Managing a Hotel When Times Are Tough

There is no doubt that the hotel sector is at a critical moment, with demand slow to respond and distribution channels failing to perform as desired, as they too—like hotels—are suffering from the standstill in demand. Cost savings are part of the daily routine for hotel marketing professionals, and likewise, projects involving major financial investment are being put on hold regardless of their return on investment. Probably a mistake; it is worth recalling the Chinese restaurant anecdote I mentioned a few weeks ago.   The hotel sector is a resilient industry, accustomed to recovering from major international disasters that affect demand and, consequently, its results. It is an industry with a remarkable ability to move from the most extreme economic prosperity to misery in terms of performance figures. The line separating one situation from the other is so fine that it is not even defined. In reality, hoteliers themselves do not know where that line lies, since the shift from one situation to the other does not even depend on them. That is why I say it is a resilient industry: it pays for the consequences of actions caused by third parties through its results. Today, we are once again in one of these situations, although this time the unfortunate circumstances affect a greater number of businesses, making the situation especially damaging. Indeed, hoteliers, accustomed to reacting to these situations, have set the traditional machinery of such times in motion, as if following a survival manual:

1. Workforce adjustments.
2. Cost savings.
3. Maximising distribution agreements.
4. Lowering rates.
5. Waiting for someone to come up with a solution.

Unfortunately, today the manual is not working:

1. Making workforce adjustments requires financial outlays in the form of severance payments, which, given companies’ current lack of liquidity, may mean that the cure turns out to be worse than the disease itself.
2. Cost savings also entail—and, it must be said, wrongly so—cutting marketing investment, precisely the budget item that can, one way or another, help businesses survive at this time.
3. Maximising distribution agreements in an attempt to maximise customer reach, but... if customers are doing the same as we are—that is, keeping their spending in check—they are probably not going to spend their money on accommodation. Moreover, distribution agreements require investment in resources to manage them, resources in the form of people—probably the very people we were trying to lay off in the first of these points.
4. Lower rates? Thinking that lowering prices stimulates demand—that is what intermediaries would have us believe when they are unable to sell our product. The reality tells us that subsequently rebuilding rates to the levels that are optimal for the hotel will not be easy, so... it is better not to try.
5. Of course, we can sit and wait, while blaming the Government, institutions, the opposition, or the competition, but none of that solves anything. By the time we realise that we hoteliers ourselves must fight for our own survival, our competition—hungrier and more astute than us, or perhaps simply equipped with the necessary resources—will already have gained a considerable competitive advantage, and worse still, will be taking our customers.

Those hotels determined to survive are investing in marketing. Probably in a different way from how they have done so in similar situations, given the current delicate circumstances. The investments I see being made follow two lines that complement each other quite well: Market positioning, among other reasons because it is sustainable, and investments in the short, medium and long term offer a positive ROI. Building Relationships, generating empathy with customers and connecting with them through the various semi-free channels offered by today’s web. In the long run, if we want customers to come, it is not a bad idea to be where they are.