How Important is a Local Sales Strategy?
The hotel industry is not a “build it and they will come” business model. It requires an active sales strategy to ensure the hotel has profitable base business throughout the year. Hotels without this focus will likely be the last to fill, be heavily reliant on OTA’s and underperform in their market.
In our experience, when clients first engage with us to help them with their sales strategy, they are typically over indexing in OTA reservations and lacking corporate base business. They tend to do well on weekends with leisure, sports teams and events; however, they are not getting their fair share of the B2B weekday business. In the absence of a sales strategy, this is a common problem that has real consequences for the success of a hotel and its profitability.
Costs for client acquisition are rising and more owners, operators and sales teams are paying attention to profit, not just top line revenue. The success of a hotel’s commercial strategy (sales, digital marketing, revenue and distribution) is getting the best mix of business that is profitable across all channels. According to Kalibri Labs, an OTA reservation on average is $12 more per room compared to loyalty member rates.
When it comes to corporate travel post pandemic, there has been a major shift in who is traveling. The fortune 1000 companies that made up the bulk of the demand pre pandemic are not the companies driving the demand today. The companies driving the corporate market today are local and regional accounts. They are largely unmanaged accounts. Meaning, not part of a large managed hotel program booking through a travel management company and having a formal RFP process. These travelers are typically not using the GDS to book and are booking through digital channels and direct to the hotel.
Hotel teams and brands need to rethink their legacy sales structures to adapt to these corporate buying trends. Relationships with local and regional companies are more important than ever before while staying on top of local demands generators.
According to Kalibri Labs 2022 Special Report, in every prior industry recovery cycle, revenue growth was driven by occupancy growth with ADR following later. The current recovery is just the opposite, with ADR growth leading the way and demand lagging. In other words, demand isn’t growing, hotels have to go and shift it way from their competitors to successfully compete.
In summary, it’s not enough for hotels to simply have “rates on the shelf” with various companies and hope travelers will book. Getting on the shelf is the starting line. It’s critical that hotel teams have a strategy to target the right customers while activating the local and regional accounts in their backyard. Hotel teams that figure this out will be the ones that come out on top.
