4 Reasons Regional Hotels & Motels are Doing it Tough

Growth of Serviced Apartments

There is an undeniable trend that the serviced apartment sector is on a spectacular growth curve as they continue to steal market share off the Motel and Hotel sectors.

Guest expectations are increasing as they demand more value from short stay accommodation providers. Serviced apartment style products give guests more space, more facility, more flexibility and often better value. While they are wanting more in some areas, in others, it is less important. Daily cleaning services as an example is an area guests are indicating they can do without if it means getting a better rate.

In 2011 Motels and Serviced Apartments had equal market share at 26% each and we have seen the apartment sector increase year on year ever since. Hotels are seeing a similar rate of decline also and while there is a rapid increase in supply of service apartments in metropolitan areas. With an aging Hotel/Motel stock in regional Australia, it’s only a matter of time before the same pattern occurs there as well.

Dumbed Down Customer Service

It’s not just physical assets that are important either. Customer Service Excellence is an area that I believe can be vastly improved at no cost to business. It is important to remember in regional hospitality, that our guests are often metropolitan based and have relatively high service expectations based upon their city experiences in much more competitive environments. “She’ll be right mate” is fine from an authentic and genuine point of view, but does it really meet their expectations. The cost of a smile or remembering someone’s personal details is nil, as is going over and above. Near enough is not good enough!

I had an experience in Albury once at the Siesta Resort where by upon my departure date, I emerge from our suite to find the General Manager of the property washing my windscreen and leaving a ‘travel safe’ message for me on the windscreen before we leave. The General Manager! Can you believe it? Now that’s customer service.

The opportunities are abound and they cost you very little, but keeps them coming back and spreading the word.

Digital Lag

While many regional operators have in fact moved to a website and even adopted platforms like trip advisor and the booking button, I still see is a reluctance to distribute room rates online through Online Travel Agents and having a strong digital footprint.

With the rise of consumer lead platforms such as AirBnB, regional operators can no longer ignore the rapidly changing digital phenomenon.

Now, I totally get this. It’s not that operators don’t understand the power of doing things digitally, it’s just simply when you consider the scale of the typical operation and the man hours required to maintain your online distribution it sometimes seems easier to just do it the old fashioned way. “Placing your Bookings on Auto Pilot” is the eternal promise that digital can bring, but the reality is so different. Small to medium Hotels & Motels seem hamstrung.

As a comparison to say the retail world, it is like customers are in the shop but it’s just too expensive to have staff on the floor to serve them. So rather than going over to serve them we only have the man power to wait for them to come to our retail service counter, one at a time! Exploring digital, places numerous virtual sales staff on the retail floor so to speak!

Going digital is fine if you have the resources to manage it and the scale to justify it, and otherwise can be quite a burden. However I believe there is still a way to maximise the digital opportunity for regional Hotel and Motel businesses. Ignore at your peril.

Static Pricing

Now here’s what I think is the biggest missed opportunity of all. Having spent time in a large city based Hotel as a Sales Manager driving many yield development programs, I have experienced what the big boys do to maximise the revenue performance of their properties. It is a multi-faceted approach with the simple aim of increasing, or optimising, room rates while maintaining or even growing occupancy.

There are many levers we can pull to achieve this and it’s not that hard. It simply takes a system and some focus.

As country boy at heart, upon returning to my roots in regional NSW, I see so many hospitality businesses missing out on the opportunity that property yielding presents. Most regional Hotels & Motels I see run with a ‘static’ pricing structure which doesn’t allow them to take advantage of the ebbs and flows of the market.

You see the hard work is already done. You have the investment in bricks and mortar; you have many systems, procedures and staffing all in place. Your rooms are available to be booked every day of the year. In my time at Rydges Hotels & Resorts, every day we had the task of selling 181 rooms to the public. If we didn’t sell them all, well you don’t get another chance to sell them do you! That’s it, the day is done. The thing that the public don’t understand is that when it’s deathly quiet, you don’t see anyone coming to console you on the days when you’re at 15% occupancy. So when it’s 100% occupancy (when the demand is high) surely you deserve the opportunity to sell those rooms at a premium!

IMPACTS

So what are the impacts if we begin to address some of these challenges that are pressuring Regional Hospitality?

If we begin to satisfy your guests growing needs, through improved facilities. If we give your focus on customer service a makeover. If we customize your digital footprint to suit both the changing consumer needs and the demands of your operation, and if we maximise your profits through a dynamic pricing strategy. The rewards for addressing these 4 challenges can be great.

Revenue Here & Now

Make hay while the sun shines, so they say. We’ll that’s what you’re in business for isn’t it. It’s not just lifestyle, let’s put some profits into your pocket to help you towards that trip, holiday or investment you’ve been dreaming of. You run a 7 day a week business, you deserve some reward for your effort. You need a solid motel business plan to achieve this but it is so achievable.

Revenue in the Future

Looking to sell any time soon? Well the Hotel/Motel sector has had a pretty flat experience in recent years with many developers and investors looking more towards serviced apartment stock because of it’s attractive returns, growth trajectory and alternative exit points. So how are you going to position yourself for exit in a tightened market?

You need good performance numbers with strong revenue, great physical appeal, expanding customer base of both corporates and leisure guests, and solid systems and processes in place. All helping to make the investors mind up that your business is just plug and play. Investors don’t buy “Potential”, they buy what’s real.

If any of this sounds familiar and you have some concerns about the performance of your Hotel or Motel, then let’s get together and discuss what you can do to improve. I remain in touch with the industry and have a keen interest and understanding of the hospitality rooms business. So much so, I run my own short stay serviced apartments business in my home town of Temora. (www.revivehotels.com.au in case you wanted to check it out).

I provide Hotel Business Coaching Services via my offering called Hotel Rescue. If you’d like to know more give me a call or drop me a line.