ORLANDO, Florida—The evolving distribution landscape, particularly initiatives being introduced into the marketplace by third parties, are creating challenges in increasing hotel revenues, according to Kirk Kinsell, president of the Americas region for InterContinental Hotels Group.
For this reason, IHG executives at the brand’s Americas Investors & Leadership Conference on Wednesday stressed the importance of increasing market share.
“The single best way to increase market share is for our brands to grow,” Kinsell said. To increase the confidence of owners and investors putting money into IHG hotels, “we will now offer 20-year license term agreements to build hotels for all of our hotels,” he said.
For conversions, the standard term will remain at 10 years.
Focusing on the customer
Growing the company’s brands might give IHG an advantage over the competition, but it’s crucial that property-level managers understand what they can do to win the majority share of customers in their respective markets, said Steve Sickel, interim global head of sales and distribution.
Executives are seeing that guests who are loyal to one particular brand within the IHG family will not book at another IHG-branded hotel if their preferred property is not in a specific market, Sickel said. “Oftentimes, they don’t know about our brands or they haven’t been properly sold on those brands enough to try them. We’re going to change (those consumers).”
As for the loyal IHG travelers, many properties are leaving money on the table by not using the more than 400 online tools and resources IHG has available to its owners.
“The last thing we want to do is sell a customer a room for $100 if they are willing to pay $120,” Sickel said.
IHG Priority Club members pay an average 6% more in average daily rate than those who are not part of the program, said Lara Hernandez, VP of distribution and relationship marketing.
In addition, loyalty members “are more likely to choose our brands. They are three times more likely to book direct, which costs (franchisees) less … and they are four times more likely to write positive reviews,” Hernandez said.
Making guests feel appreciated and thanking them for their business is key, she said. “You might think these are little things, but it’s the little things that can bring big results.”
Owning online reputation
Guests are providing an unprecedented amount of feedback, Hernandez said.
And customers are consuming that content just the same. Hernandez said guests look at three or more channels before making a purchasing decision, she said, even if they are not booking online.
That’s why it’s important to encourage guests to leave feedback directly on the property site rather than a third-party review site, she said. Many consumers leave property sites to check reviews on other websites and never go back to book.
“Your guests are talking,” Hernandez said. “You have an online reputation and you need to own it.”
Making important rate decisions
Helping drive top-line revenue means finding the right guest and making important decisions about sales, said Bob Morse, COO of the Americas.
That said, only 23% of IHG’s Americas hotels are utilizing the company’s sales performance tool, which is included in owners’ franchise fees, Morse said.
“Hotels that are engaged in the tools are seeing significant improvement in sales performance, up to 45% better sales performance than hotels not using the tools,” he said.
Making decisions about rate is harder now than it was in years past, Morse said. “We had two rate seasons (when I was a rate clerk)—‘high’ and ‘low’ … Now we have 365 rate seasons. It’s just like the weather. Every day is different, and planning ahead can make all the difference.”
Taking advantage of established best practices will help individual properties increase their revenues, he said.
For example, one of the company’s tools helps sales teams determine their hotels’ aspirational rate for requests for proposals, the minimum rate they would accept and the one they’d walk away from, but most properties still are not utilizing the resource.
“It’s OK to walk away from business,” Morse said, “but you absolutely need to understand your marketplace before you make that decision.”