Sales Conversion and its impact on RevPar
A few of us may be in very stable or rising markets but I am guessing that most of us are facing yet more challenges on rate, occupancy, ADR and RevPar as we look toward setting our budgets for 2018.
Many of us work in over-saturated (or soon to be) markets where supply can often out-strip demand. Or perhaps Brexit, a weak pound or even the left-overs from the last recession still impact our business. So how do we ensure that we grow our RevPar and ensure that every possible booking enquiry is maximised.
Of course our brand website should be converting and contributing at least 30% of all room bookings but lets look at how your Sales Team can actually help you improve that bottom line. And by the way, by Sales Team I mean the people who are actually selling for you and this includes not only your Sales Department but also your Reservation and Front Office Team.
Lets take a simple scenario:
- Your ‘Brand Hotel’ has an average rate of £100.00
- The average length of stay is 1.5 nights
- Each reservation therefore generates an average revenue of £150.00
Now for the question… Do you know the average conversion of every sales enquiry call that comes into your Sales Team?
- For this example, lets say that your team converts an average of 30% of all enquiry calls
- So for every 100 calls received, they would convert £4500.00 (100 x £150.00 = £15000.00) x 30%
Now lets imagine that there is a 5% drop in call volume due to perhaps new hotels opening or an overall drop in demand for your property.
- So a 5% drop in call volume means there are now 95 possible calls to convert
- But what if your Sales Team were able to increase conversion by the same 5%
- So out of 95 calls the team could now convert 33.25 reservations
- This would then generate £4897.50 (33.25 x £150.00)
But what if the hotel experiences a 10% drop in enquiry calls, but with sales focus and training to back that up, could convert 40% of calls
- 90 calls received
- 36 calls converted
- Total revenue of £5400.00 generated
Now I appreciate that this was a very simplistic example, but in real terms, if you added in up-selling and cross-selling, the converted revenue could be much higher. And the main takeaway should be that with a concerted effort, there are many hotels that will actually do well in a recession or a saturated market. However, if you keep doing what you have always done, the experts often predict a decline of 5-10% when experiencing tough market conditions.
Next week we will look at converting online but whether we believe it or not, a large percentage of our customers still call to book, so you have an opportunity but how do you maximise it?
- Spend some time in your Reservations Department and listen to how calls are answered and dealt with. Lots of phone systems actually allow you to ‘listen in’ but at the very least, spend time with your team.
- Understand the questions your team are fielding, especially those relating to rates and special offers. Understand the ‘blockers’
- Train your team to understand ‘the story’ behind each call. Guests who call rarely are just looking for a bed for a night, they call for a reason – usually because they need more information because they feel their reservation needs a little more attention. So it could be a birthday surprise or an anniversary celebration; a long needed family trip or a girly weekend. All of these back stories give you not only an opportunity to shine on service but also the potential to upsell. And please train your team not to think of upsells as a way of fleecing people out of more money but in fact as a way to ensure your product meets their needs.
- Make sure you train your team in how to deal with the ‘deal seekers’. Whilst most people these days are on a budget, your team must understand when it is okay to include added value products such as an upgrade or late check-out and when you absolutely need to hold-out on rate.
- Seems simple but make sure your team actually know your product. Make sure they have walked every room. They know which rooms have views; which are slightly more ‘cosy’; which potentially have noise from the air-conditioning. Only expect your team to sell if you have given them every opportunity to – and that means starting with the basics of knowing what they are selling.
- Train the team to know when and how to ‘close’ the sale and that is with out seeming pushy or over-bearing. Better to attempt to close the sale rather than deal with the wrath of a customer who calls back to book to find you are sold out!
- Maybe you could think about applying a courtesy hold on rooms for 24 hours so that the customer feels you are giving them the flexibility to make up their mind along with safe-guarding what they actually want to book
This of course only scratches the surface of conversion and we need to review how we convert on our own brand site but before you do that, please consider the advantages of having a properly targeted and enthusiastic sales team. The difference they can make will go straight to your bottom line!
(and for all things revenue, just firstname.lastname@example.org)