5 Ways to Increase your Hotel Group Sales
Hotel group sales are an integral part of the hospitality industry and make up approximately 15–35% of total room revenue. While closing a group sale can seem like striking gold, it can also present a high amount of risk to your property. Groups typically have longer lead times, require discount rates, and ask for challenging requests. It’s important for hotels to constantly review and improve their hotel group sales strategy to increase their overall sales and property revenue.
There are so many factors to consider when evaluating your property’s group business and developing the right strategy to increase your overall group sales. At first glance, this can seem like a pretty overwhelming task. But don’t let that stop you. The good news is you have all the tools at your disposal to properly evaluate and execute a plan that will not only streamline how you book your groups, it will also increase the number of bookings at your hotel without losing out on revenue.
1. Your Revenue Manager should be your work BFF
There’s a common misconception in the hospitality industry that Revenue Managers and Directors of Sales don’t get along. This backwards way of thinking is not only detrimental to your working relationship but also to your property’s overall profitability.
It’s time to start looking at your Revenue Manager as a sales ally. Their job is to constantly analyze trends and review data to ensure your hotel is selling rooms at the highest rates possible. They have the best understanding of the current landscape and are able to provide you with rates that optimize your hotel’s revenue (and, if you close, your commission).
Why not set up bi-weekly or monthly meetings to review past bookings and future occupancy rates? This will allow you to present proposals for approval with rates that align with your Revenue Manager’s data and, because you submitted well informed rates, your turnaround for approval will be shortened which increases your opportunity to close.
2. Analyze your past data.
It’s important to constantly evaluate your past group bookings to better understand your clientele and identify areas of opportunity in your business. If you’ve never analyzed your past data, start by looking one year back and record your findings in your CRM, PMS or even a Google spreadsheet. This information will help you rank your current accounts and will be a point of reference so that you can make quick and educated decisions when considering future bookings.
When looking at past data it’s important to consider a few key factors:
When was the group booking?
Timing is key when determining if a room block was a good decision or a missed opportunity. Review this material with your revenue manager (your new work BFF). Start by reflecting on the time of year and days of the week that the group came through. Ask yourself, did the hotel sell out? If so, could they have sold out without your group at a higher FIT rate? Was there a better day of the week or time of year to sell to this group? This data can help you plan for future proposals. Now that you’ve identified key peak dates, highlight them on your calendar and keep them top of mind when responding to RFPs.
What type of group was it?
There are typically 5 different types of groups that book at a hotel:
- Corporate Groups: Corporate group bookings are the most favourable type of sale. They typically require hotel rooms, meeting space, and banquet food and beverage. Guests staying at your hotel for a corporate event typically have a per diem and, depending on your hotel’s location, are likely to spend it on room service or your hotel’s restaurant or bar. While these groups can be finicky with their requirements, they generally tend to spend the most money out of all the groups at your hotel and don’t cause issues for your front desk or security team.
- Tour Groups: Tour operators typically negotiate rates with hotels over a year in advance which can be a double edged sword. You know you can count on them for booking rooms at a specific rate, however the lead time can be so long that you may be undervaluing future rates at your property. Operators that end up moving forward with a room block resell branded tour packages (with your hotel included) at an inflated rate. They are common in metropolitan cities and cities with a large tourism industry (like New York or Vancouver). They tend to be loyal and you can count on them for repeat business. Depending on the demographic of the tour group, they can spend more money at your hotel like a group banquet dinner or a nightcap at the hotel bar. It’s important to remember that hotel operators are using your hotel to run their business and have a budget and profit margin that they must meet which can lead to pricing negotiations. When determining future rates, work with your Revenue Manager to ensure that you’re both on the same page.
- Local Associations: These groups don’t typically book a large volume of hotel rooms. They are great for utilizing your event space but rarely purchase F&B. If you have limited meeting spaces, it’s recommended that you only book local associations during shoulder season. This ensures you don’t have to pass on any larger bookings with a higher budget that might come through at a later date.
- Government: Government bookings can be occupancy fillers and a great opportunity for sales during slower periods. They tend to book hotel rooms, meeting space and food and beverage but expect a discounted rate. They’re not the most dependable for repeat business because the industry and budgets are always changing.
- SMERFs: SMERFs are Social, Military, Educational, Religious, or Fraternal organizations. Like associations and government bookings, they’re able to fill any occupancy gaps that you may have at your hotel. They don’t typically book a large room block or do repeat bookings. They can be a risk when booking this group type however are usually well connected and can be a source for future referrals. These can be a dark horse when evaluating your past bookings.
What was the group’s ADR?
ADR — your Average Daily Rate — is a financial metric that can be quickly calculated for past group bookings. It’s important to compare your group’s ADR with the hotel’s ADR during their booking dates. This will help you quickly identify any gaps that you might have with your Revenue Manager and identify any periods when you could have sold a room block for a higher rate. It’s also a quick way to rank your accounts if you don’t have time to do a full data analysis. It’s recommended that you rank the difference in the hotel’s ADR to the group’s ADR because this value considers market trends and time of year. If you only look at the actual group ADR you could have skewed data when ranking your clients.
Did the group bring in any additional revenue to your property?
When calculating a group’s ADR, additional money spent within the hotel’s four walls isn’t considered. This includes any spending by the group from room service all the way to a banquet with food and beverage. It’s important that you calculate this when doing an analysis of past bookings because it does impact the total revenue a group brings to your property.
It’s easy to track any catering sales, as there’s always an invoice associated with these events but how do you calculate leisure sales within the hotel?
There are a few different ways to estimate this number. The easiest way is by looking at any room charges connected to a room in the group block through your PMS. If you want more accurate reporting, provide the group with a unique discount code that they can use at any of your amenities or establishments. This will track all other payments (besides a room charge) and you should be able to easily pull this data from your POS or PMS.
3. Lead score your current accounts
Lead scoring is a fancier term for ranking your accounts. You assign a numerical value to an account based on certain data points (including the factors discussed above). The higher the score, the more important the account. Review your past data and come up with a scoring system that makes sense to your business. Record these scores in your CRM, PMS or a Google Spreadsheet so that you can quickly evaluate an account. Once you’ve developed a scoring system you can also use it to prioritize new leads. This is especially useful during peak season when RFPs can seem unmanageable.
Now that you’ve built a relationship with your Revenue Manager, analyzed your past data, and developed a scoring system to rank current accounts and new leads, you can start looking for new business.
4. Reach out to current clientele
Remember those accounts you ranked? It’s time to start reaching out to the accounts that ranked high and see if they want to rebook. Your past leads are your number one source for bookings. Not only is it 5 times less expensive to retain old business, your current clients are 31% more likely to spend more money at your property than a new client. Set reminders for birthdays, anniversaries or holidays and spend time nurturing your current relationships so that clients feel valued and want to spend their money at your establishment.
Past bookings are also a perfect resource for referrals. If you know an account enjoyed their time at your hotel, ask them for a testimonial or — even better — ask them if they know of any businesses that are looking for a venue to host their next event. You are 4 times more likely to convert a lead if they were referred by a friend. Send thank you gifts or create a reward program for referrals to further increase your leads and bookings.
5. Prospect and find new opportunities
If you’re still finding you have occupancy opportunities at your hotel, it’s time to focus on prospecting and building new relationships.
Build partnerships within your community
Let’s say you don’t have the occupancy or space to host a group, why not send a referral to another local hotel or ask a venue to assist with meeting space? What?!? Send business away from your property to a competitor? At first glance, this seems counterintuitive but from a business perspective it actually makes sense.
Your competition can be one of your biggest sources for new business. When you send business their way they are more likely to return the favour. By supporting each other with hotel room overbookings, meeting spaces, parking, or leads, you’re able to create an authentic relationship that you can both benefit from. It’s important to not be short sighted and build those connections around your business.
Connect with your Destination Marketing Organization (DMO)
Your DMO’s job is to promote tourism in your city and increase business in the hospitality industry. They receive RFPs and send them out to any properties that meet the requirements. Invest in your DMO and participate in their networking events. Respond to any RFPs sent out by your DMO and refer inquiries that you can’t fulfill to your DMO. This keeps business in the city and contributes to the growth of the hospitality industry.
Create a visual online experience
Most event planners do their research online before even contacting a hotel or venue. You have the power to improve a potential clients’ online experience by providing images, floor plans and videos. Hotels that have virtual tours generate 48% more bookings. By creating a realistic online experience, you’re more likely to connect with visual planners and increase your overall bookings. Win — win.
Hotel group sales are a dynamic part of the hospitality industry. By taking a proactive approach to understanding your past data and applying your learnings to future events, you will be able to identify trends, develop connections and strengthen networks, and close bigger deals that will increase the profitability of your hotel.
