Hoteliers who are tuned into market needs will often cite the guest journey as being one of the most important areas that the hospitality industry must pay close attention to. They are right of course - satisfied guests should be the priority for any hotel. At the other end of the scale however, the art of selling to those guests is equally important, and sometimes overlooked. Marketing initiatives are often pushed by hotels, but must be underscored by solid sales performance, especially in selling rooms. Sales and marketing are two sides of the same coin, but let’s drill down into the selling side and look at some strategies to boost revenue, because ultimately, effective hotel sales strategies do help to maximise and enhance the overall guest journey.
The ingredients for a successful hotel sales strategy
First, let’s check in with some of the key ingredients for a successful sales strategy:
- Revenue generation: Sales directly contribute to the hotel's bottom line. Naturally better pricing strategies promote higher occupancy rates which lead to increased revenue.
- Market positioning: Effective sales strategies help position the hotel competitively in the market, attracting more guests by clearly delineating the hotel from competitors. Differentiation in the market is key to making a hotel stand out.
- Customer Relationship Management: Building strong relationships with guests can lead to repeat business and positive word-of-mouth referrals. Numerous studies have demonstrated that it can cost up to 5x more to attract new customers than repeat guests, so as well as promoting new business, nurture and retain existing customers.
- Occupancy optimisation: Sales efforts are essential to maintain high occupancy rates, especially during off-peak times when hotel revenue can otherwise slump. Tailoring sales drives to seasonal variations can positively impact the bottom line.
- Reputation and brand building: Sales activities contribute to brand awareness, helping the hotel stand out in a crowded market. A hotel’s reputation is one of its most significant assets.
- Ongoing feedback and improvement: Sales interactions provide valuable feedback that can be used to improve services and guest experiences. By knowing what sells in terms of rooms and services, managers can do more of what works well.
The science of hotel sales strategies
Although there is an ‘art’ to developing sales strategies for hotels, there is also a lot of science in achieving and maintaining effective sales results. A hotel sales department should employ a range of Key Performance Indicators (KPIs) to continuously measure achievements against set goals. This helps understand the effectiveness of different strategies, and identifies areas for improvement. Some hotel sales KPIs include:
Revenue Per Available Room (RevPAR): Measuring the revenue generated per available room, combining both occupancy and Average Daily Rate (ADR). So RevPAR is total room revenue divided by the number of available rooms.
Average Daily Rate (ADR): Looking at the average revenue earned per occupied room, or the total room revenue divided by the number of rooms sold.
Total Revenue Per Available Room (TRevPAR): This metric will include revenue from all sources, not just room sales, so associated food and beverage, special events, services, and so on. TRevPAR is the total hotel revenue divided by the number of available rooms.
Occupancy Rate: The occupancy rate is another key metric to assess sales performance, and is simply the percentage of available rooms sold over a specified timeframe, divided by the number of available rooms x 100 to provide the percentage.
Average Length of Stay (ALOS): Knowing how long guests stay is an important KPI, and ALOS is a simple calculation where the total number of room nights is divided by the total number of reservations. If ALOS is low, then management should consider enhanced offers and other attractions to increase the length of stay. Every extra night is a win.
Cost Per Acquisition (CPA): As repeat guests are less costly to acquire than new guests, CPA takes into account marketing and sales expenses, where total sales and marketing costs are divided by the total number of new guests who make bookings.
Lead Conversion Rate: The enquiries can come in thick and fast through Online Travel Agents, direct to the hotel’s website, or even through personal contact by telephone. But how many of those queries convert into sales? The formula for LCR is the number of bookings divided by the number of leads x 100.
Direct Booking Ratio: The OTA ecosystem has been hugely valuable in growing the hospitality market, but now, with sophisticated direct booking systems available for hotels of all sizes, hoteliers should question whether they are ‘giving away’ too much in the way of OTA commissions. Check out the DBR by dividing direct bookings by total bookings.
Guest Satisfaction Index (GSI): What do guests really think of your hotel? This KPI measures subjective opinions from guest feedback. Surveys take place during and after a guest stay, and include the wealth of online feedback through social media and the OTA ecosystem. The greater the number of survey points, the more granular the GSI detail that can be mined from the sum of guest satisfaction scores, divided by the number of surveys x 100.
There are of course a host of other KPIs that can be applied to the business of examining hotel room sales strategies, including the pace of bookings, sales per individual employee, and channel performance, to name just three. All of these measurement points are ongoing processes, and not ‘do once then file and forget’ activities. KPIs provide benchmarking to assess current performance and define future success.
By regularly monitoring KPIs, a hotel sales department can make informed decisions, enhance overall performance, and optimise sales strategies. So let’s take a look at some sales strategies designed for success.
Strategies for successful hotel sales
1. Know your customer
It’s the fundamental of all marketing and sales operations: If you know who your customer is and what they want, then you can sell successfully to them. It's impossible to be ‘all things to all people’, so the hotel which focuses on a particular demographic, or ‘tribe’ is better able to meet their needs. There are many ways of getting to know your customer: through in-stay and after-stay surveys, through constant checking of guest posts on social media, and on your own and OTA websites. Analysing what the competition is doing is also essential to a sales strategy. What are rival hotels charging for rooms and associated services? What do you have that they don’t have (and vice versa)? Your offer should be appropriate to your target audience, and that can only happen if you know who your guests are. Selling to someone who is interested in buying is a much better proposition than trying to sell to ‘everyone’.
2. Online is king
A hotel without a super strong online presence isn’t really in the modern world. Your hotel’s website must be optimised for easy access by search engines and be user-friendly. This means working seamlessly across all platforms, and equally well with laptop, tablet and mobile solutions. Technologies custom-built for the hospitality industry are now available which enable everything the OTA channels could previously achieve, now within a hotel’s own system - from showing the hotel’s facilities, through enquiry, booking, and payment.
At the ‘front end’ of your online presence, your website has to be attractive, with strong images, clear copywriting, and must always be up to date. Keep your online presence refreshed with new offers, seasonal messages, and great photographs or videos.
Social media platforms also engage potential guests and allow you to dialogue with them, especially when positive comments are posted. The more active and successful you are in creating a marketing ecosystem, the more directly this will influence and encourage sales.
3. Dynamic pricing
One of the things which in the past gave Travel Agents so much muscle was their ability to scan multiple pricing channels across a wide range of markets, and then rapidly adjust room rates within the same day. As a result guests could shop around for the best deals, gaining satisfaction with ‘bargains’. Rate parity is no longer required in many countries, which means that dynamic pricing to adjust room rates based on demand, seasonality, and market conditions has become the norm, and now hotels of any size can adopt dynamic pricing and intelligent pricing tools to provide flexible pricing policies. This can be done automatically many times a day (within set ‘guard rails’), so that occupancy is maximised.
4. Monitor and analyise performance
Using KPIs to measure the success of sales initiatives, it’s important to review sales data and identify areas for improvement. Data mining is now highly automated and easy to achieve, but must be done on a regular basis. Examining data is not just for slack times, or when business gets tough! Make data mining an essential part of the sales team’s activity, on a weekly, monthly or seasonal basis. And once the data is analysed, act on it! Adjust sales strategies based on performance metrics and market changes. If for example a discount scheme yields good room sales, then refine the scheme and roll it out again… And then monitor and analyse the performance all over again.
5. Organise events and promotions
Great sales and marketing work best when they are hand in hand, so effort should be put into creating promotions and special offers to attract guests. Sometimes there are obvious ‘hooks’ that a promotion can be hung on, depending on your target audience. Seasonal breaks for families, arts and craft courses, health and wellness weekends: There is always something new to offer guests which differentiates your hotel from all the rest. Look for activities to delight your guests, and persuade them to book. Once you have a portfolio of special events and offers, these can be rolled out again and again so that there is no need to ‘reinvent the wheel’. If a yoga residential works once, it will work again; if a gourmet weekend is successful, then repeat. And each time analyse the data and find out what improvements will boost the bottom line.
6. Leverage partnerships
For smaller and boutique hotels, the idea that there are separate sales and marketing ‘departments’ may seem like a dream, as sometimes these activities are undertaken by just one manager. This is why promotions with travel agents, tour operators, and in particular local people are so important. You don’t have to do everything yourself! Partner with others who have complementary interests, and they can do a lot of the organisational work, using their communication channels to spread the word. Whatever your chosen demographic, special events and courses are a great way to attract more guests, especially as much of the work is done by other partners. Partnering is a strategy worth pursuing, and once a particular promotion is set up, it can run and run, with ever-decreasing organisational load.
7. Motivate your sales team
True, not every hotel has teams dedicated to sales or marketing, but these are crucial activities which do require individuals to be trained, and motivated. Training in trends, techniques and especially in technology is essential to ensure that sales are as effective and profitable as possible. Staff using a modern Property Management System and associated software have enormously powerful sales tools at their disposal - much of the process being automatic - and can follow up with personalised service and guest engagement. Sales becomes more interesting and nuanced, and less to do with the traditional grind of merely getting heads on beds. Staff that are freer to deal with guests are more motivated and happy in their work, and of course guests who feel ‘seen’ are more likely to post favourable reviews, and re-book. Staff sales incentives are worth considering and performance-based awards create a sense of pride. Room sales should never be a chore for staff - it’s the basis of the whole business.
8. Make it personal
Hotels have always been in the business of fulfilling the needs of guests, and the trend towards personalisation has increased markedly during the last decade. Guests know what they want, and are not afraid to demand it. Personalisation has become a key differentiator for hotels, and by using customer data, specific services and tailored packages can easily be offered. With the information gathered from a modern PMS, many guest details are available, because the guest has entered those details into the system. The hotel will know their name, age, nationality, language, food preferences, planned time of arrival and departure, and quite possibly the reason for the stay. The guest may have added significant information such as ‘wedding anniversary’ or ‘family gathering’ which gives clues to appropriate communications and welcome gifts. Guests appreciate when they are treated as individuals, and personalisation encourages the sales process, whether for first timers or repeat bookings. Many hotel tech solutions now even have a chatbot to engage with guests in their chosen language, providing conversational answers to FAQs.
9. Reputation sells
Just as there is not only one type of customer, there is not one type of hotel. Is yours ‘Ultimate Luxury’, ‘Get Away From It All’, ‘Budget’ or any number of other descriptions? Whatever category, your hotel will have built a reputation on certain qualities, and this is hugely important in reaching out to your chosen demographic. Be clear about what your reputation is founded on, and how this is represented. Build on the positive aspects of how you are perceived, especially on social media and OTA sites. This requires careful monitoring to ensure that nothing is posted which can damage your hard won reputation. If ‘negative’ comments do appear, respond rapidly and politely, and if there is a basis to the complaint, investigate and rectify it, and respond publicly. Of course if people are saying reputation-enhancing things, then also respond, and use their comments in future sales initiatives. Your reputation helps sell.
10. Adopt hotel tech solutions
There has never been a better time for hotels of all sizes to use technology to enhance their sales strategies. It’s possible from first contact to offer a highly personalised, seamless service, which continues throughout the guest’s stay, and beyond. Functions such as Dynamic Pricing attracts guests and reassures them that they are getting the best deal at the best time. Facilities such as a secure Payment Gateway mean that once a guest has found your hotel, there is little reason for them to return to a third party site to make their booking. Keeping the sale within your own system means no commission fees paid to an OTA, plus a treasure trove of data becomes available to improve future sales and marketing initiatives.
Reaching out to hoteliers
Adopting the Tech is very easy if you allow us to reach out to you. We are SabeeApp, with more than 10 years experience in creating cloud-based software specifically for the hospitality industry. ‘Cloud based’ means that the hardware is remote (and not cluttering up your back office), and that upgrades and new services are regularly applied, so your system is always up to date. This means you can operate functions such as Dynamic Pricing to maximise sales as the market fluctuates. It means being able to drill down into KPIs to understand the fine detail of what customers want, and what they are spending their money on. The SabeeApp Property Management System helps with every aspect of running a modern hotel, and from first contact encourages guests to explore your offer, stay with your website, and make their booking directly with you.
Sales are perhaps not the most glamorous part of being a hotelier, but without good sales, it’s game over. At SabeeApp we lead current trends in the hospitality industry, with the very best technology, that is affordable and extremely user friendly. You want to sell more? Contact us for a free, no obligation demo.