Identify the Hidden Costs of Online Travel Agencies
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For many hotel owners and managers, reducing rates is the lazy-man's form of marketing. It’s generally the first thought when sales are low; after-all, it takes very little thought and certainly very little research and/or effort. And, it also ignores the fact that people don’t buy rate, they buy value. Simply lowering rates for everyone ignores the fact that most people are not seeking hotel rooms based upon rate alone. If that were true, the hotel with the lowest rates would be full all the time.
In a vacuum, rates mean little, but no hotel should operate in a vacuum. Low rates, when compared to your competition set, can also devalue your hotel. “You get what you pay for” is still alive and well; when a product is not known, its price will define its quality.
The tell-tale sign of a hotel-in-trouble is to see increases in occupancy and decreases in average rate and RevPar. A hotelier who understands and employs the tactics of revenue management monitors and adjusts rates in reaction to fluctuations in current and future occupancy demand.
A smart move was made on GSA’s part earlier this week. The agency made a decision to freeze government-wide per diem travel reimbursements rates at the current 2012 levels for 2013 which will save $885 million in revenue and thousands of industry jobs. Although the meetings industry has not made a full comeback and federal agencies are facing a 30% cut to their travel budgets, there are possible ways to get around the red tape and increase group bookings at hotels, resorts and conference centers.
Revenue management has been in the hospitality spotlight since the mid 1980's; a gift from American Airlines. American successfully created, what was then called yield management, in order to compete with the deeply discounted fares of People Express airlines. The problem was fairly simple; how can we offer lower rates, to be more competitive, without reducing our total revenue "yield"?
Hotels Are Poised To Reboot & Refresh Their Rate Structures
In 2011, HospitalityEducators.com lost Guest Columnist Neil Salerno, The Marketing Coach, to illness. We are pleased to recognize his contributions to the industry with this BEST OF series.
Traditionally, bed and breakfasts were required to have general business licenses, says Jay Karen, CEO of the Professional Association of Inn Keepers. But with the rise of the Internet, the term has been co-opted by all kinds of establishments seeking to rent out rooms. Airbnb.com, for example, lists rooms to let. But it doesn’t guarantee that the hosts are licensed. Users indicate that they want to book a room based on a description, then enter their credit card or Paypal information. It is up to the host to accept or decline the guest.
For many hotel owners and managers, reducing rates is the lazy-man's form of marketing. It’s generally the first thought when sales are low; after-all, it takes very little thought and certainly very little research and/or effort. And, it also ignores the fact that people don’t buy rate, they buy value. Simply lowering rates for everyone ignores the fact that most people are not seeking hotel rooms based upon rate alone. If that were true, the hotel with the lowest rates would be full all the time.
The tell-tale sign of a hotel-in-trouble is to see increases in occupancy and decreases in average rate and RevPar. A hotelier who understands and employs the tactics of revenue management monitors and adjusts rates in reaction to fluctuations in current and future occupancy demand.
A smart move was made on GSA’s part earlier this week. The agency made a decision to freeze government-wide per diem travel reimbursements rates at the current 2012 levels for 2013 which will save $885 million in revenue and thousands of industry jobs. Although the meetings industry has not made a full comeback and federal agencies are facing a 30% cut to their travel budgets, there are possible ways to get around the red tape and increase group bookings at hotels, resorts and conference centers.
In 2011, HospitalityEducators.com lost Guest Columnist Neil Salerno, The Marketing Coach, to illness. We are pleased to recognize his contributions to the industry with this BEST OF series. 
Traditionally, bed and breakfasts were required to have general business licenses, says Jay Karen, CEO of the Professional Association of Inn Keepers. But with the rise of the Internet, the term has been co-opted by all kinds of establishments seeking to rent out rooms. Airbnb.com, for example, lists rooms to let. But it doesn’t guarantee that the hosts are licensed. Users indicate that they want to book a room based on a description, then enter their credit card or Paypal information. It is up to the host to accept or decline the guest.