Pull up a chair, you are going to want to sit down. The numbers and trends are not pretty, although I do see an opportunity for creating a new business strategy for growing this area of your business.
Here is the present reality for the hotel industry from a recent survey conducted with 1,000 hotel general managers across the United States. It was made up of six different market types, starting with suburban at 24.9%, urban/city 24%, small-town 15.1%, resort 13.4%, airport 7.2% and ending with highway at 15.3%. As far as what percentage the lodging segments represented, luxury was 4.2%, upper upscale 8.6%, upscale 14.4%, upper midscale 28.5%, midscale 35.6%, and economy was 8.7%. Out of the 100%, just over 70% are part of a franchise chain. The guest mix percentages were two-thirds business travelers to one-third leisure travelers.
When the GM's were asked about the group bookings side of their business, an overwhelming majority of them stated significant challenges in this area, with 52% noticing a shorter booking window and another 35.8% acknowledging that group business booking/pricing patterns for the last 12 months were about the same as the previous 12 months; 19.3% experienced having trouble getting good pricing, while only the remaining 14.8% were able to get adequate rates, with only 13.9% out of the hundred percent noticed longer more normal booking windows.
General Managers' Comments And Concerns
The general managers were also asked to share comments about their group business. They had noticed that groups were scaling back on the food and beverage spending dramatically. All of them had an overwhelming desire to grow this aspect of their business over the next 12 months. They felt that the government shutdown had negatively affected their business. They noticed that the group business was somewhat stagnant, if not in serious decline. The only bright spot was sports groups were up but with a weak revenue growth in that particular customer segment. They did recognize two workhorses for the industry seem to be weddings and sports teams bookings.
I don't see these trends changing anytime soon for the hotel and convention bureaus, with more cutbacks in the way of government and military agencies, on top of the ones that are already in place that are impacting spending, volume, and the duration of bookings. This can also have a spillover effect into the private sector as you know, since they are so integrated in doing business together. With everything that's been said and stated by these GM's, it's going to require a totally different business strategy approach on every level of your enterprise for maintaining and growing your group business clientele.
The Business Strategy Pivot
You want to design your enterprise so that it moves your client's perspective from head to heart, or from cost/price to value, so that you can balance out the financial transactional aspect of the business relationship to a stronger connection for building loyalty with your organization. When you design your enterprise to compete on a more emotional level through the total customer experience connection, you create the possibility for gaining leverage in the business relationship. It becomes very difficult for your competitors to duplicate or procure this business strategy approach.
You first have to consider balancing the logical and analytical sales mindset perspectives with a more innovative and creative balanced approach that moves your business model's value proposition to the total customer experience as your business differentiator. This creates stronger relevance and client engagement in your businesses offerings that goes beyond just price. If you stay in what I like to call the purely left brain business mindset for overcoming these challenges, versus being a little bit more intuitive in your approach, it can become more difficult for you to break away from the pack mentality that competes on price and thus creates a very transactional business relationship with this business segment. This will end up negatively impacting your ability to generate long-term loyalty and advocacy for your business.
It's not always about price
Think about what's most important to your clients. Sometimes it's not about getting the best price; it may be more about getting the best value. This would be one intuitive pivot that would allow you to compete on an emotional level, because all buying decisions are based on emotions. It only becomes overly analytical with your clients when the customer experience is not part of the of the overall business strategy or not being considered as a legitimate business discipline within your enterprise.
Think about all the different operational departments and business disciplines within your enterprise and how they can be realigned to create an amazing customer experience for your clients and their customers. You have to consider your people, your processes, and your product for repositioning the total customer experience as your new value proposition position. Think about connecting all the different elements in the client journey that are internal and external to your business that can enhance the customer experience offering.
Making the shift
Not only should you consider all the different business model elements, but also shift how and what you measure and target within your business processes when it comes to your group business initiatives. You want to be more focused on achieving a strong customer experience outcome that drives an emotional bond and loyalty, not just short-term sales results.
You have to move your business model's value proposition out of a solely commodity-driven position to a total customer experience that accounts for everything and has the ability to anticipate and exceed expectations; otherwise, you're going to be in a crowded room of salespeople with everyone saying the same thing. When the customer experience is left unmanaged, that's when it will become about price and cost.
Basically, what I'm saying is sometimes you have to lose the battle to win the war for gaining a stronger ROI position in the overall business relationship. This isn't about trying to do more of the same at a cheaper price, or cutting cost to the point that you end up watering down your brand, per se. I see a lot of so-called consultants suggesting this approach with all the focus primarily on pricing. There's more than one way to skin a cat. You have to be more intuitively inclined when it comes to your business strategies for creating value with your clients.
About the author
For over thirty years, Brett Patten has worked in the hospitality industry. He spent those years accumulating invaluable insight, knowledge and experience through his various positions, and studies, from when he starting out has a front line employee at the age of 15, with a four-star hotel in the 1980s', to recently completing his education as an executive leadership and engagement coach. Brett's unique management style consistently transformed his work environments by focusing on his people and customers for creating a engaging hospitality experience which generated strong sales and operational performance results. In 2007, Brett launched Fire and Vine of Virginia Beach, a new world wood fire cuisine restaurant built on a hospitality business strategy process that he trademarked and now calls "five-star customer experience design." Within the first two years under Brett's strategic business approach, Fire and Vine was recognized nationally for its hospitality management, design elements, employee development, customer service excellence, culinary cuisine, and wine program.
Today, after spending the last 15 years researching, studying and developing customer experience design best practices and strategy implementation for the hospitality and tourism industries. Brett has created an innovative Hospitality Business leadership and management Program. Which aligns all the business disciplines and strategies through a customer experience design approach, for creating a customer driven brand connection, as well as elevating the engagement dynamics of the business culture for establishing positive customer loyalty and sustainable financial performance results through the generating of exceptional and memorable brand and customer experiences.
