Selling Up! Taking Group Room Revenue to a New Level!

2006 is the year for hotels to maximize their revenue opportunities.  Demand is high and new supply is low  new supply currently in the pipeline will begin entering the market in late 06 and 07.  It is clearly a sellers market this year!  Hotel sales departments clearly have an opportunity!

Hotels that may have grown a bit tired in the lean years are now investing in capital improvements and extensive renovations as there is finally the cash to do this and it is imperative to remain competitive at the desired higher rate tier.  Investors and owners, however, want to see the return on this investment.

In recent conversations with contacts in the industry, there are mixed messages.  On one hand, meeting and travel planners are concerned that rates are going through the roof and deals are getting tough to negotiate.  On the other hand, Vice Presidents and Directors of Sales, express concern that group room rates are not increasing at the same pace as rates from other channels.

There are no easy answers but answers nevertheless.  In both camps, the players need to make some tough adjustments.  From the meeting planners perspective there is tremendous pressure to keep travel budgets at least level with last year.

If it is the year that Hotels Are in the Drivers Seat, why do so many sales people have such a tough time asking for and getting the rate? Often it is a matter of mind set versus purely a skill set issue.  There are a few factors that play into this:

Length of Tenure.  How long have the sales people been at the property?  If they have been through the tough times, they may be stuck in the recession mentality.  If they were responsible for selling a tired property that has been recently renovated, the reality about what the new product is worth may not have set in. What both need to realize is that it was never ALL ABOUT THE RATE anyway!  As a wise man once said, if rate was the only issue, the economy hotel products would be full every night and they aren't!

Who signs the paycheck?  Sales people often have a great need to be liked.  They have a long-standing relationship with a client that they want to keep happy even as that client is hammering them on the rate.  Never walk into a negotiation that you are not prepared to walk away from. Sales people forget that it is the hotel that signs the check and if the client is inflexible, given the changed circumstances of supply and demand, they need to stand their ground and present the value of the product.  What can you buy today that you paid the same price for last year?   

Breaking Up is Hard to Do!  Not every client who used the property in the past when times were leaner or before the renovation is going to make the cut.   In order to drive the revenue, it is often necessary to change the client mix.  Be willing to let go of accounts that cling stubbornly to their old rate.  Refer them to another property that can meet their rate demands.

Mining for Higher Rated Business.  This is also called prospecting and New Business Development.   Most sales people don't have time to prospect because there is soooo much to do servicing existing accounts (see above!), communicating with the Front Desk, Food and Beverage, attending meetings, etc. Its a new world out there  those who are able to replace lower rated accounts with new higher rated business will win the Task!