisis, as we’ve seen with the pandemic. However, that doesn’t mean that all business opportunities are lost. Encourage your local community to visit the hotel for a staycation to have a night off from the family, enjoy a mini romantic getaway, feel pampered at the hotel spa, or simply have a change of scenery. You can also reach out to the local community and discover what type of collaborations can be done like hosting dance classes in your halls, hosting a painting class in your meeting rooms, or enjoying a 4-course themed meal in your restaurant. For more ideas click here.
Review profile on OTAs
Many people are used to using OTAs and they are a great place to have your property discovered. Ensure that your profile information, protocols, and images are all updated for potential guests discovering your hotel.
Encourage direct bookings
Ryan mentioned that when a crisis hit they would take part in some promotions like “buy $100 worth of travel vouchers and we’ll give you $200 for travel in the future for when things reopened” but they mostly spent their energy encouraging guests to book brand-direct. He also said, “we were also trying to educate people to book brand-direct as well because we heard about some of the nightmare stories that people had when they needed to cancel reservations because of the pandemic and were trying to go through third parties. It was taking days, weeks, months to get refunds or they were only offering like a travel voucher for the future, whereas anybody who booked brand-direct – it was easy, it was done, it was cancelled and your refund was put through. So, I think coming out of this we could see a shift of more people coming brand-direct as compared to third parties just because of the customer service issues and the way this was handled when people had to cancel or try to change travel plans.”
Alternative distribution channels
As an alternative to OTAs and direct bookings, you can look at different distribution channels to get your offerings out there and in front of the limited market of people who are looking to travel, take a vacation, or staycation. Look to platforms like Airbnb or Vrbo to list your rooms or you can run ads on Kijiji for monthly rentals.
Micrometrics believes that businesses should create more meaningful connections with the people that they serve by enhancing face to face interactions and creating connections with guests at scale. Our hospitality clients leverage powerful messaging automations to improve customer experience and operational efficiency at their properties. Learn more about Helix here.