Model for Independent Hotels
|by Brenda Fields, May 2004
One of the single greatest challenges facing independent hotels today is pricing. Pricing the inventory effectively can lead to profitability and helps lay the foundation for long term success. But, pricing the inventory ineffectively can lead to disaster
Frequent questions asked by hoteliers today are:
Historically, pricing was pretty straightforward. Pricing was set at one rate, Rack Rate. Those rates were posted on cards and placed in racks at the front desk. As technology became more sophisticated and hoteliers became more marketing savvy, market segments began to evolve. Each segment had its own buy decision and its own travel trends. An in-depth understanding and skillful integration of those segments placed the hotel in a greater position to maximize rates and occupancies. This was all made more manageable by the improved high tech nature of the newer hotel operating systems.
As the new technology was developing, corporate travel departments, as well as the independent consumer, turned to travel agents to get the best discounts. As the GDS technology influenced booking and buying practices, additional segments were created, resulting in the following market segment model:
What has now emerged is the realization that the Rack Rate segment no longer exists. The Internet has created brand new distribution channels, directly reaching the end user and/or allowing the third party booking parties to profit as travel agents did until recently. The Internet booking companies, in order to ensure profitability, have adopted more of the airline pricing strategy, i.e. setting rates on a daily basis. These rates can vary significantly from day to day. The hotel industry will be hard pressed to revert to the old pricing model, now that the public has been conditioned to shop for prices.
Therefore, in order to respond to the changed market place relative to the Internet and to effectively compete against chain hotels as well as other independent hotels, flexible pricing is key. But in order for hotels to create and maintain pricing credibility, it is still important for hotels to move away from competing on price alone. This strategy has been universally unsuccessful and will always backfire.
Some suggested steps to realign rates and segments to the changed market place; gain control of business; and increase profitability are:
About the author:
Brenda Fields is a sales, marketing, and rooms specialist in the lodging industry. She has created and implemented highly successful marketing and yield management programs for hotels, from small, boutique hotels to large, convention hotels. Her twenty-year experience includes serving as Vice President of Marketing for a luxury hotel and conference center in Manhattan, owned by Harry Macklowe, real estate developer.
Additionally, Brenda has had extensive experience in pre-openings and repositioning and was responsible for the successful opening and stabilization of Paramount Hotel in New York City by developing and executing a direct sales and yield management program as well as a national and international marketing campaign. Paramount Hotel was one of the first “boutique hotels” developed by Ian Schrager. The strategies and structure developed and implemented are used as the prototype for new acquisitions.
As an independent Marketing Consultant, Brenda applies the formulas for success she developed over the years to assist owners in achieving targeted results despite market conditions. Her mission is to insure that owners achieve success for the long term as well as the short term, by developing a comprehensive strategic plan which creates a solid foundation and protects the property(s) against changing market conditions.
With a “who’s who” roster of clients, Brenda has worked with a number of industry leaders and real estate investment companies including Starwood Lodging Corporation, Vornado Realty Trust and Planet Hollywood, John Hancock Mutual Life Insurance Company, Olympus Real Estate Corporation, Gotham Hotels and Apple Core Hotels, among others. Her growing consulting practice for independent properties includes clients such as The Kitano Hotel, New York; Founders Inn and Conference Center in Virginia Beach, VA; Woodlands Resort and Inn, Summerville, South Carolina; Bel Age Hotel, Los Angeles, CA; Mondrian Hotel, West Hollywood, CA; and many others.
A native of Kentucky, Brenda holds a B.S. in Psychology and English from Murray State University. She is lives on Manhattan’s Upper East Side and enjoys cooking and entertaining in her cottage in upstate New York.
Fields & Company is located at 1011 Smithfield Road, Millerton, NY 12546 :: T 518.789.0117 :: F 518.789.0118; email@example.com.
This article is the property of Brenda G. Fields and cannot be reprinted or copied in part or whole without the written consent of Brenda G. Fields.
1011 Smithfield Road,
Millerton, NY 12546
|Also See:||Boutique Hotels: Rethinking the Fundamentals in a New Business Environment / Brenda Fields / February 2004|
|Room Configuration - Are Your Rooms Configured for the Best and Highest Use? / Brenda Fields / January 2004|
|Direct Sales - What to Expect from Your Hotel Sales People and How to Get Results / Brenda Fields / August 2003|
|Boutique Hotels: How to Survive in a Down Market - Getting Back to Basics / Brenda Fields / May 2003|
|Industry Marketing Pro Brenda Fields Opens Consultancy Focusing on Independent Properties / January 2003|