With profitability squeezed by flattening revenue growth, hoteliers have to be proactive about planning for 2020.
Business plans for 2020 must be clear, concise and simple and are most effective when done prior to completing a budget.
A review of macroeconomic data currently indicates a combination of a mild global slowdown and softening but no imminent recession. Unemployment remains low, consumer confidence continues to be fairly strong and the short-term economic conditions are solid.
STR is forecasting close to 2% RevPAR growth in 2020, and most pundits are in that range. Naturally, the caveat is that unexpected “event” that could stimulate a precipitous decline in demand. We believe that can be averted over the next 12 months.
Start with the above premise, if you agree with it, and determine the impact on your market. In most markets, supply is starting to exceed demand, ergo, expect a reduction in occupancy levels if that is the case. Further, average daily rate growth has flattened to 2% or so, and costs, especially payroll, exceed that by a fairly wide margin.
The result will be reduced operating profits unless we can find savings. Look hard for savings from productivity.
The steps below include new products now available in the market.
Business plan development
Complete your research. Review your trend reports and competitive set information, including its new forward-looking data. These reports will indicate respectively where you are vis-à-vis your competitive set and what costs are incurred by every single reservation. Your table of contents should include basic macro-economic data, hotel supply and demand, competitive environment, action plans and expected results. The action plan details the who, what, when and costs associated with each action. Keep it simple.
Meet with GMs and marketing team members of competitor hotels. Site tour each business and establish a referral program. Coordinate a market review with your franchise marketing manager if appropriate and discuss opportunities for digital marketing and pay per click. Develop a 2020 sales and marketing budget. Review market-intelligence and market-pace reports carefully. Ensure your email lists are updated for newsletters and blasts and that you are compliant with GDPR (General Data Protection Regulation) as well as CCPA (California Consumer Privacy Act) if in California.
Meet with key contacts at your brand, visitor bureau and chambers of commerce. Obtain a list of trade- show opportunities, lists of your area’s top businesses and employers. Qualify key companies and individuals to create or update your own email list. Business journals also have great lists of top businesses and employers. Don’t forget to check your database in the reservation system for any errors—compare it to the convention and event calendars to ensure peak periods are blacked out. Make sure to promote your meetings space online.
Develop possible press releases for the coming year along with a public-relations plan and contact each segment specialist for your franchise sales staff and local tourism agency. This will help to see what opportunities are available to promote your business at upcoming trade shows, future segment specific directories or sales missions. Naturally, if you are independent, you must ensure you have representation to compete in each market segment. The PR plan is part of your above-mentioned action plan.
Continuously create and deliver "can't resist" content for your website and e-blasts. Social media has turned marketing upside down, and we all need a loyal fan base and potential clients alike. Media tools like blogs, newsletters, webinars, e-books, photo-sharing and videos are all needed to keep your content robust and to “tell your story.”
In developing this year’s plan, remember that the world is changing quickly. Sustainability is a “thing” and guests care about it. Simply put, sustainability is meeting the needs of the present with innovative solutions that do not compromise the future. Guests do care about that and also want an “experience”—this is where a story that talks about your features and benefits is very helpful. Otherwise, our hotels are just places to sleep.
When looking for productivity, the promise of artificial intelligence (AI) is a reality and is here to stay. In our case, we are using robotics, not to supplant jobs, rather to make them more effective and efficient. As an example, we are expecting delivery of a robot that will vacuum hotel rooms and corridors, allowing housekeepers to avoid back injury and reduce room-cleaning times.
Lastly, when budgeting after completing this simple but critical business plan, don’t forget to budget for cybersecurity, IT and wage increases that may occur in July 2020. Good luck and may some wind remain at our back a little while longer.
Robert A. Rauch, CHA, is an internationally-recognized hotelier, CEO and founder of RAR Hospitality, a leading hospitality management and consulting firm based in San Diego. Rauch has more than 35 years of hospitality-related management experience in all facets of the industry.
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.