March 18, 2011 | Hospitality Industry
With just about every hotel reporting that their pick-up is more last minute than ever lately, the end result is that today’s front desk and reservations sales agents are quoting transient rates that swing dramatically and also explaining the terms of rate “fences” that vary greatly according to market conditions.
Given that today’s revenue strategies and systems are more advanced than ever before, hotel revenue management and marketing executives are not only better able to forecast demand in advance, but also to adjust and change the rates according to unexpected variations as dates approach. With just about every hotel reporting that their pick-up is more last minute than ever lately, the end result is that today’s front desk and reservations sales agents are quoting transient rates that swing dramatically and also explaining the terms of rate “fences” that vary greatly according to market conditions.
Historically, hotel marketers have always adjusted rates and terms periodically. However the changes were typically more predictable such resorts that had high and low season rates, or business hotels that dropped rates on the weekends. Likewise, most all hotels at least sometimes changed the deposit terms, such as requiring full prepayment for city-wide events . Yet in today’s RM environment, rates and terms change much more frequently. Therefore it is more important than ever to provide frequent training and coaching to your transient sales team on how to best execute various rate strategies. Here are some tips from our KTN training modules on the subject of executing various rate, pricing, and distribution strategies:
Rate Quotation Strategies During Periods of High Demand:
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Position the initial rate(s) being quoted as being a good value. When quoting top rates during high demand, it is more important than ever to use room descriptions that allure and entice, not just list the features. So rather than saying “It’s a 400 square foot deluxe king room with a pillow top mattress and 500 thread count sheets,” train your team to say something like “This is our largest and most spacious guest room, and I’m sure you’ll enjoy our extremely comfy pillow-top mattresses and ultra-soft sheets that our guests always rave about.”
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Reference higher “rack” rates when quoting lower rate tiers. During periods of high - but not extreme - demand, your hotel may be selling rates that are higher than normal but still lower than your highest “rack” rate. In this case train your team to mention the “rack” rates to position the rate being quoted as being a good value. For example: “The standard rate for our King Deluxe room is $200, but for the dates you are looking at we can offer you the rate of $175.”
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“Sold-out” vs. “not available.” When callers ask for discounts that are closed out for high demand dates, train your team to say that lower rates are “sold out” versus “not available.” The term “not available” implies that the rate exists but we are not going to give it to you. The term “sold out” implies that the supply has been exhausted. Train them to also offer to check for other dates when promotional rates are available, which will help move demand to lower-demand dates where it is needed.
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Explaining The Advantages of Minimum Stays. During high demand your strategy might include having minimum stays. An easy example is for a three-day holiday weekend such as Memorial Day. Often callers will want only two nights and you can train your team to say, “Since it is the holiday weekend we do have a three-night minimum stay like most of the other resorts in the area. I know you were only looking for two nights, but the great part is that when you leave on Sunday you won’t have to worry about an 11am check-out time since you will have the room as late as you want it…” Or if they want the last two nights your agents can say “…. Although you are arriving Saturday you can use the third night for Friday, so that way when you arrive your room will be immediately ready instead of having to wait for our 4pm check-in time. “
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Upsellling. Depending on your inventory of accommodations, during periods of peak demand your hotel might find that the best room categories sell out last. If it is case it is important to train your team not to inadvertently apologize and make what’s left sound like “left-overs.” So instead of them saying “All we have left is our suites…” or “All we have left is our concierge floor rooms…” or “All we have left are our waterfront view rooms…” Instead they should say “Fortunately I still have some options for you…. What I still have available is actually one of our nicest options… Actually, it is only $50 more than our regular rooms would have been if they were available and the great part is that you will receive….”
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Down-selling. Again depending on your inventory of rooms and what type of hotel you operate, you might sometimes find that during periods of peak demand the best accommodations go first, leaving less desirable room types or locations. For example a beach or lake front resort might find water view rooms sell first, and it is the “garden” or “courtyard” view that is left. Train your sales team that as with the previous example, they need to avoid making what’s left sound like left-overs. They should start by pointing out any glaring deficiencies, so that guests do not have an unwelcome surprise at registration, but then talk about what is good about the remaining option. For example, “Fortunately what I still have open for your dates are our limited view rooms. Now this of course won’t have the water view you requested, but the room does have all of the same amenities and you can still use all of the hotel facilities I mentioned. And since there’s so much to do here nearby, you might not find yourself in the room all that much anyway. It really is a great value at just $150.”
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Holding the line on price. During periods of high demand when all discounts and promotions are closed out, some callers will no-doubt still ask for discounts if nothing else just to test the reaction. Make sure your staff quotes full rates with confidence and understands that smart consumers always ask for a lower price even if only just to check.
Rate quotation strategies for low demand dates:
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Incremental upselling. During periods of extremely low demand most hotel revenue managers want their agents to start by offering the lowest available rate that his showing to avoid losing any potential bookings whatsoever. In this case you can also train the team to always offer at least one higher rated accommodation and in doing so quote only the incremental rate difference. “Now Mr. Perez our Premium level rooms include all of the same features of our traditional room I just mentioned, and for only $35 more you can upgrade to this level where you will receive and have access to….”
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Quoting “fade” rates. Although many hotels have long ago moved to a strategy of always quoting the “best available rate,” other hotel revenue managers still encourage their staff to offer “fade” or “don’t lost the sale” rates to avoid losing any calls to competitors. Even if your strategy is typically not to fade, you probably still want agents to match certain rates under certain conditions, such as when a lower-tier rate was accidentally left open for an OTA channel that is lower than what is showing on the hotel website. When executing this strategy, train your agents to indicate they have to “check further” for the lower/special rate; then after a short pause or brief time on hold, they can create urgency while offering the lower rate by saying: “Okay thanks so much for holding Ms. Smart, I was able to check on that. If we can confirm this for you now I can offer you the special rate of …”
Rate quotation strategies for all market conditions:
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Explaining why rates change during a stay. Hotels that are aggressively managing their revenue and pricing may use a strategy whereby rates change on a nightly basis, resulting in a guest’s rate changing one or more times during the same stay. Even when the revenue strategy is to quote “complete stay rates,” callers will often ask for the break down by night. Train your agents that in this situation they should quote the higher rated nights first, regardless of their arrival pattern. So instead of saying “the rate for the first night is $150, then it goes up to $175….” they can say “for the last night of your stay the regular rate of $175 applies, and on the first night we can offer you a lower rate of $150.”
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Explaining why rates are higher than a previous stay. Certainly in the last couple of years hotels across all market segments and locations offered lower rates than they have ever before offered. Now with demand rebounding, hotel RM’s are working to gain back rate. So it is common than ever for callers to say “that’s so much more than I paid last time.” Train your team to respond with a comment such as “Yes, I know, we did have some lower rates last season with the economy being what it was, but with things getting back to normal and we’re back to our more traditional rates.”
Doug Kennedy, president of the Kennedy Training Network, has been a fixture on the hospitality and tourism industry conference circuit since 1989, having presented over 1,000 conference keynote sessions, educational seminars, and on-premise training workshops for diverse audiences representing every segment of the lodging industry.
