Is All Business Good Business?

While your product or service may be beneficial to the vast majority, not every client is worth the effort. A business filled with clients who are consistently looking for a “better deal” – or are otherwise causing you to lose sleep at night – is a clear sign that it’s time to redefine your target market. Start by creating a list of characteristics of your best customers and then research how best to reach them with your company message.

The topic for today’s blog is an interesting conundrum. Should you take all the business that comes your way? When should you turn business down – even in this economy? What type of business is not good business?

Let’s look at a few examples….you be the judge!

Selling Scenario #1: A corporate guest stays at your hotel for the night, and at check out he gives his card to your GSR and says, “Please have your Director of Sales call me, I’d like to negotiate a local rate for my future business.” Upon receipt of the card, you research the reservation and discover that he stayed in your hotel before, each time booking the AAA rate which is 10% off of rack rate ($116.10). You research his company, call him and find out that he will be visiting your area 2 nights a month for the next 12 months because his company is relocating to your area. There is no other anticipated business from his company as he is the only person relocating, there are no anticipated visiting VIPs, and they don’t do any meetings, etc. The customer asks for a $99 rate.

What do you do? Do you offer him the $99 rate and an LNR contract and forget that your sales “policy” states that all LNR contracts must guarantee X number of days to qualify for the discount? Do you take a chance that he is fibbing and will stay anyway at $116.10? Do you risk the fact that he will start shopping opaque and instead of getting the AAA rate, he now stays one or more times at your hotel at whatever tier of opaque you have open? Do you further risk that he will shift to one of your competitors who is willing to give the $99 rate?

What would I do? I might first evaluate how this business would affect existing business on the books. I would also research whether or not this company interacts or is working with or for any of our existing LNR customers. He does not appear to know that our existing customers have a “lower than $99” LNR rate. I would look at our Running 28 day Star report ADR and evaluate whether or not this business will help or hurt us. If I can answer positively to all of these questions, I would extend the $99. Another negotiating strategy might be to offer a counter offer and meet in the middle some where – say $104-109.

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Selling Scenario #2: A corporate guest stays at your hotel for the night. At check out your GSR discovers that he normally stays at the branded hotel across the street but they were full and he could not change his dates for the trip. He is a loyal “other brand” rewards member. He says he might be willing to stay again, but the rate would have to be lower to get him to switch brands and he is currently “platinum” in the other rewards program. He is the only person who travels from his company and he comes to this area 2-3 nights per month. His company has an LNR with the hotel across the street which is comparable to your current LNR rates.

What do you do? I hope your GSR savvy enough to ask for his business card so that you can call him or his company to discuss travel/rate options…. and if so – I would hope that you would not only research the company, but contact the travel manager (or the traveler) to discuss what he likes (and dislikes) about your competitor. By getting these facts you are in a better position to offer a competitive rate for this company. Maybe you offer to “reward” some additional points in your frequent stay program so that he is on an even keel with the other brand. Share shifting is a major factor for improving business during this economy. Do not think for one minute, that your competition is not trying to take your customers!

What would I do? I definitely put out a competitive bid for the business. I would also offer to match rewards program points – a little at a time as an incentive to stay – maybe double points with a bonus # of points after the third stay. I might also suggest working on a “trial” LNR. Start with a 6 month introductory program with a rate 20-30% off BAR, and points. Give your hotel a chance to win over their business with service.

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Selling Scenario #3: A travel manager calls your hotel and suggests that their company would like to send it’s future traveling executives to your hotel. They are very budget conscious that want a flat rate even though you are a seasonal rate hotel. They travel year round and suggest that they will stay at your hotel 5 days per month. You have 6 months per year that you consider “high season” where your rates are $40-50 higher than they want to pay, 4 months per year where your rates are $20 higher and 3 months per year where your rates are even to what they are suggesting. Your year-round LNR and group rates are typically about $20 higher than they want to pay. Your hotel runs a 50% occupancy during mid- and low seasons, and 90-100% during high season.

What do you do? This is a tough one because of your hotel occupancy and seasonality. You must first sit down and do the math. Calculate how much revenue this customer would bring in and how much it might displace higher rated business. Write out a Pros and Cons list. Does this business interact or influence any other businesses or any of your current customers? What is your competition doing?

What would I do? I would first try to negotiate a seasonal LNR rate. If that didn’t fly, and I was seriously considering taking the business, then I would definitely cap the number of room nights per year, not allow last room availability, and would put black out dates in the contract.

 
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The learning lesson here is that you need to not just grab any business that comes your way. You need to research the company, do the math and see what the financial implications are if you take the business, you need to know your hotel history and forecasts, and you need to discuss all questionable business with your General Manager and your Corporate Director of Sales and Marketing.

Will this business affect existing business and set a precedent? Are you protecting group rate and loyal customer rates?

Research the customer. Find out where they stay, do reference checks. Why are they looking for a change? Are they an upstart company or new to your area? Knowledge is power!

Happy negotiating!

Linda

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