6 Management Tips To Help Rate Recovery

　　As 2013 gets underway, and drama about the fiscal cliff gives way to a potential debt ceiling and budget debate in the months ahead, the narrative for the hotel industry continues to be one of cautious optimism. There is a near universal expectation that the industry will build on the slow but steady momentum of 2012 and that the year ahead will see strong and accelerating growth. While analysts forecast occupancy numbers to grow more slowly, the year ahead does seem like a quality opportunity to build on recent rate increases, and, in the process, recapture some of the rate loss that occurred during the depths of the recession.Anecdotally, 2013 budgets seem predicated on relatively flat occupancy numbers and some modest rate hikes, but translating that budgetary theory into management practice often turns out to be tougher than anticipated. Ownership and management groups tend to make predictable mistakes when it comes time to increase rates, and industry professionals should take the time to remind themselves of what it takes to make a rate recovery:

　　1. Be a leader

　　It’s been well documented by respected industry publications that the hotel industry dropped the ball on rates by lowering rates too much during the economic downturn crisis. Driving a rate recovery means taking initiative. Fundamentally, however, being a rate leader and setting an example means worrying less about the competitive set and more about figuring out your right price point and making it happen. Being a rate leader instead of a follower means recognizing that, for the most part, comparable properties in a market are all in the same boat. A golfer will tell you that his real competition is the golf course not the other players. The same holds true in the hotel business. Ultimately, you have to do what is right for your property.

　　2. Be strategic

　　Several significant components of your 2013 average-daily-rate strategy should already be in place, including negotiated national accounts (request for proposals), your local negotiated rates, plus your group pace and selective sell targets. To make an immediate impact, however, establish an effective channel management strategy that positions your property to capture ADR increases, assuring your rate strategy is rational and consistent across all producing channels. Additionally, tweaking group rates can be effective and efficient for incremental revenue increases. The strategy to increase ADR can be modest, but the mindset needs to be that this is a means to an end. Consider all rate categories analytically, and identify which group or groups provide you the opportunity to raise rates.

　　3. Make it happen

　　The bottom line is that if you budgeted a rate increase in 2013 for your property, you have to take action. It all starts with the leadership of the GM directing your revenue management team. Ideally, discussions between the revenue team members is ongoing but took place during the budgeting process a couple of months ago—and ownership is on board with the established rate increase—but getting a budget approved and implementing it are two completely different things. All too often GMs get a budget approved but then don’t follow through with the revenue management team or the director of sales to get it done. It is up to your GM to lead the team at the property level to take the steps necessary to implement that on-paper rate increase and put it into practice.

　　4. Stay competitive

　　Online travel agencies had a record year in 2012—an ongoing concern for all hotel brands because of the net expense. OTAs continue to have a big impact on the cost of doing business, and that is all the more reason to be smart with rates. Your revenue management team should have a detailed strategy for each OTA that reflects the net rate and impact on the hotel’s overall rate objectives.

　　5. Don’t panic

　　From debt ceiling debates to tax changes and the ongoing rollout of new health-care legislation, there will likely be a period of uncertainty as businesses and families start to figure out how all of this will impact their wallets. At least on the leisure side of the aisle, tax increases affecting disposable income could reduce travel and take some steam out of the economy, while the latter half of the year is likely to be more robust.

　　6. Plan ahead, turn it around

　　Effective management professionals and leading management companies are taking the initiative to ensure that budgeted rate increases are being implemented and that those rate hikes pay off downstream. It is not too early to start thinking about how your current tactics will affect your 2014 RFP strategies. A confident, proactive GM and revenue management team will be able to capture ADR and revenue share gains with a dedicated and strategic approach. Most importantly, ownership needs to clearly communicate to the management team that capturing rate—and doing everything possible to make it happen—remains a priority in 2013 and beyond.