Times are good in the hospitality industry. We are fully recovered from the economic downturn of 2008 and the outlook at the 2014 STR-sponsored Hotel Data Conference is for 2-3 more years of growth. The strengthened hospitality market has prompted many franchise operators to weigh rising fees and brand-related expenses against the option of going independent. If this describes you, read on for insights to help with your decision.
We tapped three leading executives on the question of "brand versus independent":
- Harley Mayersohn, senior strategy officer for Mosaic H&H Advisors.
- John Bradway, director of marketing for the newly-independent Eau Palm Beach Resort & Spa.
- Alex Cabanas, president and CEO of Benchmark Hospitality. Cabanas spoke with Jim Butler at the Global Hospitality Group® for an extensive interview March 2, 2014. Cabanas' comments are used with permission.
Indie properties need personality
Mosaic H&H Advisors’ Harley Mayersohn said, “A number of factors bear on the decision to go independent. First, the property should have a personality on its own, rather than a standard brand format. It is also valuable if the property has a history, like the Arizona Biltmore, which had been independent for many years and is now managed by Hilton’s Waldorf Astoria Group.”
When you take down the flag, be ready to step up sales
Mayersohn counsels operators to be ready for an impact on business when they go independent. “When you take a flag down, there will be a decline in visits. People will miss a beat, so you need to balance between lost business against the money you save by not having franchise fees.” Mosaic H&H Advisors is a problem solving/ideation hospitality practice founded on the core principles of deliberate, creative thinking to find solutions and opportunities.
The AAA Five-Diamond Eau Palm Beach took down its respected chain flag and became fully independent in 2013. “We are a well-known luxury resort, but we understood that when we left the chain’s call center we would have to be ready with our own professionally trained reservation team,” said Eau Palm Beach Director of Marketing John Bradway. “Using NAVIS technologies and best practices, we were able to train our new team to Forbes Five Star standards and created sales incentives. We also implemented NAVIS’ Narrowcast call center technology. This helped keep our call center busy and built occupancy as an indie.” Click here to learn more about NAVIS’ reservations sales system.
Direct voice channel reservations dominate full-service resort revenue
Here's an important data point for prospective independents: statistics for the full-service resort segment show that direct "off line" voice channels deliver $3 for every $1 from online. A professional sales-focused reservation team is essential to a high-value resort. As a result, some independent operators are adopting effective new direct-channel strategies to deliver higher conversion rates and revenue.
“The NAVIS system helped us measure and optimize the Eau Palm Beach reservation team to high quality standards. We've implemented an incentive program to reward staff for property knowledge, caller contact information gathering, and conversions,” said Bradway. “We learned to ask for the sale. This is a very important step.”
Pyramid Hotel Group’s Mayersohn said, “Before you go indie, do the math on how long it will take to recoup the room nights after the brand change. Brands perform well with occupancy, but have lower rates. Indies generally have higher rates.”
Eau Palm Beach applied such an approach. The property launched independent operations with conversion-focused call center agents. It also rolled out an online introduction strategy with effective use of pay-per-click (PPC) to educate its market.
Indies that track campaigns get the most for their marketing investment
“We announced Eau Palm Beach in multiple markets and channels, and we needed to track which promotions, markets, and PPC placements were effective,” Bradway said. “Our NAVIS reservation system tracks revenue from each campaign and channel. NAVIS’ solutions show the revenue on each digital spend and this is extremely valuable."
Bradway added that, "A luxury property like ours gets a large number of reservation calls. Some callers reach us after going to our website or seeing an online promotion. Our online campaigns are more effective because NAVIS shows return from our banner ads, PPC, and website placements. This lets us invests our marketing dollars where they are most effective. When a property goes independent, it is essential to invest marketing spend in the most productive channels. This has been important to us.”
NAVIS sales and marketing solutions empower resorts, hotels and vacation rental management companies to leverage the full profit potential of their direct channel. NAVIS hospitality clients drive more demand, capture more demand, and convert more demand with dramatic increases in revenue and RevPAR. With a laser focus on actionable, real-time CRM data from the direct channel, NAVIS uncovers new and often ignored revenue opportunities, including increased reservations productivity, greater marketing efficiencies, call center optimization, and greater visibility into their businesses. NAVIS clients outperform competitors, enjoy greater market share, higher NOI and more revenue. Click HERE to find out what NAVIS can do for you.
Bill Schlosser, Director of Marketing Communications
389 SW Scalehouse Ct.
Bend, OR 97702
Julie Keyser-Squires, APR
Atlanta, GA 30328
Logos, product and company names mentioned are the property of their respective owners.