Targeted sales action plans help hotels increase revenue

Hotel & Motel Management, Jan 10, 2005 by Howard Feiertag

If you have not yet completed your sales action plan for this year, it is not too late. What we want to do is maximize revenue so that more falls to the bottom line of a profit statement.

Most properties probably already have some sort of a marketing plan that gets into many things that are very helpful in running the marketing effort of a facility. Few, however, probably have a detailed sales action plan that reflects what needs to be done from a sales standpoint and includes an action calendar. The key is to start out by determining which market segments would bring in the most revenue and how much more business can be secured from those segments.

Start by making an analysis of all the markets from which you have gotten business in the previous year. These should be listed in order, with the segment producing the highest average daily revenue on top. In just about all cases, this would be the rack rate business. Right next to that figure, for each market segment, indicate the percentage of total room sales that is represented by that amount. For example, if the rack rate for a property is $100 and for the entire year the property took in $100,000 at rack rate, and the total room sales was $1,000,000, this would reflect the percentage as 10 percent.

Do this for each market segment. Once it is determined what percentage of the total business is coming from each market segment, it is easy to take a look at all the figures and make some decision regarding from which market segments you want more business.

The next step is to come up with a goal of how much of an increase in revenue you want from certain market segments.

Once you have determined to what extent you want to increase sales in a particular market segment, you then have to come up with an action plan. First, come up with a strategy to create the increase. Be very specific about who will be responsible for each action step, when will the action be started, when will it be expected to be completed and how much it would cost to do it.

You need to be careful to be able to relate cost versus how much more business you plan to bring in. If you set a goal of increasing business by $10,000 in a particular market segment, you need to be careful of how much you want to spend to bring in that amount of business. Everything is relative; however, if cost of expected sales is figured at 10 percent, that should be considered a pretty safe amount.

For each market segment that is planned for an increase in business, you should come up with two or three strategies that need to be implemented.

If you would like a sample of the market segment analysis form I use in my workshops, just ask, via e-mail: howardf@vt.edu.

hmm@advanstar.com

In our next Catering Sales Workshop, which is scheduled for Feb. 7-9, I will show how to do a market segment analysis for improving catering sales. For more information, please go to: www.conted.vt.edu/catering.

Howard Feiertag is on the faculty of the Department of Hospitality and Tourism Management at Virginia Polytechnic Institute, Blacksburg, Va. He can be reached at howardf@vt.edu.