While COVID has presented myriad challenges for hoteliers across the globe, there are still ways to improve operations and capture more share of market demand. We thought it would benefit HR2020 readers to provide a real-life case study on one property that was able to make changes to its marketing and distribution strategies and reap significant rewards.
Hammock Beach Golf Resort & Spa is a 4-star property on Florida’s Palm Coast. A thorough audit conducted by Dragonfly Strategists indicated several adjustments that the resort needed to make to increase profitability. By making rate, channel, communications, marketing and promotional adjustments, the property could offset dramatic losses in group revenue with increases in leisure/transient business.
Pre-COVID – January-March, 2020:
The Right Rates and Room Types
We were engaged in late 2019 to oversee revenue management services in an executive capacity. The hotel was not positioned correctly for 2020 and the production already on the books was not in line with future success. We discovered that the rates were too high, and this was impacting occupancy and RevPAR. We conducted an in-depth analysis of each room type and interviewed operations about the value of each room. We focused on what rooms had been renovated – the sizes, views and demand. We utilized the room mapping features in OTA Insight to accurately shop and compare the resort room types to the competition. We set up seasonal BAR rates in the system that can be toggled on and off to keep up with the evolving and unpredictable demand patters of 2020. The resort does not utilize a revenue management system, so we restructured the BAR rates in the PMS and CRS to allow for more flexibility. This optimization change contributed in transient ADR increases of 7% Pre-COVID.
The Right Channels and Promotions
Hammock Beach was heavily utilizing promotions on Expedia and was out of parity with other OTA channels. Expedia was the largest channel producer, and we wanted to shift business to the more profitable, direct channels. The property was also missing some standard rate discounts like military and AAA. We removed the promotions on Expedia, got into parity, and made sure the standard offers were promoted and available on direct websites. The property did also partner with The Hotel Network to support our Book Direct strategy with meaningful offers in parity.
These early changes helped the property increase BAR production by over 100% and reduced the dependencies on OTAs by over 40%.
COVID Lockdown – March 27:
The Florida Governor banned vacation rentals from March 27 to May 20. The lockdown orders left the condo-heavy property with only 20 out of 315 rooms to sell during this time.
The Right Communications
To maximize potential revenue under the lockdown, we reduced the promotional discounts from 20% to 12% and extended the window on the advanced purchase rate. The property also evolved their housekeeping, cancellation policies, and guest check-in and check-out procedures. We discovered that the property was over communicating via email with several promotional emails going out each week. This over-use of email resulted in a declining ROI per e-mail and an increase in unsubscribes.
Working with the property’s marketing team, we developed an email and promotional communications content calendar. We reduced the email frequency by more than 45% and saw the revenue per email increase by 200%. The resort’s marketing team also developed some innovative strategies for growing their email list on social media with a sweepstakes and connected with the community on a “Give Back” offer.
We also saw the resort’s call center become inundated with calls and questions about what parts of the resort are open and the evolving COVID guest policies. To alleviate the call center team from answering these questions, we developed comprehensive pre-arrival emails and weekly pre-recorded messages for guests to listen to before talking to agents. These tactics resulted in the abandonment rate dropping by 81%.
Budgeting Strategies for an Uncertain Future
Hammock Beach was a strong meeting and convention property with 50,000 sq. ft. of indoor and outdoor event space. Since COVID closures have canceled most group business, we had to make up the group revenue with transient and leisure business. The changes to rates, promotions and communications resulted in beating budget in June that included a strong group base. With a sound strategy and the right changes, we made up 83% of group losses with leisure/transient business.
Saying that budgeting for 2021 is a challenge is an understatement. However, we see changes to normal patterns and adjust rates accordingly to maximize revenue by reviewing data. Conventional methods might not work as well in this new COVID world. By budgeting on a daily level, we can better optimize rates for high demand and develop future promotions for slow times. The data indicates that with more people working and schooling from home, the typical weekend stays are being extended, and you can capitalize on new minimum lengths of stays. We use the daily data in our budgets to better inform the resort’s marketing and communications. This allows for proactive marketing rather than the reactive marketing that many properties utilize as a fire hose during downturns.
“Once we reopened just after Memorial Day, the resort ran high occupancies and realized ADR increases of $20-$40 monthly without actually raising rates. These results were achieved by restructuring our market mix and presenting well-timed offers to our customers who fortunately, responded enthusiastically,” said Kerry Mitruska, Hammock Beach’s Director of Sales and Marketing. “We are now into the fifth month post reopening and continue to dominate not only our primary comp set, but our aspirational set as well, per the STR report.”
Going from the all-time low of 4% occupancy to 81% in a three-month time during the pandemic this summer was a lesson in how sound strategy and adjustments in revenue management and marketing can make a huge difference in profitability.
About the Author
Caryl Helsel left a long and successful career in the hotel industry to begin Dragonfly Strategists, providing leadership and strategic direction to hotels. Dragonfly creates actionable strategies and transforms them into higher revenues and improved performance for a range of clients throughout the world.