Inn Consultants and Brokers Since 1993

Rick Wolf and Peter Scherman (that’s Rick on the left and Peter on the right) are both experienced speakers who have presented on a range of innkeeping related topics at the state, regional, and national level. They gather and analyze research for the Innkeeping industry and welcome the opportunity to share it with others. Contact Us

The B&B Team
 

Posts Tagged ‘leisure travel’

V is also for VALUE-with a Bed & Breakfast

September 3rd, 2012 by Scott Bushnell

Mark Orwoll, International Editor of Travel + Leisure was interviewed this morning by CBS Morning Show who spoke to the hidden fees that surprise hotel travelers…and often cause that debate with the hotel front clerk that is uncomfortable for the guest and annoying for the clerk.

The Negotiator…”offer a lower price, you mamby-pamby!”

According to Mr. Orwoll, and due to the economy slump starting about 4 years ago, hotels started adding these fees to supplement the deep discounting they have had to do to keep their shares of the traveling market.  Such marketing efforts as Expedia, Priceline, and Hotels.com were reducing room revenues so the hotels resorted to other “hidden” fees to maintain overall revenues such as:

  • Internet fees (as much as $10-$20 per day)
  • Resort fees (what the heck is that?  Why should I pay for the spa and golf course if I am not going to use it?)
  • Mandatory valet fees (Can’t I park my own car and save the $20 per day?)

And we already know that the restaurants and gift shops in a hotel are not a bargain.

Bed & Breakfasts offer the full VALUE of free parking, free we-fi, free gourmet breakfast, newspapers, snacks and drinks, often wine and cheese gatherings, concierge services beyond the expectation in addition to striking up that personal relationship that is so important to the guest.

The lesson here for B&B’s?  Be sure these extras (all a part of the full guest experience) are on your website, on your marketing materials, and your reservation confirmations.  B&B’s have been offering such VALUE for decades and will continue to do so.  So let’s all be sure to take advantage of letting the traveling public know that the full guest experience is also at the best VALUE.  Scott

What’s All this Stuff about Living Social and Groupon?

April 28th, 2011 by Scott Bushnell

A little more info to add to Jan’s post of April 6th.

It used to be the mantra in the B&B industry to NEVER discount your rooms.  You cheapen your image and could set lower price expectations for the traveling public for their next trip to your inn.  Well William Shatner in his TV ads and a multitude of Price Lowering websites and alternatives have already changed those expectations…so get over it.

Here are a few Mid-Atlantic stories that counter the old school discounting taboo:

A Full Service Inn in New Jersey, through Living Social Escapes, sold 225 vouchers offering two options to purchasers…a one night stay (voucher price $230) or two night stay ($380)including dinner, breakfast, champagne, chocolates, 2 martinis at the bar and 2 tickets to a regional attraction.

Another upscale B&B in Maryland sold 86 coupons through Groupon for one night, flowers and chocolates for a voucher price of $155, and a larger inn in Maryland, using Living Social Escapes,  is offering two nights, wine and chocolates for $157 (weekends) and $117 (weekdays) and sold 632 at last count.  They make their money on upselling spa services and gift baskets with each voucher at a 20% discount from usual pricing.

A fourth, very upscale inn in Baltimore sold 550 Groupons at $99 for a room with a value up to $250!

The two largest companies, Living Social and Groupon, offer coupons to their memberships at deep discounts…often 50% or more.  They do mass marketing through their email membership databases usually targeted in a particular region or city.  Retailers and service providers have seen phenomenal traffic from the vouchers sold to these members.

Living Social has an “Escapes” section on their site specifically attractive to their travel membership.  Often, this is the section in which an inn can participate.

Here’s the general process:  A retail or service provider signs a deal with the service for a particular product or service having an identified value.  A discount to the purchaser is provided (50% off is usually the minimum…but negotiable with the company), and the coupon “drop” is targeted for a specific market.  The company sells the voucher, subtracts a commission (often 30%+ depending on the voucher price), and sends a net proceeds check each month to compensate the business.

Sound scary to try it?  Here are a few VERY IMPORTANT considerations when planning such a coupon drop:

  • Understand your variable costs.  Your fixed costs are those bills that you have to pay anyway…whether there is a guest in the house or not…such as the electric, real estate taxes, insurances and cable TV bills.  Variable costs are the extra costs when you have a guest, including:
    –  Food costs (take your annual food costs and divide by the number of room-nights sold…should be about $8 or $9).
    –  Laundry (use about $4 per room)
    –  Room amenities (shampoos, soaps, munchies, etc….perhaps $3?)
    –  Housekeeping labor and the withholding associated with wages (probably in the $10-$12 range)
    –  We won’t count the little bit of extra utilities a guest will use.
    –  Add a buck or two for the office supplies (confirmation letters, postage), wear and tear on the linens, etc.

This Variable Cost adds up to about $25-$30 for the first room-night…about $15 more for a second night’s stay.

  • Take the rack rates for the rooms you wish to dedicate to this effort…say it’s $160.  Divide that by two to figure in the 50% discount to the purchaser.  That leaves $80 price for the voucher in our example.
  • You can expect to pay at least 30% commission to the company.  They will also, most likely, charge you the credit card fee they have to pay (let’s say 2.5%).  That leaves $54 which is sent to you for each voucher sold.

    Then compare the proceeds you will receive with the Variable Costs you will incur…Worth it?

That is why inns are upselling other packages and services with their offer.  It increases the value of the voucher and ultimately the check received at a rate greater than the costs associated with the package.  But you must understand your costs.

On the good side of such an effort:

  • You can dedicate a time frame within which the voucher must be used.  Aim those dates to the holes in your schedules including the slow season and mid-week.  Stay away from the weekends and busy season when you will sell your rooms at your usual rates anyway.  You can put those restrictions on the voucher.
  • You can limit how many you sell so that you don’t have the risk of overselling for the time frame and angering guests.
  • Experience is showing a large number of younger couples taking advantage of the deals.  This is the NEXT generation of inn visitor…a valuable asset to the industry.
  • You will build your database with email addresses for future marketing efforts.
  • You can “hook ’em” with your hospitality so that they become repeat guests.
  • It seems about 20% of the vouchers will never be redeemed.  This is free income to you, but don’t budget it.

A few watch-outs from those who have used these programs:

  • The demographics of the visitors may not be your what you are used to.  They can be “cheapskates” (as one innkeeper put it), asking for other discounts and taking advantage of the free goodies you have around the inn.
  • “Sit by the phone” when the coupon drops…you will be swamped all at once.  One inn had a list of 60 callback names and numbers to get back to because the calls came in like a tsunami.
  • You will get calls from people trying to buy the deal after the vouchers sell out.  They saw it online and feel they have the right to book it directly with you.
  • The voucher holders tend to book early (as soon as they buy it) or late (just before they expire).  Be prepared with rooms for the procrastinators.

For those start-up inns or inns with very slow months of the year…I think it’s a valuable tool for cash flow.  Any other inns out there doing it?  Would love to hear your comments.    Scott

Do You Know What the B&B Industry’s Competition is Doing?

June 11th, 2010 by Scott Bushnell

On a flight to visit an inn this past week, I was reading an article in the USA Today (June 1) containing some interesting information about the big guys…the hotels…with information that also applies to the B and B industry.  In his article “Hotels try to woo leisure travelers” Roger Yu relates some concepts of the changing travel marketplace and the evolution of the hotels (and WE should listen too!) to meet the change challenge.

First a few facts: According to D.K. Shifflet & Associates, a travel and research consulting firm:

  • Leisure travel surpassed business travel for the hotel industry in 2004
  • That gap has widened and by 2009, 54% of hotel travel volume is now leisure travel.
  • Corporate travel has been slowly declining, and “it’s not going back” according to Shifflet.
  • The Gen X (late 20’s to early 40’s) travelers are replacing the Baby Boomers and are traveling with their young families.

The hotels are watching the changing demographics and evolving to meet the new market.  To entice the leisure traveler to their properties, focus is strengthening on FAMILY travel. Marriott is:

  • Offering a Nickelodeon package to the kids with activity books and Nick bracelets
  • Toddler care packages are awaiting the arriving family with squirting bath toys, fitted crib sheets, baby shampoos and nightlights.
  • Spongebob backpacks with matching sheets and pillowcases are for sale in the gift shop.

The younger demographic is also demanding VALUE, a concept more wide-spread than just the Gen X-ers.  Homewood Suites by Hilton (typically a corporate traveler mecca has seen a 50% increase in its leisure travel this past year) is revising its free meals program, and Kimpton Hotels will give away free sangria drinks and Wii video games in the lobby this summer…something for the parents AND the kids.

So what does that have to do with US in the Bed and Breakfast Industry?

Everything, if you are ready to keep your business growing!

B and B owners often cater to only a certain slice of the traveling market.  They rely on the romance getaway, or traveling couple, typically Baby Boomers, to fill rooms.  But this AGE-SEGMENT of the traveling market is declining and we must target the NEXT generation as well…and they’re traveling with their kids. Some target the corporate traveler if the inn is fortunate enough to have several large businesses or a college within a mile or two.  But this segment is also in decline, and mid-week rooms are going to go empty.

Some ACTION Items for your Next Planning Meeting

  • Is your Inn ready for a Tune-Up? Do your rooms and bathrooms appeal to the NEW demographic of the traveling public?  Do you have Ipod docking stations, and have you replaced gramma’s old furniture with clean lines and Pottery Barn-type styling?  People want to visit museums, not stay in one.
  • Is your website ready for updating?  Anything 2 years or older is a dinosaur that won’t be found by the new search engine algorithms.  Do you have video of area attractions, or still relying on static photography of a bed?  The next generation is ultra techno-savvy and will find you in ways OTHER than your organic website, IF you embrace social media (May 7 posting) marketing and email marketing.
  • Are you still illegally restricting kids to age 12 or older?  Talk to those inns who willingly accept children and find out what they do to make the family experience memorable.
  • If all the inns in your area still restrict children, think of the ADVANTAGE you will have when they send all their family-travel referrals to you!
  • Targeting and marketing for mid-week bookings in addition to your current corporate travelers will prepare to replace those declining mid-week business guests with others…such as quilting groups, elder travel with grandkids, or scrapbookers.  I’ll bet there’s an inn in your area already capitalizing on this new trend.

The B&B Team is ready to help you with your Evolution Planning when you are finally disgusted with negative growth of your inn’s performance.  The traveling market is evolving, and we BEG each of the inns in this industry to evolve with it.  And it’s fun!  And more satisfying than watching Spongebob!

Scott

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