Monthly Archives: September 2012

The Staggering Costs To Hotels Managing Leads In An E-RFP Explosion

Today, e-RFP channels are enabling meeting and event planners to flood the market with a tsunami of “leads” that has left hotels struggling to keep up with the demand, according to an article published in Business Travel News.

“It’s broken,” said Hyatt Hotels Corporation senior Vice President of Sales, Jack Thorne.  ”The whole thing got out of control almost overnight with us.”

The e-RFP explosion largely is a result of the growing popularity for the mechanisms offered by electronic lead channels such as Cvent and StarCite, the article goes on to state, and the use of those tools by meeting planners and site-selection third parties. Users of those tools have the option not only to ask more than 100 questions of a potential meeting site, but also to forward that request to dozens of venues. The result is a far higher number of leads for properties.

Hotels have few options in dealing with such an influx, said Dave Lutz, managing director of Velvet Chainsaw Consulting and former president of the event planning and registration division of meetings-management third-party Experient. “It’s a very inefficient model and it’s not sustainable,” he said during the Cvent conference.

Hyatt notes that the conversion rate is approximately two percent of meeting leads from the major e-channels as well as their own site, Hyatt.com.  Hyatt also suggests that such converted leads comprise only six percent of Hyatt’s business but replying to them can take up hours of a salesperson’s day.

The cost to respond to leads and the associated cost per sale are staggering.

Lead Assumptions and Cost Analysis

I estimate that a hotel sales manager will spend approximately two-hours on each lead that they field, respond to, and monitor (this time estimate was also confirmed by other hotel sales managers who I have contacted).

If this is true, the following assumptions can be made.

Sales Manager’s annual salary – $50,000.00 (sales manager’s annual salary not including benefits and bonus based on 50 weeks).

Sales Manager’s hourly salary – $25.00 ($50,000.00/50 weeks/40 hours – FICA and benefits estimated to add an additional 30 percent to the base salary and could raise the hourly salary to $32.50.

Lead assumptions based upon 30 leads per day received by a hotel

  • 30 leads a day
  • 150 leads a week
  • 7,800 annual leads (based on 52 weeks)
  • $25.00 to $32.50 base hourly salary of a sales manager
  • $50.00 to $65.00 cost to hotel to respond, monitor, and track each lead (two hours per lead)
  • $390,000.00 to $507,000.00 total cost to a hotel to respond to all leads

If you are a hotel owner or GM, read on.

ROI Analysis Assumptions

Let’s assume, based upon the lead volume above, that a hotel will convert two percent of the leads received from e-channels as referenced above.

  • 30 leads a day
  • 150 leads a week
  • 7,800 annual leads (based on 52 weeks)
  • Average Daily Rate (ADR) of $150.00 per room per night
  • Average lead @ 60 peak guest rooms (30 guest rooms/2 nights)
  • Total guest room revenue per lead – $9,000.00 (60 nights @ $150.00)
  • 2 percent conversion rate of annual leads
  • 156 annual leads converted
  • Total guest room revenue from total converted leads – $1,404,000.00
  • Cost to a hotel to respond to leads – $390,000.00 to $507,000.00
  • Cost per sale to a hotel – 28 percent to 36 percent

I’d like to hear from you, on or off the record, to see what you think about these numbers and how they affect your hotel.

Tom Costello is the CEO and Managing Director of iGroupAdvisors, a performance improvement consulting firm, that specializes in the hospitality and travel verticals.

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The Secret To A Successful Marketing Campaign Is Not Your Value Propostion

When is your marketing campaign the most ineffective use of time, money, and resources for your hotel?

When your message only contains your value proposition.

Check the analytics of your last email campaign for instance.

How many opens did you get?  What percentage of your emails were unopened?  What was your response rate?  Did you see any click-throughs?

If the answers were low, high, none, and no, keep reading.

The secret to a successful marketing is much more than just your value propostion

The secret to a successful marketing campaign is driven by a message that will solve your customer’s problems.

Go back and read your last email blast and ask yourself what problems did your message solve?

Did you solve problems by telling prospective customers about your recent multi-million dollar renovation, a special discount on AV or that secluded Japanese soaking tub on a private balcony?

Those are value propositions and not problem solvers.

The message that your marketing campaign should convey must be in harmony with the thinking of your prospective customers. This means that you need to have enough understanding of your customers in order to determine their needs, worries, problems, and desires.

If you want to attract and engage prospective customers and lead them down the sales funnel, you need to focus on them and their problems.

The more your message helps to solve your customers problems, the more apt they are to respond to your message and move that much closer to a conversion.

So what problems are your customers struggling with?

Tomorrow morning might be the perfect time to pick up the phone and ask them.  If you don’t have the time to make that call then consider sending out a survey that will uncover more opportunities where you can identify what problems confront them (and ones that you can solve).

If your hotel has a blog, take a look at the search engine keywords that may help to uncover some clues.

If your hotel has a Twitter account, type in relevant keywords and look for comments or read articles from links provided that can help point you in the right direction.

You do read your TripAdvisor reviews don’t you?  What do guest reviews say about your hotel and what problems of theirs did your hotel solve?

Follow this link to find out other ways to use Social Media for customer research.

Here are some problems that customers may encounter on a business trip or while attending a meeting.  Does your hotel provide a solution to any of these problems?

  • Does your hotel’s reservation team provide the type of professional service and accuracy that customers expect and deserve?
  • Does your hotel front desk staff excel in providing check-in and check-out in a friendly, timely, courteous, and accurate fashion?
  • Does your Conference Services team stand up and deliver in all aspects of their duties?
  • Does your hotel staff consistently demonstrate that they are willing to do whatever it takes to exceed your customer’s expectations?
  • What do your former customers say about your hotel and do you share their testimonials with prospective customers?
  • Is your in-house AV provider the best in the business?
  • Does your hotel provide complimentary WiFi and is it readily excessible?
  • Does your Business Center provide more than just a copy and fax machine?
  • Does your hotel provide a complimentary shuttle service to/from airport/hotel and other areas within close proximity to your hotel?
  • Does your hotel offer complimentary and secured parking?

Do you need help crafting a marketing message that will solve your customer’s problems?

Send me an email and let’s discuss!

Tom Costello is the CEO and Managing Director of iGroupAdvisors, a performance improvement consulting firm, that helps hotels and their sales managers grow their business and generate more revenue.

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Filed under Email marketing, Hotel Marketing