There is a feeling that the hotel industry is getting saturated and there is an over-supply of beds, shifting the supply/demand curve. Market saturation is a signal that you need to take action.
All hotels you are competing with will have rooms, buffet breakfast, a la carte breakfast, Swahili corner over the weekends, freshly squeezed juice, writing material, LCD projector and screen in the meeting rooms….name it. In short, you have very similar offerings with the hotels you are in competition with.
You may want to change how you market your hotel, how you differentiate your hotel, how you upgrade your product which can be in the way you present it. Spicing up the obvious, or just making it different!
Here are 4 ways, that will help you sustain your business in a saturated market:
Creativity and Innovation
You need to stand out. A hotel has no limit in terms of creativity and innovation. Towel art has been overdone, evening dance groups in the Resorts? Same moves and that same animal print uniform. If you cannot do without it, how can you do it DIFFERENTLY? What will set you apart from competition? What is that one thing that your guest or booker will identify you with. I will use the cliché ‘think outside the box’
Keep Re-inventing Your Product
If you are to penetrate a saturated market successfully, and thrive through stiff competition, keep re-inventing and reaffirming your position. There has to be something new about your hotel that you can talk about. Your hotel might have celebrated 50yrs of existence, but there has to be a new story….something fresh, something to talk about. Otherwise, these new kids on the block who are coming up fast and steady will bury you in the ancient tomb.
Pricing
Pricing is crucial. It is important for the head of sales to note that not every hotel in the city is your competition. And, competitive pricing doesn’t necessarily mean lowering your rates. If every property try to compete in terms of rate with every hotel/resort in the destination, it results to price-wars in the market, and between properties that are not necessarily of the same caliber. Remember that the cost of running a 5-star hotel or resort is very different from the cost of running a 3-star. Consequently, the guests’ offerings, the guests’ amenities, the salaries e.t.c are very different.
At the same time, you need to evaluate your reasons for lowering your rate. There are three things that need to be evaluated. When there is pressure to achieve, the head of sales will look at ADR, occupancy and revenue first. The management and finance will go further and look at the REVPAR, which is also as important. One can argue that by lowering the rate, they will meet the budgeted revenue and the ADR will ensure that the ADR will not go beyond X%, below the budgeted ADR . In a saturated market however, it means supply is more than demand. Therefore does discounting translate to more business? Remember that a discount is a reduction of your profitability as a business. So if you have to apply it, the WHY must be reasonable.
Intelligent Marketing
Brand positioning has a lot to do with perception. You must deliberately build that perception to the market by the way you present our product. Have a strategy for every market and every season. A city hotel and resort have a very different strategy. A 5-star, a boutique property and a 3-star hotel in the same city will have very different strategies. Therefore, knowing your hotel, positioning it right, and understanding your ideal market is critical to how you will approach that market to grow your market share.
Sometimes being in the game is too overwhelming because it seldom gives you time to stop and re-strategize. Sometimes one is too overwhelmed by the current market situation that looking beyond the crisis is a challenge.
Would you like us to have a chat with your sales team, business development team or head of Sales and Marketing?
Talk to us on Tel: +254 720 349 233 // E-mail info@thehospitalityconsult.com
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