Good News Formula For RevPar in 2009.
By Doug Kennedy
Friday, 9th January 2009
With all the bad economic news in the media lately, and with most industry experts expecting RevPar to drop by as much as 5%-10% here in 2009, there are few if any hotels that are projecting a good financial performance this year. 

Yet in the real world  it's a great time to remember that as with life in general, success in the hotel industry is an "I'll See It When I Believe It" opportunity, not the opposite!

If you as a hotel leader still believe it's possible to have a reasonably solid year even in the face of declining demand, here's a good news formula for you to consider as you  think about RevPar for next year. 

Let's take a look at a model for the "Anytown Hotel" as an example.  Currently, this hotel has a transient average rate of $100 and a transient average stay of 1.5 nights; so each reservations inquiry generates $150 in revenue.  Let's say this hotel current converts 30% of its reservations inquiry calls.  For every 100 calls, they would convert 30 reservations, thus generating $4,500.  

Now let's say that this hotel experiences a 5% decline in call volume; yet their transient sales team is able to increase call conversion by the same 5%.  So out of 95 calls the hotel would convert 33.25 reservations, thus generating $4,987.50.  Not bad.

Let us now assume the expert's worst expectations prove out and this hotel experiences a drop of 10% in inquiry calls; yet the team is more focused than ever and is able to increase call conversion by 10% to now convert 40% of inquiries.  This scenario would be excellent news actually.  Although the hotel now only received 90 calls, they were able to convert 36, for a grand total of $5,400. 

These model formulas don't even factor in the RevPAR impact of an effective upselling program, which will move the potential opportunity even higher.

However the base numbers in the formula work out for your actual hotel or call  center, the main takeaway here is that plenty of hotels can and will have good – if not stellar – financial years in 2009.  Those that do will achieve it through hard work, focus, and a true team effort to maximize the return on each and every reservations inquiry.  Plenty of other hotels will continue doing exactly what they have done in the past, and these organizations will likely experience exactly what the experts are predicting, which is an off year that is down 5-10%. 

If you're looking to help your team maximize their call conversions while at the same time to become more proficient at upselling and revenue optimization, here are some considerations for your future planning sessions and training meetings:

  • Start listening in to what your reservations agents are saying daily.  Consider the telephone line the "store front window" for your hotel; make sure your window is always properly dressed.
  • Listen to the questions your team is currently fielding, especially those related to rates, promotions, and special packages.  Use the "supervisory monitor" function available in most modern phone systems, or consider hiring an outside mystery shopping company such as our team at Kennedy Training Network or many of the other fine companies in the field.
  • Use what you observe to help train your agents on handling future calls of a similar nature to those you are currently hearing.  Role play through the most common scenarios and practice overcoming your actual most common objections.
  • Train your agents to ask investigative questions to find "the story" behind the  call so that they can sell relevant benefits vs. listing random features.
  • Help your agents use "product" descriptions that allure, entice and appeal to emotional desire vs. simply listing random features.
  • Make sure all agents know that most guests still ask for the discount just to check your reaction.  While it's true many guests are actually on tighter budgets these days, plenty of others are simply "deal seekers" who have been reading the proliferation of news stories and articles in the mass media about travel discounting.  Sometimes agents just need to hold the line on price by reiterating value and reassuring the caller this is the lowest rate available for their dates.
  • Ensure that your agents are familiar with the overall "product" they are selling; this includes the room of course, which agents at some hotels haven't seen in years, but also the hotel facilities, services, and amenities as well as the location and area attractions. Today's callers want local insider's information and tips.
  • Train your staff that closing the sale benefits everyone to overcome any hesitancy if they see closing as been too pushy or aggressive. The proof is in the negative reaction of caller's who call back to book, only to find their options are now sold out.
  • Especially for resorts and hotels that charge deposits and/or have restrictive cancellation fees, consider a "courtesy hold" option allowing guests to hold a room for two or three days while their plans are finalized.
  • If you don't get the sale, be pro-active with follow-up, such as offering to e-mail the caller a link to the room type or package discussed. 
By focusing now more than ever on the fundamental principles of reservations sales success, you and your team can help make sure that 2009 is at least as good a year as the one before it.  If your transient sales team works harder and smarter than ever before, it's still possible to capture the same if not more revenue than last year, even in the face of declining call volume. 

Doug Kennedy, president of the Kennedy Training Network, has been a fixture on the hospitality and tourism industry conference circuit since 1989, having presented over 1,000 conference keynote sessions, educational seminars, and on-premise training workshops for diverse audiences representing every segment of the lodging industry. 


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