The economic downfall has caused a reduction in RevPAR in the hotel industry. Smith Travel research (STR) indicated that 2010 will be slightly better, not without more reductions in the key metrics. Occupancies are forecasted with a 0.6% decrease, ADR with 3.4% decrease and RevPAR is expected to shrink with 4.0%.
Your business can turn this around, the key is to understand the new economic situation and its impact on your business. Demands will be fluctuating and showing an irregular pattern, which makes forecasting more challenging. The key is to look at your product mix and the change in demand for each specific product.
To start with evaluating the trend line in the current market, leisure or corporate travel, what is the main market trend. As Phuket is a main leisure environment, corporate business are not of interest. Bangkok however, might look closer in to the days of the week which represent the highest and lowest occupancy. Also look at the location of origin, domestic or international and are there specific markets within those groups. The more information the better to determine your strategy.
The historical data gives you a good insight in what has been sold, to whom at what rate and for which duration. Overlay this with seasonality and or special events and you can determine if these have had effect on your business results.
In next step is to look in to your plan, where are we standing now in the market and where are we willing to be in the market. A firm look at your competition and what is their offer, and what is yours. It is important in a plan that you have a target, a goal, where you want to end up. Your strategic plan should live up to this, not to short term changes.
By starting to create a budget, it will help to determine where you want to end. (the result) Breakdown you yearly budget into monthly, weekly and daily budget and you able to anticipate any moment of the day to achieve your goal. The budget should also incorporate the market segments, and the average price of this segment. Analyzing the highs and lows of certain market segments, creates a good impression of what we can expect of their contribution and how other related department can anticipate on to this.
Create your objective short term and long term. They both will contribute to your plan, your goal. Each objective should be stated for each market segment. As clearly each segment is having a different set of needs.
Be realistic, do not use the wide approach, but approach your targets carefully and precise. Not every market segment is interesting to approach as it takes too much time, take the one who are easy to approach and which you understand their behavior and needs. This way you can use your resources wisely and create the best ROI for your company.
In order to maximize your rates, you have to apply a strong revenue management. The airlines are strong in it, but also the hotel business is more and more applying the same approach, fill base load with lower rates and sell the remaining at high rates when the demand is high. Use this approach in any given market to obtain the highest yield but maintain rate parity at all time.
Create a plan in which you will study the demand for your product. With the knowledge of the behavior of your market you can tackle their needs and apply rate management to obtain the highest yield in each segment. Also it helps to focus on the Social media and website optimization as these are nowadays key elements in which the market is informed about your product.
The current crisis will not be over soon and as the financial market also the hotel market is hit hard. By wise business planning and get market information creates strength and confidence to overcome this current situation.