Before we complete our business plans for 2018, a review of macroeconomic data is in order. China’s growth might be slowing but we anticipate a fairly steady U.S. economy in 2018. We will likely slow to about a 2 percent GDP growth rate over the next year as this economic recovery reaches the 100 month mark next year.
Unemployment is low, consumer confidence is solid and household spending is strong. Interest rates remain low, business confidence is strong and nothing to derail the economy is imminent. Oil prices have been unusually flat notwithstanding the speed bump caused by Hurricane Harvey.
All of this information bodes well for the hotel market in the U.S. which should lead to our estimate of 3 percent RevPAR growth in 2018. Last year at this time, we projected 4 percent RevPar growth for 2017 and stand by that number. Naturally, the caveat is that unexpected “event” that could stimulate a precipitous decline in demand. We believe that can be averted in 2018 despite the craziness in the Middle East, North Korea’s chest pounding and the turbulent economies abroad.
As we are now nearing the end of summer of 2017, this means budget and market planning time is here. While many operators merely look at last year’s numbers to budget and forecast, the only meaningful way to budget is to analyze the market thoroughly. Whether you are opening a new business or getting ready for 2018 budgeting, now is the time to begin the planning process.
The following action needs to be taken:
- Review trend report and competitive set information from STR. This will provide a baseline. Ghost call primary and secondary competitors to obtain price points, features and benefits. Obtain sales collateral and start a competitive information file. The process of “elicitation,” coined by John Nolan in “Uncover Your Competitors’ Top Business Secrets Legally and Quickly-And Protect Your Own” discusses the importance of this area.
- Meet with general managers and marketing team members of primary and secondary competitors. Site tour each business and establish a referral program. Coordinate a market review with your franchise marketing manager if appropriate; obtain a franchise national media schedule. Discuss opportunities for digital advertising to promote your business with your extended marketing team. Independents must create a digital presence.
- Develop a 2018 sales and marketing budget; do not assume growth from last year. Review the STR report and other market intelligence and market pace reports carefully. Review quality and quantity of sales collateral and ensure your email lists are updated for newsletters and blasts.
- Review customer information guides whether electronic or printed. Plan a sales blitz. Order blitz giveaways and mementos with your logo, address, web site and phone numbers. Choose items that will stay in contacts office such as candy jars, post-it notes or coffee mugs. Review your central reservation database property information file. Forward to your central reservations database supervisor.
- Meet with key contacts at your Convention and Visitors Bureau and Chambers of Commerce. Obtain a list of advertising and trade show opportunities for budgeting. Contact local Chambers of Commerce and obtain lists of your area’s top businesses and employers. Qualify key companies and individuals to create or update your own emailing or mailing lists/labels. Business Journals also have great lists. Ensure that you have a list of your competitive set top demand generators (360 report).
- Contact guest loyalty rewards program administrators at franchise headquarters to arrange to promote your business in the next member newsletter. Solicit articles on your business as a feature story. Develop possible press releases for the coming year along with a public relations plan and contact each segment specialist for the franchise worldwide sales staff to see what opportunities are available to promote your business at upcoming trade shows, future segment specific directories or sales missions.
- Create a strong database for electronic mail promotions and ensure your website is not a brochure but rather a focused, customer-acquisition medium. Create website awareness, i.e., create some “buzz” via pay per click, SEO, SEM and unique offerings. And if your website is not mobile optimized by now, this needs to be corrected immediately.
- Continuously create and deliver “can’t-resist” content. Traditional advertising is rapidly losing out as marketing professionals realize the advantages and effectiveness of digital content marketing. Marketing’s new mantra of “brands must now act as publishers” has arrived in part because of social media and its potential to engage in meaningful conversations with their loyal fan base and potential clients alike.
- Develop a permission based electronic marketing program. This is a type of marketing whereby the target audience is solicited by e-mail and his or her approval is sought before marketing to them. By investing in the sharpest media tools like blogs, social media, newsletters, webinars, e-books, photo-sharing, videos, shared media and even Virtual Reality, you will drastically reduce the hefty investments in traditional paid media that are becoming substantially less effective with modern consumers. Simply put, you need to create and share content while being of interest to lots of people to be a player!
- Calculate the lifetime value of a new customer. As an example, if a traveler stays with you two nights per month at $150 per night for 5 years, that is $18,000 in today’s dollars. This data is helpful in determining the value of a new customer. Include calls to action in all advertisements and measure the result of every email marketing blitz and test new approaches periodically.
Use this process now or risk losing your competitive edge! And do yourself a favor and do not create the budget without first reviewing your Business Plan – otherwise you are just entering numbers to make yourself feel good. Remember that all business is local – national trends are merely the foundation of your plan.
Enjoy the end of summer and Q4!