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 ‘specials’

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

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

Travel Packaging-Wrap Up What You Do Best

October 26th, 2010 by Janet Wolf

Here in Kennebunkport we have a local family owned restaurant Alisson’s that runs a great business and has been doing it for about 30 years. When we have our Aspiring Innkeeper Seminars here in the Port we always treat our attendees to dinner on Friday to kick off our seminar. Alisson’s serves the locals and tourists alike with casual dining fare, great service and another important part, fun! They wrap up all three of these important components and do a fabulous job packaging what they do best.

As an example their October calendar offers live music on Wednesday nights and very reasonably priced comfort food specials. Their Tuesday nights have become very popular, packaging ‘Pub Team Trivia’ and $9.95 Prime Rib. Every mid-week night has a reason to go there. They continue to create new value added packages to keep things new and fresh and customers coming through the door.

There are many B&B’s out there that also do a fabulous job of packaging. One example of a B&B that does an unusually good job is the Munro House Bed & Breakfast and Spa in Jonesville, Michigan. Innkeepers Lori and Mike Venturini have created a wide variety of packages that wrap up what they do best. Just like Alisson’s, they have created a package for ‘any day of the week’.

In addition there are many of you out there that want to do more packaging but may feel paralyzed at the thought of where to start. Many of you also may feel  you would like to increase the number of packages you offer or do a better job of it. Help is on the way! The B&B Team and Joe Veneto, ‘The Opportunity Guy’, will be presenting two PAII pre-conference sessions; The Secrets of Packaging Success, Simplified.

The first will be a half day session on Nov. 15 from 1 pm to 5 pm at the PAII New England Conference and Trade Show in Nashua, New Hampshire. The second will be at the PAII 2011 Innkeeping and Trade Show, a full day session from 9 am to 5 pm on January 10 in beautiful Charleston, South Carolina. For those innkeepers out there who would like some help packaging ‘what you do best’ we hope you will be able to join us for either one of these sessions. You will come away loaded with information, ready to ‘wrap’ those packages, make more money and have fun along the way.

Janet Wolf

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