The most important distribution channels you have are walk-up, direct, and drive-by business from your local market. The strongest performing hotels shoot for at least 50 percent via direct local. Here’s how to do it.
There’s an old rule called the Pareto principle (also known as the 80–20 rule), which means that roughly 80 percent of the effects come from 20 percent of the causes. For example, you may have heard that 80 percent of your sales come from 20 percent of your clients.
These simple and effective strategies will help you achieve 80 percent of the results with 20 percent of the time, and will allow you to focus on many things simultaneously so you can begin building your empire today.
Build your base like a layer cake or foundation of a house. At the bottom, secure as much year-round non-leisure business at discounted contract rates; segments such as government, corporate, educational, local businesses, and trucking companies.
Find out what your annual break-even is, and fill up 50 percent of your capacity at lower negotiated contract rates to meet your overhead. Then raise your rates as demand hits for all other segments, leading to much greater profits. You will never have a seasonality problem again.
Take your local phone book and make 25 outbound calls per day to these local market entities:
Schools, from university- to elementary-level: Speak to the coaches and athletic directors. Tell them who you are, and that you love teams. Offer a special rate with a free coach’s room and always give them your card with your direct number.
Churches: Offer conference rooms and special rates for visiting church groups.
Funeral homes: Offer a special bereavement rate for out-of-town families, and be sure to provide your mobile number for 24-hour emergency access.
Insurance agencies: Offer special rates for people who have experienced a house fire, break-in, or water damage.
Local corporations: Offer special rates with shuttle service and 52-week availability for last-minute meetings.
Prisons: Offer a special family rate with a shuttle for out-of-town visitors.
Government: Call states, federal agencies, and local agencies offering a special rate for out-of-town visitors on government business.
Construction companies: Offer special rates for visiting construction workers. Do this cycle two to three times per year, and you don’t even have to sell. Just let them know you are here to help when needed.
Once you’ve successfully built your local market base, the most important place for managers is in the lobby welcoming guests. When employees see that you care, so will they. Give your card to guests and say thank you for choosing this hotel. For every OTA-sourced guest, offer your card and number with a special VIP direct rate. Managers, do not worry about phone overload. I give out my mobile number to every hotel owner, I list it on LinkedIn and press releases, and I respond to online guest comments (and complaints) directly. Even though I am CEO of a top 10 chain with 1,000 hotels, hardly anyone ever calls, but they like to know that they can.
Finally, be visible in the community. Don’t forget to be a local center for charities—give away tons of promo rooms to auctions and good causes. Become a known part of the local chamber and visitors bureau. It is critical to know that a hotel can and should become the highest profile member of a community. Conquer your local market, and then your momentum can become unstoppable. Who knows? Maybe you will be the next hotelier running for president.
About the Author
Tom Magnuson is cofounder and CEO of Magnuson Hotels.
Lodging Magazine, May 24, 2016