0  

SoLoMo: Still Going Strong

SoLoMo is a marketing tactic for leveraging the power of social networks to deliver local information to consumers via their mobile devices. But the scope of SoLoMo’s evolving impact on the hospitality industry is still being defined.

Practical applications of SoLoMo are not exactly abundant at the moment, though this is changing rapidly. One innovator typically leveraged by hotels in this domain is foursquare, the free app that lets users “check in” to a location with their mobile device to fulfill some social function or to locate (or be located by) friends. An additional local—and marketing—benefit is that foursquare offers recommendations, discounts, and coupons from local participating retailers. Some examples:

One of the first hotel companies to practice SoLoMo was Four Seasons Hotels in California, which used a location-based social-network application (the now defunct gowalla) to give guests special recommendations for “best of” places and experiences to try during their visits—and to earn hotel credits (for example, in the spa or for dining) in the process. Guests “checked in” to the app using their mobile devices when they arrived at any Four Seasons in California. They then received access to curated recommendations for things to do and see to enhance their stay—much like a virtual concierge. If they “checked in” to three of the recommended spots, they could show a “pin” at the hotel’s front desk, which could be redeemed for the hotel credits.

Today, the industry in general continues to find its way with SoLoMo, thanks in large part to fast-evolving mobile technologies. Still, we have found some intriguing examples. Here are some SoLoMo strategies put to use by sbe Hotel Group’s marketing department. Lauren Roxborough, sbe’s Marketing Director, Hotels, provides the details:

  • iPad Messages: SLS South Beach’s new in-room iPad app has a “Messages” feature where we can communicate exclusive offers to hotel guests. One of our current offers is for guests to receive a complimentary dessert at either Katsuya or Bazaar (both on-property restaurants) if they download the sbe app to their mobile device and present the offer via the app to their server. Here we are not only incentivizing guests to dine at our restaurants, but we are also using the in-room iPads to drive app downloads.

  • Shake a Drink: We have also added a “Shake a Drink” feature to the in-room iPads, where guests can “pick their poison” or select an alcohol, shake the iPad, and receive a recipe for a cocktail they can make from items in their minibar. They also receive another recipe based on the selected alcohol with a specialty cocktail they can order at one of the on-property venues – this drives interaction with the app, increases minibar sales, and drives traffic to our food and beverage venues. This is also a great way for us to highlight our alcohol partners.

  • Hyde Beach Escape Sweepstakes – Integrated Social Campaign: We launched this Facebook sweepstakes through our sbe Hotel Group Newsletter where a winner can receive a two-night stay in a Lenny Kravitz-designed Villa at SLS South Beach that comes with a poolside daybed for two, pitcher of sangria and fresh fruit platter daily, and a 7-series BMW and SLS chauffeur at your disposal. This social campaign increased Facebook likes to our Hyde Beach page, increased loyalty to the Hyde and SLS brands, and cross promoted between the hotel and club.

  • Mercato di Vetro Sunday Supper: Produced a promotional video for Mercato di Vetro’s “Sunday Supper” to generate buzz. This video resulted in 3,415 views in its first week and drove traffic to the restaurant for the promotion. The video now has more than 14,000 views.
  0  

The Cheapest and Best Approach to Overbooking

This week’s theme on the Hospitality Blog is overbooking. Here’s an exercise taken directly from my eCornell course Overbooking Practices in Hotel Revenue Management. The overbooking-ratio method is a very, very popular and successful method that many hotels use for their overbooking policy. When you’ve completed this exercise, be sure to download this free step-by-step guide to overbooking. 

Now, sometimes people talk about overbooking as being evil. Why would anyone ever overbook, because that’s not fair to the customer? Let’s think about this. If you never overbook—you say that I’m a good and pure person, and I would never, ever do anything like that—what happens if you have a 5% no-show rate?

You have those rooms sitting there empty—it actually might end up costing you more than if you overbook just a little bit. And so when we try to look at overbooking, we try to come up with the least expensive overbooking policy, realizing that whatever we do with this, we’re still going to be making a guess. It’s kind of like gambling—we’re going to come up with a forecast of how many no-shows, and come up with our best bet on what the overbooking policy should be. So, when we look at coming up with an overbooking policy, there are more than several factors to consider.

Read More

  0  

Demand Management: A Deep-Dive

Success in the hotel business hinges on getting demand management right. It’s a key driver in hotel operations, revenue optimization and overall customer experience.

Today we give you an entire chapter on demand management from The Cornell School of Hotel Administration on Hospitality book. In this chapter written by Cornell Professor Bill Carroll, you’ll get both a broad overview and incredibly detailed instruction on how to manage demand at your hotel. This chapter on demand management is an absolute must-read for anyone in hospitality working at the crossroads of revenue generation and customer service.

Permission to redistribute Dr. Carroll’s chapter courtesy of Wiley Publishing.

From the publisher: This cutting-edge and comprehensive book—with contributions from the star faculty of Cornell University’s School of Hotel Administration—offers the latest thinking on the best practices and strategies for hospitality management. A must for students and professionals seeking to enter or expand their reach in the hospitality industry, The Cornell School of Hotel Administration on Hospitality delivers the authoritative advice you need to:

  • Develop and manage a multinational career and become a leader in the hospitality industry
  • Maximize profits from franchise agreements, management contracts, and leases
  • Understand and predict customer choices, and motivate your staff to provide outstanding service
  • Manage hospitality businesses and the real estate underlying the businesses
  • Control costs, coordinate branding strategy, and manage operations across multiple locations

 

 

 

  0  

Revenue Management Strategy: Demand-Control Charts

No matter what size hotel you work in, all successful revenue management strategies are based on the ability to forecast demand accurately and, therefore, predict the optimal rate based on that demand. This is where a demand-control chart can come in handy to help determine when to change your rate based on demand, separating the “hot” zones (high reservations-on-hand) from the “cold” zones (low reservations-on-hand). Knowing how and when to use a demand-control chart can enable you to plan your room rates for top revenue every time.

Demand-Control Charts

The major use of a demand-control chart is to help determine when to change your rate based on demand. When your forecast, or estimated demand, is above a certain level, you will close (or raise) room rates. When the forecast is below a certain level, you will open up (or lower) room rates. Similar to most approaches to setting rates, this one has advantages and disadvantages.

Advantages

  • easy to use and implement (a simple spreadsheet will do)
  • can be applied to other parts of the business (ballrooms, restaurants, etc.)

Disadvantages

  • does not consider length of stay
  • lumps all demand together even though different market segments might have different demand

Steps in Creating a Demand-Control Chart

To develop a demand-control chart, we develop the forecast, determine trigger points, and then determine the minimum rates to quote.

1. Develop the Forecast

The best way to develop your forecast is based on past experience. Take a look at your reservations from the last several years. What was your demand? What was your actual occupancy? Using historical data, you can make a pretty good prediction, or forecast, for what the demand will be for the future.

For example, you may calculate the forecast for each day for the next few months based on the same days for the past five years. The demand-control chart to the left shows the forecast for a 250-room hotel for part of the month of June, in both numbers and percentages.

2. Determine the Trigger Points

Trigger points signal the opening or closing of a rate class—the hot and cold periods. If the forecast predicts that demand will be above a trigger point (a hot period), close (raise) the appropriate rate classes; if predicted demand is below a trigger point (a cold period), open (lower) the appropriate rate classes. Your firm may have multiple trigger points. For our example hotel, our trigger points are:

  • Cold Period: 70% occupancy or below
  • Hot Period: 100% occupancy or above

3. Determine the Minimum Rate

Determine the minimum rate to quote based on the forecast and trigger points. In this chart we have two trigger points: 70% and 100% (which makes 71%-99% occupancy our Warm Period). For each hot, warm, and cold period, you will want to determine your minimum rate.

  • If our forecast is under 70%, it’s cold and we set the minimum rate at €250.
  • If the forecast is hot, the minimum rate is €425.
  • If the forecast is between 70% and 100%, it is a warm period, and our minimum rate is €325.

Develop Your Own Demand-Control Chart

Try your own hand at developing a demand chart for your hotel to get a better understanding of how you can easily and simply predict demand and determine the best pricing strategy for you. Click the thumbnail to the right to download the Demand-Control Chart used in Dr. Chris Anderson’s eCornell course Price and Inventory Control. It has already been filled in with example data to get you started, but you can easily plug in your hotel’s forecast, determine your own trigger points, and set your minimum rates depending on your hot and cold periods.

Note: The demand-control chart is a spreadsheet in .xls format and opens best in Microsoft Excel or OpenOffice Calc.

  0  

The Risk of Social Media on Any Given Day

Social Media is Everywhere

Social media has changed the way we behave in almost every aspect of our lives and even our philosophies on leading an organization. Do a search on any company and you will probably find they have at least one or more profiles on Facebook, Twitter, Google+, LinkedIn, Pinterest, and maybe even Instagram. It’s a whole new way to engage with your customers. If you are not using social media in your organization, you should want to!

However, new tools bring benefits as well as risks. As leaders we need to balance those risks and benefits. As we consider the risks, consider the supporting policy to mitigate those risks…putting your head in sand and ignoring it is not a policy…no choice…it is here and not going away.

So maybe you are thinking: “I don’t need to worry about this, I can keep doing it my old way and not be affected by the social media hype.” But social media is being used everywhere and will continue to increase in use. Your employees are using it. Your future employees are using it. Your customers are using it. Your business partners are using it. And, your competition is using it. Heck, even my 85 year old grandmother is using it! But every day your organization is using social media without the associated risk mitigation that well thought through policies provide is a day rife with significant organizational risk: legal, regulatory, financial and reputational.

If that doesn’t convince you, think about operating with outdated or non-existent policies as a game of organizational Russian Roulette. While on any given day, the odds may be in your favor, over the long haul they are not. Let’s drive this point home with a little math.

Assume that on “any given day”, there’s only a 0.1% chance that nothing bad will happen.

However, the problem is not with “any given day” but rather what happens when a series of “any given days” are strung together. When we apply a little math and look at the odds are over a longer period of time, we should get very very worried. What the math shows is that over a 1-year period (365 days), even if the daily odds are only 1 in 1000, over the long run, there’s a better than 30% chance that we’ll experience a serious issue. Over a 2-year period, this number rises to almost 52%. 3-years? 67%. So, for those of you who don’t think you have an issue, you’re probably living on borrowed time.

So get comfortable with the uncomfortable and jump into the proverbial deep end of the social media pool! But start with a healthy social media policy. Is your company already involved in social media? If so, does your company have a social media policy in place?

  0  

The Dos and Don’ts of Length of Stay

How far in advance can you predict demand for your hotel? In hotel management, we continually stress the importance of creating demand, rather than simply responding to it. How to do it?

Well, proper use of length of stay controls during high-demand periods enables you to control customer demand, plan for the future, and maximize revenue.

Minimum Length of Stay

When to use

Minimum length of stay can be used at any hotel where there will be a period of high demand (a string of busy nights) followed by a period of low demand. Some example scenarios are: a resort hotel over a winter holiday or any hotel in the vicinity of a major national festival or conference.

What to do

Implement a rule to accept longer-duration reservations and reject shorter-duration reservations for arrival during a hot period. That way you can fine-tune demand during hot times to increase occupancy during the slow period that follows.

Potential problems

You may not have anybody who wants to stay longer than the minimum you have in mind. Also, your guests may decide to leave early.

Requirements

Be sure you have sufficient demand for longer lengths of stay. Otherwise, use of this control could have a detrimental effect on RevPAR instead of improving it.

Maximum Length of Stay

When to use

This control is used when you are expecting to be able to sell out your rooms at higher rates. Using maximum length of stay, you can limit the number of rooms sold at large discounts during the high rate time period by limiting the (discounted) multi-night stays extending into that time period.

What to do

Do not accept reservations at specific discounted rates for multiple-night stays extending into the sold-out period. To do this, use the start of the sold-out period as a guide to determine the maximum length of stay allowable for discount customers. To accommodate guests who would like to stay at the hotel longer than the maximum length, it is possible to charge two rates: the discount rate for nights up to the maximum and the rack rate for subsequent nights.

Potential problems

Your guests may decide to stay longer. By law, you can’t force them out of their rooms.

Requirements

Be sure you have high demand. Otherwise, you could decrease RevPAR instead of improving it.

Closed to Arrival

When to use

This control can be used to restrict arrivals during a time when you expect to reach maximum occupancy through guests staying on at the hotel for multiple nights (through “stayovers” as opposed to through new arrivals). Using this control would only make sense if you believed you would achieve higher occupancy by selecting a particular set of guests (i.e. those arriving before the closed-to-arrival date).

What to do

Do not accept reservations for arrivals on the day in question. Allow guests staying through from previous nights only.

Potential problems

Be very, very careful with this control, because using it will have an impact on the day you’ve closed to arrivals, and the day after, and the day after that. You may end up improving revenue on some days, but decreasing it on others.

Requirements

Be sure you have extremely high demand.

Fill Your Hotel

To better understand how length of stay controls actually work, we suggest you try your hand with the interactive activity, Fill Your Hotel, used in eCornell’s course, “Forecasting and Availability Controls in Hotel Revenue Management,” taught by Dr. Sheryl Kimes. This activity simulates a length-of-stay tool as it relates to variable demand and overall occupancy rate. Learn how you can not only predict, but control for your hotel’s demand.

  0  

100% Occupancy? Let’s See If You Can Achieve It

Price and duration, or length of stay, are the two fundamental levers for revenue management. Successfully striking a balance between the two by managing length of stay is how you get your hotel closer to full occupancy.

See if you can achieve 100% occupancy in our Fill Your Hotel simulation by clicking the game below.

There are several different types of length-of-stay controls. One thing you might want to use during a busy period is called a “minimum length of stay.” Let’s say you have four busy nights and that you’re going to have some slow periods. You’re trying to decide which reservations to accept at the beginning of those four busy nights. If you have people who are willing to stay four nights, you’re going to be a lot more open to having them at your hotel than someone who’s only willing to stay one or even two nights.

Of course, leveraging length-of-stay controls is a delicate proposition: The last thing you want to do is turn away demand to the point where you end up with empty rooms.

To better understand how length-of-stay controls actually work, we suggest you try your hand with the Fill Your Hotel simulation, used in eCornell’s course, “Forecasting and Availability Controls in Hotel Revenue Management,” taught by Dr. Sheryl Kimes. This activity simulates a length-of-stay tool as it relates to variable demand and overall occupancy rate.

 

  0  

The Crystal Clear Benefit of an Opaque Selling Strategy

Opaque online travel agents, which we call opaque OTAs, have recently become an integral part of many hotel properties’ distribution strategy. To clear excess inventory, hotels sell rooms at reduced rates via OTAs, hoping to reach price sensitive customers, while simultaneously selling rooms at “normal” rates to regular brand loyal customers via their traditional channels, including their own websites.

In this report we outline a simple model for setting multiple prices and booking limits at Priceline. Learn how an opaque selling strategy can increase your bottom line through the same advanced revenue management strategies as taught in Dr. Anderson’s eCornell series called Advanced Hospitality Revenue Management: Pricing and Demand Strategies.

  0  

How Staff Efforts at the Property Level Can Increase Your Website Performance

All hoteliers would like to see an increase in the amount of revenue contributed from their website.  After all, direct bookings are the most profitable. Here are some quick, easy and fun ways to get your hotel staff to positively influence your website performance.

Re-market On Property 

Remarketing is a favored strategy in Search Engine Optimization (SEM). If a customer visits your website without making a booking, effective remarketing will continue to serve up ads about your hotel as the customer continues to browse the internet.

While guest are at your hotel, you should continue these re-marketing efforts at the hotel level. There are guest touch points all over the property.  Remember not all guests at your hotel booked their stays through your website. They may have found your hotel in the yellow pages or was recommended by a friend. They may have booked their rooms by calling the property or used a travel agent. So, it’s important to share your website’s URL and inform your guests that they can find the best deal there. This effort does two things; (1) increases awareness to your website, and (2) incentivizes guests to think of your hotel again when they return to your city. Here are several ideas how you can implement this at your hotel:

  • Create posters, flyers, door hangers, tent cards , etc. and display these in guest rooms, elevators, breakfast rooms, and lobby.
  • If you’re taking advantage of digital marketing boards, feature a screen capture of your website
  • Have your website URL printed on guest receipts

You want to continually remarket your website to your guests in an effort to influence their future purchasing behavior by constantly reminding them to visit your website for future stays. For guests who did book on your website, the on-property marketing will reinforcing that behavior.

Local Relationships

Local businesses and attractions are a great place to get referral traffic to your website.  Building partnerships or relationships will help increase referral traffic to your site.  Ask local attractions and businesses to list your hotel on their website with a  link back to your hotel’s website. You can offer these businesses an incentive to list your hotel on their site by giving and exclusive discounted rate. For area attractions such as theme parks or golf resorts, an incentive could be helping them sell tickets through your hotel concierge or front desk.  Referral traffic can convert into a direct website booking just as easily as search traffic.

Socialize Your Staff

Social signals are playing an increasing role in SEO.  Effective search engine strategies require the use of Social Media.  Are you leveraging your hotel staff in social efforts?  Here are several ways you can encourage your hotel staff to promote your hotel on social media channels and increase your fan base:

  • Feature your staff members on your Facebook page
  • Ask your staff for provide “locals’ tips” they can share with current and potential guests to help them learn about the best places to eat, park, things to do in and around your city.
  • Share these tips on social channels and highlight the staff that provided the tip.

These tips may seem basic and possibly even old-school, but getting back to basics can improve performance. Educate your staff on how their efforts on property play into your online success.

By: Heidi Bitar, Director of Client Services, Milestone Internet Marketing. Anil Aggarwal, CEO, has appeared in eCornell’s Ask the Expert segments for our New Media Course for Hospitality Professionals.

*This is reposted from the Milestone Internet Blog.

  0  

Increase Your Brand Site Bookings with The Billboard Effect

When it comes to online distribution, hotels typically prefer to sell rooms through their own websites. Third-party sites, particularly those of online travel agents (OTAs), tend to be seen as competitors in terms of distribution—even though OTAs are instrumental in filling rooms that might otherwise go unsold.

When hotels are able to increase brand-site bookings by listing with an OTA, they are essentially tapping what’s called the “billboard effect.” This reservation benefit enables hotels to quickly tap wider markets through alignment with the right third-party OTAs.

For example, Intercontinental Hotel Group listed their properties on Expedia during the summer months of 2009-2011 and saw increases between 7% and 26% in reservations through their own channel. And remember: These are brand-site reservations that are increasing, not reservations made on the OTA sites.

Dr. Chris Anderson, an associate professor at Cornell University’s School of Hotel Administration, had published a small test of the billboard effect’s on the hospitality industry in a 2009 Center for Hospitality Research study. Now Anderson is back with a new and considerably larger analysis. And it confirms the power of the billboard effect in gaining additional brand-site bookings for hotels listed with OTAs.

Click here to receive both the original and expanded research studies from Cornell’s Center for Hospitality Research and learn how you can quickly increase your brand-site bookings through OTAs.