Hermann Hesse used to say that every time we embark on a new beginning, there’s some sort of magic spell that protects us and helps us to live. The magic of embarking on a new way forward, of abandoning the habits of the past, and of transforming businesses is, perhaps, the most exciting aspect of a hotel consultant’s work. From our perspective, there’s nothing frightening about proposing a radical strategic change to an establishment that is unfamiliar with Revenue Management and Online Distribution. It’s a matter of applying, time and again, the good practices and knowledge that we have acquired in our years of experience.
But from the customer’s perspective… everything changes! Many hoteliers see the need to modernize their business model, but at the same time they fear that the changes will achieve nothing and that they may even compromise the good reputation they have achieved among their guests.
In broad terms, this could be the situation with many hotels, guest houses, and hostels that are beginning to operate in the modern era of hotel distribution. In this success story, we analyzed the work-in-progress of a 20-room guest house in the province of Lleida. It’s an establishment with many points in its favour, including a restaurant that they manage with passion and care, and their total trust in our partnership with them.
Establish Revenue Management and Online Distribution strategies for a guest house that, before Hotel-lo started working with them:
- Didn’t have PMS
- Didn’t have a booking engine on their website
- Had never worked with dynamic rates before
- Only had one non-direct sales channel (Booking.com)
- Because of the previous point, they had never used a channel manager
- To familiarize the entire hotel team with the concept of Revenue Management, starting from the basics: the concept of Dynamic Rates.
- Modernize their working methods by progressively introducing technological tools that will soon become indispensable for them to improve their sales in every way.
- To take advantage of all the Online Distribution resources available to the guest house (and its competitors).
- To combine all the changes into a single sales and marketing strategy.
We always start with an audit in which we focus on a number of decisive factors in the business’s marketing:
- Segmentation
- Pricing
- Product
- Channels
- Benchmarking
- Technology
After thoroughly analysing each of these areas of action, we define a commercial strategy and make the relevant changes in all areas.
Segmentation: The percentage of direct sales is usually high, but, instead of increasing profitability, it actually reduces it. On the other hand, the absence of direct booking through the website turns potential direct customers into middlemen.
Pricing: Seasonal rates that are, to all intents and purposes, static.
Product: Only single rooms, with no possibility of upgrading or upselling.
Channels: Enormous potential for sales growth through OTAs and our own website.
Technology: The staff works with lots of paperwork and Excel sheets. Perhaps the most radical change in mentality must be carried out in this area.
To begin with, we hired a photographer who specializes in hotels and interior design, and who was able to convey the guest house’s true personality. It really is priceless to have quality images that go beyond the plainly obvious, and that tell the story of the establishment and convey its character. A winning strategy in Online Distribution starts right here. Then came all the technical stuff: creating a booking engine for the website, optimizing existing channels (vertical SEO and content review) and opening new ones, as well as choosing a channel manager. And, finally, the creation of a new website that conveys the guest house’s personality and character, designed to index and convert the content.
As far as Revenue Management is concerned, the first step was a cultural one. We met with the owners, so that they were aware of the changes we wanted to introduce and could understand the philosophy behind the new strategy. We then reviewed Product and Pricing – for example by making changes in the room categories, creating rate schedules, pickups, and forecasting, and then sharing this knowledge with the hotel staff.
At the same time, we advised the guest house regarding the choice of the best PMS, taking into account its specific needs. We chose Front Desk Master, a relatively unknown product, but very suitable for small establishments. Let’s not forget that the importance of a good PMS is not only in its capacity to facilitate the daily work, but also in the amount of information it stores and in the way it presents it when you make an enquiry or a request.
This success story is still a work in progress. The three months of partnership are already bearing fruit, but more work is needed to completely carry out the “radical change”.
Thanks to the actions we’ve taken, we’re creating the best possible foundation to help us make the best decisions in the future. However, there is still one very important job that is still pending: the renewal of the website and, as a result of this, the Online Marketing strategy that has to be linked to Revenue Management.
Whoever would like to see how the project is developing in its final stages just needs to pay a visit to the Hostal Buenos Aires de Tremp website.
