
The current economic crisis poses a threat to the hotel industry. Around the country and all over the world, a lot of hoteliers are commenting that profits are not as good as before. This is not the first time that the hospitality industry faced such a challenge. The main difference is that no one can predict how severe the crisis will get and how long it will last. Traditionally, hotels tend to be reactive instead of proactive in facing changes to the economy. This will have to change if hotels want to survive.
It is important to consider that travelers don’t go far distances just to stay in a hotel. On the contrary, hotels are able to profit because travelers stay in accommodations that are located in areas their guests frequent. People choose hotels based on its prices, hotel rate strategy, and facilities. However, believing that there is nothing hotels can do to encourage people to travel is misguiding. This is because when the travel industry including those involved in aviation, food, and tours work together to come up with attractive packages, people can be induced to travel once again. The question is how well a hotel can work to get a bigger piece of the shrinking pie.
Protect Market Share
Right now, business travelers are reducing their travel expenses; it is likely that leisure travelers will soon follow. There are many options to generate hotel sales and improve yield management. However, it is also essential to be aware that some options may do more harm than good. For example, before significantly cutting back on expenses, looking at the consequences of a reduced service level is critical. Cuts in marketing can likewise backfire because the competitor can get a larger share of the market.
With today’s economic problems, there is no doubt that demographic lines are being crossed. Upper-scale accommodations are competing against mid-scale accommodations that have little amenities. On the other hand, when expensive hotels lower their rates to get a bigger share of the market, its mid-range competitors suffer.
Hotels need to balance their resources among different sales channels to improve hotel financial performance. It is important to remember that while investing in technology particularly the distribution to major Internet travel sites can beneficial, it is not enough. Maximum revenue can be derived from a combination of front desk training, local sales partnerships, group sales efforts, and effective yield management.
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