At a recent HSMAI Greater New York Chapter symposium on Creative Solutions to Expand Your Marketing Dollars, several experts offered insights into marketing unsold rooms. Monetizing unsold hotel room inventory is – by a wide margin – the largest available asset for management and ownership at many properties as it can help drive additional profitability, demand and brand awareness, according to Sean Hennessey, CEO of Lodging Advisors. Monetizing unsold rooms is much more lucrative than dumping inventory into OTAs (online travel agencies).
“Just shifting 5-10% of OTA business into trade could enhance a property’s market mix by reaching higher revenue-producing, long-term customers,” noted Jody Merl, President of Innovative Travel Marketing.
Hennessey told attendees: In New York City alone, many properties are running at 85-90% occupancy but at flat rates with new product coming into the market, while “there remains 15,000 unsold hotel rooms each night – that’s 5.5 million empty rooms each year equating to over $1 billion in lost revenues and more than $300 million in lost net income. Nationally, the numbers are staggering.”
The perishable nature of hotel rooms makes them well suited to being monetized. Hennessey emphasized the need for hotels to differentiate themselves in order to get higher-rated customers.
Merl reviewed ways to execute, such as monetizing unsold rooms to fund integrated marketing campaigns that produce more direct business and editorial inquiries. The fruits of those results include top rankings with consumer travel press and online review sites such as TripAdvisor.
“The revenue of a lost room night can never be replaced,” said Merl, adding: “Leveraging the value of perishable, unsold hotel rooms as ‘currency’ is an innovative, fiscally responsible way to purchase valuable marketing channels and advertising, in order to differentiate your product and stay top of mind in a competitive marketplace. You’re tapping the cash under your mattress to procure desirable media and clients who are directed to the hotels, while shrewdly planned media buys targeted consumers, meeting planners or travel agents, to ultimately generate new customers and incremental revenue.”
For hotels with limited or no budget, trading unsold inventory enables them to purchase media and other marketing services, which generates a halo effect of visibility that further extends the reach of their sales and public relations efforts.
Merl explained how monetizing rooms on trade yields discerning customers and exposure. For example, consistently advertising over time drives interest in properties for “Best of” / “Readers Choice” Awards in leading consumer travel publications, and properties capitalize on these accolades to gain desirable clientele and generate revenue. In this fashion, hotels and resorts increased their average rate.
Merl gave many examples of how trading rooms has created and expanded marketing budgets to reach global travelers for leisure, corporate and group business. Trade can be used to fund promotions, video production, merchandise, client incentives and even accommodations for sales calls, ultimately enhancing revenue and preserving cash:
Free and low cost links such as enhanced company TripAdvisor listings to maximize visits to hotel websites
Presence on film and video production sites
Sweepstakes and broadcast promotions
Subsidize production of low-cost video, TV commercials and photography
Generate sales without a sales staff and market without a budget to reach global travel agents via trade, resulting in significant bookings, increased room rates and higher ranking in competitive set
Vertical marketing to target corporate travel and HR managers via trade advertising, and generate ancillary editorial coverage in business travel publications
“Ultimately, barter is a strategic marketing tool that creates relationships and builds demand among target markets, while preserving the value of product,” summarized Merl.