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A Hotel’s New Marketing Demographic – Think Outside the Comp Set By Jennifer Rodrigues, ThinkInk Communications Let’s face it: the travel industry is in serious trouble. Almost all hotels, motels and resorts are experiencing a huge decline in demand – which can be attributed to many factors, but at the top of the list is the ongoing recession, which has drastically changed the hospitality business landscape in every corner of the globe. Some markets have deteriorated more than others over the past two years; many properties just can’t compete on price or value, and have seen their target audience shrink too much, with not enough marketing or heads in beds to keep going. Some may find themselves in crowded competitive environments - the product of oversaturation during the boom years –and battling for every half-percent of market share. And others are stuck in the past – ignoring the growth of the online channel and only pricing their rates against their comp set. The comp set, or the Smith Travel Research Competitive Set analysis, is often used by hoteliers as the benchmark for their pricing or marketing strategy. But savvy hoteliers know that in today’s marketplace, the comp set is no longer a robust or thorough marketing or revenue management measure. With the rise of the online channel, consumers are able to compare all rates for all hotels within their choice of destination with immediacy that was unheard of just 5 years ago. More importantly, consumers will pick a hotel based only its value offering whether it’s a five star with a full spa or a three star with a pool - rather than a brand or the amenities that it offers. Hotels that successfully market outside their comp set can expand their potential customer base, avoid a ‘following’ marketing and pricing scheme, improve the reach of their brand by exploring new markets, and position themselves to better compete in this challenging environment. Marketing outside the competitive set is not rocket science; any hotel can learn to do it. Need some help? First, hoteliers need to stop thinking like hoteliers and brand managers and instead, think like marketers wearing their customers’ shoes. Then, by making small, incremental changes to the property’s existing marketing strategy, hoteliers can increase both their bookings and revenues. Think outside your existing sales channels Of course, before a hotel can identify what strategy to eliminate and which to change, it needs to undertake a critical analysis of which sales channels are most effective. Are OTAs the primary reservation vehicle for the hotel? The Global Distribution System (GDS)? Is the property part of a chain, with a centralized reservation system and a unified marketing plan? Or does the internal reservations department and the property website account for the majority of sales? Once these questions are answered and the strongest sales channels identified, a hotel can work on improving those that it has neglected. Often the strongest channels are consistent across the comp set, so by improving the weaker channels, a hotel can attract new customers and bring in revenue from outside that comp set. This strategy - seeking out commonalities in marketing and distribution and then focusing efforts on the other areas – is a great one to ensure that a property’s efforts are focused outside its comp set. The aims of competing hotels in the same market are inherently similar, after all; it is only by escaping the conventional wisdom propagated by comp sets that a property can truly differentiate itself. Hotels in a comp set target the same audience, operate in the same marketplace, share similar rate structures and service offerings and often share core values. The first step to marketing outside of this homogenous group is to stop thinking like a monolith, and start the process of reinventing the way the hotel presents itself to the public. COPYRIGHT INFORMATION If you wish to quote, copy, reproduce, or redistribute this document in any format please attribute Travel Ink’d

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Discounts aren’t the answer The quickest way to move beyond the comp set is to lower the room rates outside of the price range common to the comp set. Although this can be a seemingly “quick-fix” solution, this kind of discounting can be counterproductive over the long-term. Research shows that maintaining a slight price premium within your comp set can provide a consistent revPAR advantage, proving that discounting (and this applies to so many industries) is rarely an effective way of expanding market share. Yes, this may seem counterintuitive, particularly during a time of weakened demand, but occupancy is not the only metric that matters. Think about it this way – after the economy and the travel market recovers, how will a hotel be able to increase its rates back up to “normal” without consumer backlash, brand devaluation and losing valuable customers in the process? So instead of occupancy, focus on making the most revenue from each room (revPAR). It’s been proven over and over, marketing outside of the comp set is the best way to increase revPAR over the long-term. Value is the new luxe - Emphasize value, not luxury After 9/11, the luxury and super-luxury hotel markets grew exponentially. In many popular destinations, this segment outpaced the growth of other segments, crowding the marketplace with a surplus of high-rate, highluxury options that no one seemed to mind paying big bucks for. Today, the opposite is true; now that demand for these properties has softened, luxury operations are reinventing themselves in terms of value and relevancy, as this is the key driver for consumers today. And this too means going outside of the marketing tactics associated with its comp set. The good news is that travelers have not abandoned lodging altogether; they are simply seeking better value for their money. This is where luxury hotels have a great deal of opportunity to present their services and product offerings as value propositions, particularly if they lower their rate targets to levels attractive to traditional valueseeking consumers. Taking a leaf out of the airline industry and its evolution to find new revenue streams, the value of luxury amenities and service levels don’t go un-noticed by consumers, and by emphasizing these aspects a hotel can truly differentiate itself from its competition. Budget properties must focus on convenience Budget hotels face a completely different set of challenges than luxury properties. Budget comp sets tend to be very value-focused, relying too heavily on discounting and bargain pricing for individual budget properties to effectively differentiate themselves. If a hotel is to market outside of this comp set, it must find a factor that sets it apart from its competitors - besides price. Convenience is an excellent counterpoint to price segmentation. Still a value-add proposition, convenience (of location, ease of service, or amenities)is as important to consumers as price, and can position a budget brand to attract a less budget-conscious audience, thereby expanding its potential base. In a competitive set defined by price, an emphasis on convenience can really help a hotel reach far beyond its traditional market and start attracting share from other segments. Additionally, hoteliers can add more value to the already low-rates by offering complimentary bonuses for booking with their property over the competition. Free WiFi, free breakfast and discounts on local attractions are all value-adds that can really differentiate one budget hotel from another, endearing your brand to budgetconscious consumers even further.

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Put your own website first Many hotels seek to expand their reach by selling their inventory though online travel agencies (OTAs) like Orbitz or Hotels.com. While OTAs certainly are invaluable tools for distributing inventory, if they form the major part of a hotel’s marketing strategy, that hotel is giving up far too much control over its marketing – and ultimately, its bottom line. A hotel’s own website is its first and most important face to customers, and the most important marketing channel for disseminating messages and developing its brand. A hotel with a strong website and an emphasis on the online sales channel is far better positioned to implement marketing initiatives that differ substantially from their comp set. What’s more, a strong web presence helps make these changes happen quickly, so a hotel can react to changes in the marketplace (at least from a sales and marketing perspective) rapidly, and before its competitors do. Times are a-changing; it’s time to look forward In today’s economic environment, travelers are increasingly putting a premium on value - trends are showing consumers both snatching upscale bargains and trading down in service levels - so by engaging in strategies that differentiate a hotel from its immediate comp set, that property gets access to an entirely different segment of customers. Forward-thinking hoteliers are thinking outside their comp set to bring in more business in a slow market; will you be one of them? Jennifer Rodrigues, Visibility Specialist with ThinkInk Communications, is a seasoned public relations professional with a passion for the hospitality industry, which is expressed in her role at ThinkInk’s travel division called TravelInk’d. At TravelInk’d, she is responsible for developing cost-effective and creative public relations and marketing strategies for clients in the travel and tourism, airline, lodging, cruise and meeting/event sectors. For more information on TravelInk’d, please visit www.travelinkd.com or contact Jennifer at jrodrigues@thinkinkpr.com.

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TRAVELINKDHotel Business ReviewA Hotels New Marketing Demographic