Promotion
This is your opportunity to evaluate what has been working and what has not. Try and remove your personal preferences for particular tactics and look at your measurements. You need to keep a steady flow of new leads as well as making sure that you retain as many current customers as possible.
Taking into account the lifetime value, there is research to show that, in terms of return on investment, direct contact is the best tactic, followed closely by your own website, media relations, internet advertising and e-mail marketing. But this is only research and you will have your own statistics to help you.
How Are We Going To Get There?
In this section you will look at any changes you need to make to your product and service and explore all the opportunities that there are for developing new business and maximising the revenue from current customers. You will consider your pricing and distribution strategy, select some tactics for new business and make some choices about resource allocation and budget. This is the place for the action plan.
Action Plan
An action plan is a detailed list of all the action steps needed to carry out the strategies and tactics for reaching each goal. Below is an example of the sort of plan you need to make for each of the goals that you have decided on for the year. Ensure that your goals are all Specific, Measurable, Achievable, Realistic and Time bound (SMART).
For each tactic you will need to decide who is responsible, what is the start date, what is the finish date and what is the cost.
Once you have planned the action steps to achieve all the goals for the year, you will also need to go through and make a month-by-month plan that incorporates all the various actions in date order.
Budget
Hotel owners are forever asking me how much they should spend on sales and marketing activity. My usual reply is to say that you need to spend as much as necessary to achieve your objectives. This may not be very helpful, but neither would it be much help to say that you must spend four per cent of your total revenue. If your occupancy was 40 per cent and you could increase that to 60 per cent by spending more money then I would recommend that you get on and spend the money. If at the end of the year you have spent, for instance, ten per cent of your total revenue on sales and marketing then you might take the view that this is a bit too much and look at ways to reduce it. But at least you now have the occupancy to work with.
If you take cost as the limiting factor, then you will be limiting your top line revenue potential. The key is in the evaluation and measurement and the amount you need to spend will depend on your own circumstances including your competition and location.
As a matter of interest I think that on average US hotels spend around six per cent of total revenue, with hotels in Europe just behind at five per cent. Resort hotels tend to spend slightly more unless they distribute all their rooms through wholesalers. As with any averages there are some big deviations, particularly in franchise and chain hotels, that have to make a hefty percentage contribution for ‘corporate’ advertising.
One interesting development, particularly where you are launching a new hotel, is to use barter funds. This is where you use unsold room inventory as currency to stretch your marketing budget. This may well not be that new to you since it is likely that you already give away weekend rooms in return for radio advertising. There are a number of trading organisations operating in this field and you can use your credit to buy radio, TV and print advertising as well as printing services.