In this third chapter of a nine-part series, Starwood Hotels & Resorts’ former Director of Revenue Strategy for North America, explains where, and how, hotels should look for suite demand.
No, this article is not about the Zika virus. It’s actually about how to spot suite demand. Revenue and sales teams at hotels spend a lot of time chasing demand – and then trying to capture it. More of it, and faster than their competitive set. Transient room demand changes with seasonal and day-of-week trends but for the most part, the entire market is in it together. All boats rise with the tide and while some take more advantage of it than others, it’s fair to say that in the macroeconomic sense, market fluctuations dictate demand. A smart revenue & sales team is like an expert mixologist, tapping the right ingredients of segmentation (including layering group business) to fill its house with the juiciest of demand. Thus your weekly market share report is little more than the result of battles in demand mix – day in day out, rather than a sustainable advantage over your competitors that is hard to emulate.
A sustainable advantage in demand brings you something that others don’t and can’t have. The biggest successes here come from capturing demand that is unusual, inconsistent, and unique. A good example is group business. Although there are some trends in group business such as seasonality, conventions, and repeat business, for the most part, group is unpredictable. That’s what makes it so advantageous because all else being equal in a market, a hotel with group business is going to pull ahead than its competitive set. I’m not discounting the value of yielding transient business on top of the compression created, but what I’m trying to convey is that spotting and capturing demand that doesn’t follow common market patterns is a winning strategy.
To this end, premium suite demand also fits this definition. Sure, suites have some very high demand patterns especially during events like UNGA in New York or Oracle Open World in San Francisco, but for the rest of the year suite demand is unpredictable, inconsistent and extremely beneficial when you capture it. We all remember a time when a lead for a premium suite converted, boosted ADR for that week and you moved a spot up in your ranking on the market share report. Cast your mind back to how you did it, and you’ll remember that it was most likely a personalized, customized sell that converted a specific customer for a specific price – and most often, not the published one. That’s because, just like a customized group proposal, a suite sell is a proposal that the customer needs to mull over, weigh options and choose carefully to maximize return on the thousands of dollars that they will spend on that suite.
No one spends $5000 a night on a suite just to get a good night’s sleep
Once we realize that just optimizing pricing based on our revenue systems works for rooms but not for suites, we can get down to exactly why people buy suites and then fill that need. One common misconception is that people spend on suites only because they can afford it. The other is that the suite itself is a compelling enough reason to spend it. Example? The assumption that if people fly business class, they’ll always stay in suites too!
It’s true that certain communities, geographical areas, and demographics spend more on suites than others, like guests from the Middle East. But they’re by no means the only market in the world – besides, we all know every major hotel company has a Middle East office trying to capture this demand. To be clear, it’s a worthy effort to entrench yourself in highly beneficial feeder markets where the effort spent per lead is far lower than if you were trying to pick out a needle in a hay stack of a less saturated market. So I won’t state the obvious but rather provide a framework for spotting new suite demand.
So how do you find unique suite demand?
First, redefine your luxury offering by understanding the value proposition of your suites other than just as a place to stay – then look for people who’re willing to pay for it. In Paris it could be views of the city and Eiffel Tower, in Hawaii it could be the beach, or the weather. Mind you, this value proposition can’t just be ‘service’. Who can truly tell me the difference between the service you get at a Ritz Carlton, a St. Regis, a Peninsula or Mandarin Oriental? With some bespoke flair, they’re the same signature luxury service worldwide. Nor is the fact that your suite chandeliers came from Bohemian crystal or your carpet was woven from the finest Persian silk going to be the only reason why customers stay in your suites. But they will pay to enjoy breakfast on their suite’s terrace in Paris. This redefining of luxury has become necessary in part because of people seeking experiences more than ever, over materialistic things prompting hotels to take a hard look at what experiences they offer. They have to be unique too – people will pay for a terrace in Paris, perhaps not in Beijing!
Second, ask your customers what more they would like to see you offer – then offer that only for suites. Here’s an example. A business hotel I know with high mid-week demand asked their customers what they could improve. Many business guests complained that they had to wait too long at the desk to check-in and out (although other non-front desk alternatives are available these days). The hotel took a real pain for their customers and solved it by attaching a suite to that perk not the other way around. They created a separate line for suite check-in and check-out. People now started paying for expedited service – staying in a suite was just a way of justifying it. I’ll cover more about suite experience in a later chapter in detail. Suites need a new positioning in the hierarchy of room products. If you remember the days before 2007 when customers paid ludicrous amounts for suites, then you also know that those rates will probably never come back. We have to create new value for suites and asking your customers is a sound place to start.
Finally, rely on macroeconomic events to ‘cultivate’ new markets. Vietnam has the world’s fastest growth rates since 1990, after China, so you can bet an entire strata of society is coming in to money. Luxury is new and staying in suites which was probably unfathomable a decade ago, and reserved only for the super-rich, suddenly seems affordable for many. It is still a middle income country but if you don’t get in there first and introduce them to luxury, someone else will. Just because it’s not a tried and tested market doesn’t mean demand doesn’t exist. Another example, if tourist numbers in Paris have halved where are all those people who would’ve visited France going? Time to tap in to France’s largest feeder markets and bring some of that demand to your city. Bear in mind though that to react to macroeconomic trends, you will need to quickly redeploy selling resources, but the payoff is worth it.
At the end of the day, I don’t mean to suggest that it’s all a cakewalk. It’s not. A long-term strategy, redefining your value proposition, and constantly evaluating your selling techniques to capture demand takes time, commitment and some out-of-the-box thinking.
A hotel in Miami/South Beach discovered that more Brazilian women were coming to their hotel than before. Turns out there is a growing tradition among affluent Brazilians, especially from Sao Paulo to gift their wives once they get pregnant, with a trip to Miami to relax, enjoy the sun and shop for baby clothes/toys etc. The hotel quickly put together a plan – they offered the best spa treatment slots for suite customers, solved the largest pain point for these ladies with free shipping worldwide for premium suite guests, and redeployed marketing resources to heavily promote their hotel to married men in Brazil – the idea being, send your wives to us - we’ll return them pampered and happy. Suite sales soared and the hotel topped their STR ranking – and that, is precisely why every hotel needs to find their proverbial pregnant women from Brazil.