It is not just in the current tough times that hotels need to give close attention to controlling costs.

In the area of marketing, particularly for independent hotels, which are fully responsible for their own marketing costs, our work has shown that there is frequently scope for a more formal approach to marketing expenditure.   Work we have done in conjunction with management teams has resulted in savings and efficiencies which have paid handsome dividends.

The basis of the approach is to work exclusively by market segment in determining the need for marketing actions/expenditure, the potential returns from effort and expenditure and the subsequent evaluation of the activity.   All too often the failure to follow this approach has resulted in substantial wasted effort and cash.

A hotel can have a large number of market segments and each one is different in terms of need and potential and there will always be too many things that a business wants to do to market itself --- it must identify those actions that are going to provide the best returns.  

This can be a lengthy exercise the first time round and outside help can be a useful catalyst (or vital driver in fact), but once it has been done the first time, the next is much easier, as many of our clients will happily admit to.

The starting point is the accurate segmentation of a hotel's revenue, usually separating room revenue from F&B because of the greater conversion to bottom line of the former.   (The number of times we have listened to a management team's plans for promoting Valentine's night dinner or Sunday lunch without having worked out what it would mean in terms of bottom line is extraordinary!)

Each segment must then be assessed for what it can contribute to the business and the extent to which it deserves effort and/or cash.   The main criteria are:

• The total value of the segment --- how important a part of the business is it?
• The "health" of the segment itself --- is it a section of business that is growing or declining for the region or country as a whole?
• How do you stand competitively to get more from the market?   Honesty is often needed here to determine if the product you have is adequate to take a bigger share of the market from your competitors.
• How much do you think you could grow the segment --- set a realistic volume/ revenue target?
• How easy it to influence the segment --- how much time and money is needed to achieve the target you have in mind?
• Is there a realistic relationship between the target and the cost of achieving it?   Could time and money be better spent on another segment? 

This may sound both obvious and simplistic. It is neither. So many hotel businesses that we see have sales and marketing plans that cannot be justified on the above basis. 

Actions are repeated year on year without robustly assessing their value and time is spent pursuing markets of low value and low potential.   Senior management is often focused on operational areas and do not challenge substantial areas of marketing spend.

This requires a disciplined approach and, particularly initially, a fair bit of effort --- it is well worth it in the end.

Contact alastairstevenson@hotelsolutionspartnership.com

Contact frankcoan@hotelsolutionspartnership.com 

The Hotel Solutions Partnership offers specialist hotel consultancy services to hotel owners, operators, developers and investors, or those wishing to become involved in the hotel and hospitality industry.

The Hotel Solutions Partnership network incorporates a wide range of skills, experience and knowledge which we call on to craft individual solutions that meet our clients' specific needs. Please take a look at our Areas of expertise page to see who does what.

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