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 ‘marketing’

Y is for Yield Management

October 21st, 2011 by Janet Wolf

crossroads

What is it? More important, should you be doing it? I will attempt to decode some of the marketing jargon and bring the reality of yield management out of the airline and hotel realms to our neck of the hospitality business.

One interesting fact I discovered was that yield management has only become a part of mainstream business over the past fifteen to twenty years. It started with the deregulation of the airline industry, then spread to other travel and transportation companies in the early 1990’s.

Here are some terms that we at The B&B Team have found in our research that best defines yield management.

  • The control of inventory to sell it to the right customer at the right time for the right price.
  • The process of understanding, anticipating and influencing consumer behavior in order to maximize yield or profit from a fixed or perishable resource.

Your inventory is of course your rooms. Because you don’t have 500 hotel rooms or 5000 airline seats to sell by a certain date to meet a marketing quota strategy doesn’t mean your inventory is any less challenging to manage.  In an article written by Glenn Withiam from the Center for Hospitality Research at Cornell University, he writes about the ‘Four Cs’, Calendar, Clock, Capacity and cost. A fifth (which is most important) is Customer. Let’s break these down to our industry.

  • Calendar – The majority of our properties have seasonal rates. These rates reflect when consumers are most likely going to want to stay in your location. The term marketer’s use is ‘demand fluctuations’. These fluctuations can be fairly predictable based on historical demand but can also be hard to predict at times. They are influenced by weather, gas prices, when certain holidays land in the week, just to name a few.
  • Clock – Your inventory becomes perishable at 12 midnight. Here is an example of managing that one last empty room at 6 PM.
    •  Scenario: Your neighbor Inn who is full, calls and tells you he has a couple standing in front of him that wants to stay for one night, can you accommodate them? First thing you do is ask to talk to them, eliminate the third person. Tell them that you have a room left for this evening and that you would love for them to come by and take a look. Getting them to your Inn is preferable but if there is any hesitation than you can skip right to the rate. “We have our 6 PM special rate for first time guests” (you can come up with your own spin on a spur of the moment special, remember the clock is ticking!).  At this point you offer them an attractive rate that will hopefully get them in your door.
  • Capacity – This is the size of your property and the amount to rooms you have to sell. The variable is the size of the room and the amenities offered. These variables will determine the rates you set. The challenge is in managing your capacity, to minimize any lost revenue. In other words, not leaving any money on the table! A good example in managing capacity is group reservations for weddings, family reunions and other events. Booking the Inn for a weekend event may restrict the reservations you could get for a possible Thursday through Monday booking. There are no general rules for group reservations. The rules are what work best for you. Some innkeepers restrict group reservations during peak seasons. Another example of managing your capacity is being creative when you need to fill the booking ‘holes’.  You may have single rooms available for one or two nights but a customer wants three nights.  In order to fill those ‘holes’ you offer to book them in one of the available rooms for two nights and move them for the third night. In our experience as innkeepers most guests don’t mind the move when you make it seamless.
  • Cost – This is the part of selling your inventory for the right price. The spread between the cost of renting your room and the revenue you receive should be as large as possible. You, the Innkeeper know what your rooms are worth, the great service you provide, the great breakfasts, the value added amenities, etc. But…does your customer know they are paying a fair rate for what you have to offer? Some do and are willing to pay the rate you offer. Some are not and are looking only for the rate they want to pay.  Mr. Withiam from Cornell calls these customers ‘price sensitive’.  I have heard innkeepers use many other phrases! This is when the clock and capacity come into play. You have to match what you have to the customer’s willingness to pay for the service in relation to its timing. Let’s go back to the “6 PM special first time guest rate” This approach has everything to do with what you have in inventory at a specific time and engaging a customer to accept an attractive rate at that moment in time.  Have fun with this approach; it is even more fun when they book the room!  Just remember the special rate (I’m not going to use the word discount) is better than an empty, and perishable, room.
  • Customer – Let’s go back to one of the first definitions. ‘The process of understanding, influencing and anticipating the customer’s behavior.’ Innkeepers are constantly trying to understand their customers. It is one of the most challenging and interesting parts of being an Innkeeper. Many have indicated to us that their guests have become more demanding, more ‘price sensitive’ and expect certain amenities that in the past were not as important to them. Are these questions familiar: Do you have TVs in your rooms? Can we buy a bottle of wine from you or do we have to bring our own? I am allergic to fruit, gluten, eggs, dairy products and honey, can you accommodate my dietary needs? (Scream) All your answers should be Yes, Yes and (gulp) yes. Knowing what your customers are looking for, anticipating their needs is an art and comes with experience. If your guests know that you are working hard at accommodating their wants and needs they are more likely to return and influence their friends and family to stay.

 

In conclusion….Yield management is nothing more than knowing what you have to sell, your inventory, and managing it in a way that will result in maximizing your revenue. Obviously you want and need to sell as many rooms at the highest possible seasonal rates. But you know that some of your rooms will be available at certain times and will need to be let go at lower rates.  The definition of yield is to produce something as a result of cultivation that in turn gives profit. It also means to stop resisting.

So you have to yield a bit at times, especially before midnight when that empty room goes ‘poof’ and disappears.

 

Living Social Tips from Innkeepers

April 6th, 2011 by Janet Wolf

ShoppersAttention shoppers…group buying marketing companies have hit the air waves. In radio days the airwaves were the frequency that transmitted the signals that carried information to the world. We all know what claims the airwaves today, social media.  And the latest addition to the social media tool box is…

If you haven’t heard, Living Social along with Groupon are the front runners when it comes to social commerce. These two companies have attracted the largest audience of consumers.  Since the introduction of Living Social Escapes (many of us were first introduced at the Charleston PAII Conference) there have been a number of innkeepers that have taken advantage of this form of ‘social shopping’.  This is a new way to attract buyers to your brand. Increased exposure, isn’t that what we all need?

I recently interviewed Janel Martin, Innkeeper/Chef (extraordinaire) of The Wakefield Inn in New Hampshire about her experience with Living Social Escapes.

Chef Martin in The Wakefield Inn Kitchen

Q.  What was your motivation for using this social media tool?

A.  Marketing exposure. In the past I tried all the conventional advertising media and spent lots of money with no results. It has been a struggle to get my name, brand out there. I got instant and phenomenal exposure with my package posting. It went viral instantly.

Q.  What did your package include?

A.  I tell myself all the time, sell what you know and what you know will sell. I do cooking classes that are hands on; I love to get the guests involved. So my package includes a cooking class, a massage and a Deneen mug to take home, and the room of course. Oh yes, I believe it is important that the guest take home something with the Inn’s logo to remind them of the great time they had, so don’t forget to pre order the mugs, I ran out!

 Q.  What kind of feedback have you gotten from the participating guests?

A.  They all leave saying they can’t wait to tell their friends about the experience. I got at least 20 new reviews on Trip Advisor from these guests. Also there were at least 100 people that contacted me saying they missed the deadline and was I going to post one again. These are new people that are now in my database. Many of the people are from as far away as Montreal.

Q.  Would you do it again?

A.  Definitely!

Q.  What advice would you want to pass on to innkeepers who are considering putting a special on a social commerce site?

A.  If I was to do it again I would be more specific and firm about the rooms I offer and the dates. It would be for mid-week only and for a shorter period of time. You must structure your package very carefully and be very detailed about what you offer.

                Thanks Janel.

A point that Janel wanted to empathize is that you can do all the number crunching to see if your package will be profitable and that is important but her real motivation was the increased marketing exposure. This is what we at The B&B Team also believe is a prime reason to use any social media tool.  Marketing 101: Draw customers to your sell!  Your package is your invitation to customers to experience what you have to offer and it must be worth their while. If the growing number of customers using social commerce see your ‘escape’ and think it is worth their while than you have a new customer X 100, 200, 300, 400! Is it worth your while too?  Hope this helps you decide one way or the other.

This will a part of a series of interviews I will have with innkeepers that have participated in Living Social. Stay tuned.

Janet Wolf

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