Strategies for Increasing Hotel Room Sales

Edward A. Merritt, PhD

Dr. Ed Merritt is the James A. Collins Distinguished Professor of Management at California
State Polytechnic University (Cal Poly Pomona) and maintains a consulting practice in
leadership and strategy throughout the U.S. Prior to entering the academic world, he
spent twentyfive years in the hospitality industry where his primary focus was resort and
club development and management.
To contact the author: eamerritt@csupomona.edu
This article identifies and discusses 15 proven techniques, which can be implemented to
increase room sales at your property. It also includes ideas for finetuning or overhauling your
room sales strategy.
1. Price room rates according to selling point. Inspect rooms for uniqueness, room size,
features, location, and guest request. Categorize these elements as a basis for room rate
differential from which to sell. For example, a down and out, end room, with Jacuzzi tub,
overlooking a wooded stream, which is the mostoften requested room would sell for more
than an upstairs room located farthest away from the stairs. Creating a variety of room
rates allows for creative up selling by your staff. Moreover, a variety of room rates allows
for a basis of negotiation when booking a reservation.2. Spruce up. Examine your property from a
guest's point of view for curb appeal. Are
potholes filled? Has the parking lot recently been slurried and or seal coated? Are the
parking lot stripes fresh? Are all light bulbs shining? Is the grass freshly mowed? Are the
flowerbeds alive with annual color?
3. Draw guests in with price. Not all properties want to compete on price. However, if you
need to sell rooms, price is an effective motivator. Consider a changeable letter board or an
electronic sign which can display a message. Advertise your lowest possible price. Use price
as an opportunity to upsell on the basis of features. As occupancy increases, consider raising
rates. This is especially true if, for example, your propertys walkin traffic increases after 6
p.m. (with an average 20 requests) and you have just 15 rooms left to sell at 4:30 p.m.
4. Empower your clerks to negotiate price. Travelers expect to be able to negotiate
especially when they see that the parking lots are empty at 10 p.m. at all competing
properties. The idea in this case is that any rate above variable cost (the cost for
housekeeping, amenities, and laundry) contributes to profit. You set the parameters; your
clerks negotiate within those parameters. Bonus guest services agents on room sales.
5. Allow options for the breakfast question. Many limited service properties have a tough
time deciding whether to add eggs and meat products to their complimentary breakfast.
2 Consider continuing with your continental breakfast being complimentary, but adding a
modest charge for the option of eggs and meat products.
6. Sell to the local community. Advertise your property to the local community in the Shopper
as an extra bedroom. Give locals a special rate to encourage them to use your property
when outoftown guests come to visit. Consider blast emailing lastminute bargain rates
when your sales fall short of forecast.
7. Examine the number of tasks that your guest service agents provide. There is always a
balance which must be maintained between labor cost and guest service. At some point,
however, you lose room sales when clerks are trying to perform too many functions.
Consider, for example, the incoming phone reservation which is missed because the clerk
on duty is taking another reservation, cashiering, night auditing, providing room service,
replacing an air conditioner, performing wakeup calls, taking a message, walking security
rounds, room clerking, running the phone console, issuing a key, running the elevator,
parking a car, or giving directions to the local diner.
8. Choose a market niche. In which market are you competing? Successful operators know
their market niche and stay within their bounds. There has always been a margin for
properties to cross over into competing territories ever since Holiday Inn merged concepts
from fullservice hotels and limitedservice properties. However, a $59.00 rate likely does
not warrant custom toiletries and triplesheeted beds. The limited service category
3 emphasizes basic room accommodations and minimal public areas. Compete on the basis of
providing the best value instead of the most amenities. Your bottom line will thank you and
your guests will too. Motel 6 and the early days of the original Volkswagen Beetle
revolutionized their industries by utilizing these principles.
9. Reexamine your operating affiliation. Are you an independent or a flagged property? If
you are independent, you may be able to benefit from the advertising, name recognition,
centralized reservations system, and operating support of an established brand. On the
other hand, your location, operating conditions, and market may suggest that you rethink
the expense involved in maintaining a flag relationship. The bottom linedoes a flag
affiliation offer you a net gain?
10. Establish a program of total quality management. All employees should have an
opportunity to be involved in a program to incrementally improve operations at your
property. The function of a total quality management program is that operational
challenges are addressed at the lowest possible level within the organization, which can
yield operational savings, increased employee satisfaction, as well as increased guest
satisfaction. W. Edwards Deming, a wellknown USbased consultant, was instrumental in
helping automobile manufacturers in Japan develop their once cheap cars into worldclass
quality cars. The idea was that every employee within the organization was charged with
making one small positive change to his or her workplace. The change could favor the
organization, the employee, the manufacturing process, or the customer. Lets do the math
4 (stay with me to see how this works out): 10,000 employees working 250 days each year,
for 20 years (since he started the program) = 50 million improvements! His motto: A little +
done often = a lot. The same can work at your propertyno matter how small.
11. Mine demographic data from registration cards. Watch for patterns and useful information
among variables such as zip codes, email, company, number in party, arrival days and
times, and special requests. For example, zip code patterns suggest areas that you can
identify for advertising. Email addresses allow you to communicate with your guest history
easily, quickly, and almost without charge. A recurrence of a particular company would
allow you to investigate the possibility of creating special rates and/or billto accounts.
Number in party and special requests can assist you in providing an adequate number of no
smoking rooms, rates for late checkouts, rollaways, daytime rates, etc.
12. Become a femalefriendly property. One of the fastest growing sectors of the lodging
industry is single female travelers. Tap into this market by making subtle adjustments to
your operating standards. For example, clip and maintain all hedges no higher than hood
height. This helps provide additional security by reducing hiding places and shadows. Ensure
that parking lot and walkway lighting maintains lighting conditions to a minimum of dusk
illumination. Change remote corridor entries to operable only with room keys (and remove
door props). Position security cameras throughout public areas. Review the amenity
package. Review lighting quality and amount in the bathroom/dressing area.
5 13. Book returns at checkin and checkout. Train guest service agents to ask about return
reservations at checkin. For example, it is normal for clerks to maintain a friendly
conversation with guests during the checkin process. Use these conversations to discover
opportunities for advance bookings:
Guest Service Agent (GSA): "Where are you headed this morning?"
Guest: "We are driving up to Wyoming to visit Yellowstone for 10 days."
GSA: "Would you like to reserve a room now for your return trip home?"
Clerks should be paid bonuses for booking gains such as these. Similarly, clerks should inquire
about future reservations at checkout.
GSA: "Do you get out this way often?"
Guest: "Yes. I have a consulting contract with Dodge. I am here every month from the 25
th
through the 30
th
like clockwork."
GSA: "Can we book some future reservations dates for you while you are here and we have all
of your information in the system? That way it will be all taken care of for you, and you won't
have to worry. You can always let us know if something changes."
Chaching!
14. Offer "special" business packages. Operators are always searching for ways to raise their
average daily rates (ADRs). Traditional thinking suggests that frequent business travelers
expect discounted rates. Maybe not. Consider this alternative strategy by example: Business
traveler Smith stays at the Shady Rest Motel. The rack rate at the Shady Rest is $90; The
ADR is $75; and Smith pays $80 for a room. Smith pays with a Corporate American Express
6 card. Over time, the operator, Patel, has come to know Smith and has discovered that
Smith's company will pay up to $100 per day for a room. Patel bundles a valueadded
business package for Smith with the following daily features: Best room available at check
in, two complimentary drink coupons for the manager reception, complimentary full
breakfast, Wall Street Journal, USA Today, and free DVD movies. Smith pays $95 per day.
Let's examine the impact of the deal:
Smith's rate increases from $80 to $95 ($5 over the rack rate and $20 over the ADR).
Smith's company continues to reimburse the expense, since the rate is within the allowable
range.
Smith gets the best room available at checkin, which, arguably, costs Patel $0. Smith values
the room premium at $15.
Smith gets two drink coupons, which costs Patel approximately $2. Smith values the
coupons at a street value of $6.
Smith gets a full complimentary breakfast, which costs Patel $2 above the free continental
breakfast. Smith values the breakfast at $7.
Smith gets a Wall Street Journal and USA Today, which costs Patel $1.50. Smith values the
papers at $1.50 plus a convenience factor.
Smith gets free DVD movies, which, arguably, cost Patel $0. Smith values the movies at $7.
7 8
The result is a winwin situation for both Smith and Patel. Smith is rewarded for being a
frequent guest at the perceived value at $36.50 per day. Patel receives $9.50 per day more
after expenses. Think about this example when considering frequent guests.
15. Consider minimum stays and drastic rate deviation during special events. For example, the
Cliff Motel rack rate is $75; The ADR is $59. During homecoming weekend at the nearby
university, demand is such that the property charges $100 per day with a twonight
minimum. This rate and minimum stay holds until 15 days before the event. Inside of two
weeks, the property first drops the minimum stay and then the rate in order to help ensure
a sellout. Three days before the event, the rate increases to $150, but no minimum stays on
remaining rooms. The community accepts the policy due to market conditions. Consider
your opportunities for implementing similar strategies.
Email me your ideas and suggestions for increasing room sales, so that we can share them.