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Tuesday, April 27, 2010Tuesday, April 27, 20102:00 2:00 –– 3:30 PM EDT3:30 PM EDT

Selling Value Over Price

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Overview of Format and TopicOverview of Format and Topic

Webinar ModeratorFran BrasseuxExecutive Vice President, HSMAI

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HSMAI University Alliance PartnersHSMAI University Alliance Partners

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POLL QUESTION #1POLL QUESTION #1How many people are participating in

this webinar at your location today?

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� 8 or more

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Panel Moderator: Jeff Higley, VP,

Digital Media & Communications

HotelNewsNow/STR STR/STR Global

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TodayToday’’s Presenters: s Presenters: Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:

Vail Brown, VP,

Global Sales, STR

Jon Eliot, Director

Revenue Optimization

Carlson Hotels Worldwide

Allan Wlaschin,

President, CEG Global Solutions

Noreen Collins,

Regional Director of Revenue Management, Interstate Hotels

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Spring Has Sprung!

Hotel InduSTRy Overview

Vail R. Brown

Vice President

STR

Agenda

• Forecast• Current Hotel Overview• Group vs. Transient• Chain Scales• Takeaways

Forecast

Forecast Shows Slight “Warming Up”

Hotel Industry Performance Scenarios (% Change)

2010 2011Low

GrowthForecast

HighGrowth

LowGrowth

ForecastHigh

Growth

Supply 2.0 1.8 1.7 1.2 1.0 0.8

Demand 1.6 1.8 2.1 2.9 3.2 3.4

Occupancy -0.4 0.0 0.4 1.7 2.2 2.6

ADR -3.6 -3.2 -3.0 1.8 2.0 2.4

RevPAR -4.0 -3.2 -2.6 3.5 4.2 5.0

2010 Smith Travel Research, Inc.

If year 2000 ADR had increased by CPI each year…

Rate Cuts in ’01 Were Felt for 6 Years


If year 2007 ADR had increased by CPI each year…

Rate Cuts in ‘09 Are Felt Through…?


Total United StatesKey Performance Indicator Outlook Scenario

2010P by Chain Scale

2010 Year End Outlook 2010 Year End Scenarios

Chain Scale

Occ

(% chg)

ADR

(% chg)

RevPAR

(%chg)

Occupancy

(% chg)

ADR

(% chg)

RevPAR

(% chg)

High

Growth

Low

Growth

High

Growth

Low

Growth

High

Growth

Low

Growth

Luxury 0.6 -3.5 -2.9 2.0 -1.0 -3.0 -6.0 -1.0 -6.0

Upper Upscale 1.0 -2.5 -1.5 2.0 -1.0 -2.0 -5.0 1.0 -4.0

Upscale -0.5 -2.3 -2.8 1.5 -1.5 -1.0 -4.0 0.0 -5.0

Mid w/ F&B -3.8 -3.4 -7.1 -2.0 -5.0 -2.0 -5.0 -4.0 -9.0

Mid w/o F&B 0.9 -2.1 -1.2 1.5 -1.5 0.0 -3.0 1.0 -4.0

Economy -2.4 -4.4 -6.7 -1.0 -4.0 -3.0 -6.0 -4.0 -9.0

Independent -1.1 -3.0 -4.1 1.0 -2.0 -2.0 -5.0 -2.0 -5.0


Current Reality…hotel industry overview

Is that positive OCC and ADR growth we see?!?

Total United StatesYear to Date through 4/17


As Always: Building Into The Downturn

3.1%

-2.9%

-4.8%

-6.6%

Total United StatesTwelve Month Moving Average1989 through March 2010


The Magic Number: 2%+ Demand Growth. What Is It In Your Market?

Total United States1st Quarter 1988 through 1 st Quarter 2010


Demand Has Been Recovering – Rate Slow to Follow.

Total United States28-Day Moving Average Jan. 1,2010 through April 17, 2010 2010 Smith Travel Research, Inc.

Group vs. TransientPerformance

Total United StatesUpper Tier Hotels = Luxury / Upper Upscale chains & Upper Tier Indep.

Group OCC Data Already “Less Bad”Transient Occupancy Recovers


ADR Data Still “Bad”Group Rate Will Hurt For A Long Time

Total United StatesUpper Tier Hotels = Luxury / Upper Upscale chains & Upper tier Indep.


Group Rate Will Hurt For A Long Time.



Transient Room Demand Recovered in the Summer



Sluggish Group Room Demand Has Major Implications For The Industry



Chain Scales

Appears To Be A Top Down Recovery…

U.S. Chain ScalesDemand % Change by Month through March 2010 2010 Smith Travel Research, Inc.

ADR Data is Now “Less Bad”

U.S. Chain ScalesADR % Change by Month through March 2010 2010 Smith Travel Research, Inc.

Takeaways

• The Good News: Less Bad News• Top Down Recovery• Pipeline Emptying• Demand Slooooooowly Improving• Group ADR Declines Hold Industry Hostage

• 2009: “Back In Heaven in 2011”• 2010: “Heaven? Just give me solid ground”

For a copy of all our presentations, please go to:

www.hotelnewsnow.com

Click on “Industry Presentations”

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Jon Eliot, Director



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Understanding Value

� Value vs. Price

� What is your value proposition?

� Value and segmentation

� Communicating value

� Internal vs. external value proposition

� Price/Value positioning exercise

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Value vs. Price

� Buying a car

� Type of car

� Features

� Performance

� Reviews

� Selling on price alone

� Commoditization

� “Price Wars”

� Price is never low enough

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What is your value proposition?

� Not simply list of services and amenities

� What makes your property different?

� Why do guests choose your hotel? What do they value?

� Guest surveys

� Social media

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Value and Segmentation

� Business

� Location

� Business Services

� F&B options

� Fitness facilities

� Transportation

� Leisure

� Location

� Recreation facilities

� Spa

� F&B options

� Attractions

� Shopping

� Group

� Value to meeting planner

• Location

• Meeting Services

� Value to organization

• Prestige

• Upgrades

• Ability to draw attendees

� Value to attendee

• Services

• Amenities

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How do you communicate value?

� Property descriptions

� Hotel/Brand web site

� OTA sites

� GDS

� CRS

� Rate descriptions

� Marketing materials

� Property reservations

� Sales department

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Internal Value

� Is the difference in value between products clear to the guest?

� Are they priced appropriately?

� Is it consistent?

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External Value

� What are your competitors’ value propositions?

� Where do you fit in the market?

� Are you positioned properly?

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Comparing Price and Value

� Positioning exercise

� Compare your competitors to your hotel on relevant value factors

• Example: Competitor A has a superior location so they may get a score of +1, whereas Competitor B has a much less desirable location and may get a score of -2

� Add up total score (can be weighted)

� Shop available rates – use “like” rates

� Plot results on a price/value grid

� Repeat exercise for a variety of segments/scenarios

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Price/Value Grid

Price

Value AB

C

D

E

F

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Noreen Collins,


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Value Proposition Strategy

• Build value instead of cost cutting

• Effects of price reduction

• Benefits of value proposition selling

• Guest perception of the value proposition

• Develop the value proposition strategy

• Evaluate effectiveness of strategy

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Value Proposition Strategy

• Build value instead of price cutting• Effects of price reduction

• Issue of service

• Question of quality of hotel

• Loss of credibility and reputation damaged

• Clientele

• Hotel loses control of pricing

• Price war with competition

• Difficult to regain rate integrity

• Not a long term business strategy

• Loss of business and change in mix of business

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Creating a Value Proposition Strategy

• Build value instead of cost cutting• Benefits of value proposition vs. price reduction

• Satisfy the WIFM’s

• Confidence in quality of hotel

• Increase guest satisfaction

• Consistent expectations

• Maintain rate integrity

• Gain business

• Maintain loyal guests

• Long term business strategy

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Value Proposition Strategy Benefits

• Guest perception of the value proposition• Benefit from purchasing

• Customized and personalized

• Appeals to the needs of the different segments

• Getting more for less

• Best deal at your hotel

• Meets budgetary requirements

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• Determine targeted segment• Group segments

• Corporate groups

• SMERFE

• Tour & Travel

• Transient segments

• Corporate business

• Government

• Leisure segments

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• Determine the needs of the targeted segments• Groups

• Corporate – inclusive meeting packages, business amenities

• SMERFE – F&B included, hospitality room, welcome reception

• Government – business amenities included, F&B inclusion

• Transient

• Corporate – free HSIA, complimentary upgrades, etc.

• Government – complimentary breakfast, free HSIA,

business amenities included

• Leisure – family themed packages,

local events/activities included, F&B inclusion

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• Determine the best distribution channels• Ease of booking value proposition

• Determine how segment being targeted books reservations

• Use cost effective channels

• Determine the best promotion outlets• Most effective way to reach segments being targeted

• Use cost effective means

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Evaluating Value Proposition Strategies

• Measure the results• Track results and analyze trends

• Room night production and revenues

• RevPar performance

• Guests service scores and review site ratings

• Increase of loyal guests

• Modify if and when necessary based upon results

and feedback.

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Allan Wlaschin,


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Country Inn & Suites by Carlson - Scottsdale� Hotel Background

� 162 Room/Suite Limited Service Property

� Hotel located in Central Scottsdale

• Medical district with Mayo Clinic

• Nine miles to nearest spring training facility

� Opened 1996 and renovated in 2008

� Comp Set features: 3 Marriott Limited Service Products,

La Quinta, and Limited Service Independent

� Brand Value Requirements

� Breakfast daily

� High Speed Internet in all rooms/public areas

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Hotel Level Value

� Hotel Level Value

� Complimentary shuttle within 5 mile radius of hotel

� Complimentary Evening Snack of Soup and Crackers each night after 9pm

� Special rates/promotions for medical business

� Title sponsorship of Gift for Life program in cooperation with Scottsdale Health Care Center

� 2010-2011 – Desire to redefine hotel value

� Late 2009 Discussion

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Value 2010 and beyond

� Defining Value for 2010 and beyond

� Long Term Hotel Value Proposition Goals

� Short Term Hotel Value Proposition Goals

� Targeting a market and or season

� Developing a package rate around this market/season

� Create the value add-ons and rate

� Marketing the offer

� Reviewing Results

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Spring Training is the Target

� Spring Training !!!

� Long Term Hotel Value Proposition Goals

• During 2011 season our hotel will be only 3 miles to two new stadiums with two MLB teams

• Generate a early ‘buzz’ as our hotel being the spring training place to be

� Short Term Value Proposition Goals

• Create a new type of package unique to market and hotel

• Sell some rooms!

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The Value Added Offer� Spring Training Package

� Targeting market or Season and Package Development

• Spring Training 2010, standing out from competition

� Create the Value Add-Ons and Rate

• Package inclusions (Value 2usd per bag)

– Sunflower Seeds

– Bubble Gum

– Baseball Cards

– Two Bottles of Water

– Unique element – Weekly Cookout!

(cost 150usd for season)

• Package rate

– Where to Price? Equal to Bar? Higher? How much?

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Marketing the Value Added Offer

� Marketing the Offer

• On Property – starting February– Front Desk promotion

– Table Tents in Breakfast room

– Other on property marketing/awareness

• Off Property– Offer Specific URL (pretty URL) -www.countryinns.com/scottsdalespringtraining

– Email marketing to past guests

– Promotion on CVB Website

– Facebook/Twitter Updates

– Email marketing to past guests

– Press Releases prior to and during March

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Measuring Results of Value Added Offer

� Reviewing the Results

• Measurable Results– Bookings: 68 Room Nights, $121.96 ADR, $8279.97 Revenue

– Revenue – Cost (package inclusions & food) = Hotel Profit » $8279.97 – $310.00 = $7969.97

• Increase positive results in hotel comments through Medallia and Trip Advisor– A highlight of some of the comments received:

» “the free hot dogs and chips [during spring training] was very nice”

» “first time staying here during spring training will stay again – cook out a nice plus”

» “we stay at the Country every year, really liked the new package, my kids really enjoyed the sunflower seeds”

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Other Example of Value Added Offers

� Other key results

� Positive comments from ‘regular’ guests

� Guest Feedback on being unique to competing hotels

� Comments regarding ‘no other hotel has done this’

� Other examples of value proposition

• Valentine’s Day Twist

• Easter Egg Hunt

• Mothers Day Package

• Special Event

• Market Specific Demand Drivers

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Review: What can you take away?

� Let’s Review

� Define your value proposition goals

� Make the offer unique (or add a twist to existing offer)

� Determine costs of package and price accordingly

� Market both internally/externally (be unique)

� Measure the results

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Questions? Questions? Panel Moderator: Jeff Higley, VP, Digital Media and Communications, HotelNewsNow.com/STR/STR Global

Panelists:

Vail Brown, VP,

Global Sales, STR

Jon Eliot, Director



Allan Wlaschin,


Noreen Collins,


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Upcoming HSMAI University ProgramsUpcoming HSMAI University Programs

If you haven’t registered for the entire 10-part Revenue Management series going through December 14, 2010, you can do so now. Details on this series and other upcoming webinars at www.hsmaiuniversity.org

Next session: May 25, 2010 –

Grow RMs Knowledge of Internet Marketing

Also coming soon…May 18, 2010: “Upsell in a Recovering Economy: Trends for Enhancing Group and Catering Sales”June 1, 2010: “Guess who's coming to visit?” - What to do when your property owner calls a meeting with your property leadership July 1, 8, & 15: Mobile marketing, in-depth social media strategies, and social media case studies & best practices

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The Evolving Dynamics of Revenue Management: A Comprehensive Revenue Optimization Road Map for

Hotel Owners, Operators and Practitioners

By Kathleen Cullen & Caryl HelselPublished by HSMAI Foundation in partnership with the HSMAI Revenue

Management SIG Advisory Board and TravelCLICK

Coming Soon!

Revenue Management has continued to grow as a science and an art over the past several years in many industries, and especially in the hospitality industry. On the most fundamental level, the basis for success is to have the right revenue management organization in place to support the revenue strategy. A solid understanding of revenue management is critical throughout an organization, from top to bottom. This HSMAI Foundation publication brings you and your property the very latest information on understanding the market, market segmentation, forecasting, revenue strategy, pricing, inventory control strategies, and performance analysis. Included are a plethora of case studies to help you optimize revenue at all levels.

Expected publishing date: July 1, 2010. Pre-order today at www.hsmaipublications.com.

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TodayToday ’’s webinar is copyright 2010 by the Hospitality Sale s & Marketings webinar is copyright 2010 by the Hospitality Sale s & Marketing Association International Association International with All Rights Reserved.with All Rights Reserved.

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