2015 Business Planning Guide

The hospitality industry is changing by the minute and this often creates challenges for hoteliers to keep up with the latest trends, drive profits and increase guest satisfaction. As 2015 quickly approaches, it is important to put together an actionable business plan, in particular a “digital business plan!” If you are the architect of your hotel’s business plan, think like one. An architect does not toss together a stack of Lego blocks and hope they will fit together. A written business plan is paramount to all entrepreneurs and business owners. What does it entail? It is actually simple.

Start with your brand. What does your hotel or company stand for? There is no need to be academic here, just have a fundamental understanding of what your firm represents. Whether it is “to create the most luxurious experience with constant pampering” or “a high quality budget/economy lodging experience for today’s vacationers,” the key is to articulate and communicate it to your team members and to your target market.

plannerPrioritize your digital goals by laying out your short and long-term business goals first to form a foundation. Start with the matrices you have on hand for each of your digital platforms. That might include your newsletter and website. Your email “open” rates and web “bounce rates” are good places to begin. The old saying, “content is king” holds true here. Content creation and distribution are critical to the success of your digital marketing – good content grabs and holds attention!

Digital Marketing

At R.A. Rauch & Associates, Inc. we have become big believers in digital marketing and employ buuteeq as our digital marketing firm for each of our hotels. The Seattle-based firm is incredibly responsive, bright and ahead of the curve. Its production/platform typically costs a few hundred dollars per property per month. With the pace of change in this area, if we hired a traditional interactive agency we would not be able to keep up without a web “refresh” at $10,000 per shot, twice a year. The combination of great websites, consistently fresh layout and content, and no additional development costs upfront (or otherwise) is what made them our choice.

Reputation Management

It is essential to diligently follow a reputation management program/system. How are your third party reviews? How do you handle them? A strategy must be in place to capture positive reviews and secure and engage cheerleaders for your business. This can be done on your own or with the use of a third-party reputation management firm. Prices typically fall in the range of $100-$200 per property per month. We have been using Travel Media Group, TrustYou and Revinate and know there are many options out there.

Recently, R.A. Rauch & Associates, Inc. has encouraged guests to share their experiences at the properties using Flip.to, a marketing platform that allows hotels to engage with guests from the moment they make a reservation to creating a unique experience upon arrival. As guests share with their family and friends about their upcoming trip to the hotel, Flip.to creates a custom experience for their social media connections that can lead toward a future booking.

Social Media

Social media sites such as Facebook, Twitter and even TripAdvisor have changed how the hospitality industry interacts with guests, creates experiences for guests and has changed how hotels are marketed. It is important that hoteliers understand the power and the reach of social media. A powerful strategy should be executed that influences the target audience, creates engagement and promotes the property in real-time. A strong social media strategy for hotels should include the following:

  • Make review sites such as TripAdvisor a priority and respond to all reviews in a timely manner.
  • Use current customers to market your hotel and capitalize on their comments via Flip.to.
  • Create a virtual concierge through the property’s website or other digital app
  • Implement concise and impactful videos to enhance dramatic imagery that is appealing to guests making booking decisions.
  • Utilize content marketing and real-time marketing via social media pages to consistently engage with guests.


The present and immediate future is mobile. SoLoMo (social, local, mobile) is a trend that is growing exponentially. According to a recent survey that was presented in Hospitality Upgrade this past summer, 76 percent of guests want an alternative to carrying something in their wallet. This could jump start the use of mobile gift cards that will compete with physical gift cards. Keep digital customers coming back using rewards like mobile coupons. Target your active online users, give them reward choices and make it easy to use as well as to cash in.

Lee McCabe, head of Travel, Global Vertical Marketing at Facebook says, “Utilization of social media is still in the early stages of development in the travel industry.” He expects the use of Facebook for direct marketing to match your own database; Millennials, often referred to as Generation Y, age 18-34, are the key market here as 90 percent of them are on Facebook. Keep in mind, any Facebook promotion must show a return on investment.

Implementing Great Entrepreneurial Ideas

Fast Company recently held a conference and generated great entrepreneurial ideas (we converted the best to hospitality) that we should implement into our daily routine

  • Empower Your People – Turn Them Loose
    “Freedom is the greatest when the ground rules are clear. Chalk out the playing field and say, within those lines, make any decisions you need.” – Dick Brown, former chairman and CEO of EDS. For hotels, think about those guest service agents and other team members and how much easier everything would be if they did not have to constantly look for a supervisor, manager or owner.
  • Increase Your Net Worth
    “Networking is sharing your contacts with others to create value without the expectation of compensation. Your network is your net worth.” – Tim Sanders, former chief solutions officer at Yahoo. For hotels, it’s all about networking. This could be for sales, finding contacts with companies that can increase the value of your asset, or any other purpose. Networking is essential.
  • Expand Your Roster
    “Think of your team as not just the people you pay, but as the people who pay you as well.” – Feargal Quinn, former executive chairman of Superquinn. For hotels, management companies can look to owners for advice from time to time. How about marketing alongside hospitals, tech companies and biomedical companies to bring people to your market? Novel ideas?

Revenue Management

The cost of attracting, booking and retaining guests must be a factor in determining what segment of the market to pursue. The reservation cost per channel, optimum channel mix and other factors are critical for use by the revenue manager. This information must be put into play instead of just driving occupancy; the key is not rate but net profit per occupied room. Digital marketing performance measures include social media and web analytics, especially mobile. Today’s revenue manager should be a highly valued team member and part of top management.

Moreover, there is a major trend within the chain hotels to automate this process, however, this does not mean that individuals do not stay focused. A computer cannot discern why certain historical patterns exist. A one-time only piece of business or a critical shift in where holidays fall can materially impact the revenue management algorithm.


At the end of the day, whether you are an owner, operator or both, net income and the value of your hotel is a key indicator of the market strength and your team’s performance. Capitalization rates, which determine value by providing an estimated return that a buyer will receive on your current net income, are the best barometer for determining value. Today, these rates range from 5 to 11 and the average is 8. This means an investor would receive a first year return of 8 percent on a cap rate of 8.

Boutique hotels, resorts and top tier metropolitan areas are lower than average, meaning that your price would be higher (lower cap rate means higher value). Now is a great time to invest as net operating income (NOI) was up by double digits in both 2012 and 2013 according to CBRE/PKF and increasing again over the next three years. Values are at or above previous highs in 2006 and 2007.

There are always caveats to any business plan. Terrorism, global market meltdowns, tragic events, potential for nuclear war, China, the Middle East and changes in market conditions locally can wreak havoc on the best laid plans. Stay focused and true to what you do best and most likely 2015 will be the best year you have ever had in this industry!

A strong business plan must contain short-term and long-term goals that are measurable and attainable. The plan must be innovative, in line with the latest industry trends and focused on staying ahead of the competition. By developing a strong business plan, hoteliers are providing a road map for a successful 2015.

Robert A. Rauch, CHA
[email protected]
Follow me on Twitter: @truehotelguru
Like us on Facebook: https://www.facebook.com/rarhospitality
www.hotelguru.com | www.rarhospitality.com


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