Traditionally, hotel asset management has been focused on operations and cost control as the main elements to consider.
But over the last few years we have seen a clear shift in revenue management getting a more prominent role.
Profitability is not only a result of cost control but also revenue generation. Finally we also see sales and marketing become a key area for the by hotel asset manager.
Why was there so little focus on marketing and sales previously? And would you not want to control the promotion and positioning of your property?
As in the early days most asset management, companies signed a franchise deal with a large chain, and this was left for the brand to manage.
But the playing field has changed dramatically over the past two decades.
New reality
No longer are the hotel franchises the only brands that deliver a global distribution and marketing platforms to hotels. With the rise of the search engines, online travel agencies, review websites, metasearch and social media, hotels have to be present in each to achieve a good market share.
Hotels can no longer solely depend on the brand marketing strategies of the chain to compete in their local market.
The so-clled SoLoMo (social, local, mobile) trend in marketing has caught many of the more traditional hotel companies off guard. The old school approach is not sufficient anymore to guarantee good results.
We simply can't keep doing the same thing each year and expect the same results. Sales and marketing efforts and investments should be made measurable to evaluate their impact.
We also have to keep looking at which budgets we can allocate and spend differently to get a better ROI.
And, importantly, going through this period of economic constraint, asset managers have to make sure that previously scrapped expenses don’t make it back, once revenues rise again.
Staying the course
A good example of the new asset management come via the results generated at Hotel de Londres y de Inglaterra in San Sebastian, Spain (a client).
The hotel was previously managed by a traditional national hotel group. Focus was on the brand and not on the property. Overheads and transaction costs were high, including corporate marketing contributions.
Now run as an independent property, revenues have gone up over 25% in the past two years (direct sales, through the hotel’s own website more than doubled), this against the backdrop of Spain's tough economic situation.
How?
With a different approach to revenue management, search engine optimization, and social media marketing, online reach can be increased.
For example, previously the property was positioned number 38 on TripAdvisor, out of 51 in the destination. Just by asking guests for more feedback on review sites has seen it climb to number five. We expect to be in the Top 3 before the end of the year.
Hotel asset management by merely controlling cost will not get you the results you need. Marketing is a vital part of the final success and achieving profit targets.
NB:More on hotel asset management.
NB2:Charts-graphs-strategy image via Shutterstock.