Direct sales is the future for hotels

28 June 2022
Direct Sales was once the essential department for hotel success. The sales department produced 60-75 % of the total revenue. The sales team was excellent in balancing the needs of both the hotel and the guests/customers with excellent social skills building solid and long-lasting relationships.
Over time, high demand, new technology, and OTAs led hotels to believe that capturing transactions is more important than the personal touch and relationship that the sales team provides. The revenue manager became the new champion in the digital distribution landscape, and the reservations flow seemed endless. However, hotels have now discovered that the new way of working comes with a high cost. Customer Acquisition Cost (CAC) has skyrocketed with a hefty fee for every reservation. Many hoteliers dream about guests doing business directly with the hotel instead of using expensive third-party channels. Hotels can keep on dreaming or hiring salespeople to drive direct business.
.

Build strong relationships with customers

The primary role of the salesperson is to build a solid long-term relationship with the customer. Skilled sales managers uncover the customers' needs and pain points and can provide a customized offering to win the business for the hotel. This way, the salesperson can generate business for the hotel and find the customers with the best fit. Customers that are not guided in the buying process by professional salespeople will not find the perfect offering, which leads to lower customer satisfaction. In addition, having salespersons on the ground constantly meeting and talking to customers and potential customers will also give the hotel valuable insights into trends and opportunities for future business.

Contracting

Hotels that try to automate their contracting with standardized contracts apply a one-size-fits-all policy, which means that the standard contracts do not fit anyone. The sales manager can customize terms and conditions for each customer depending on their needs. Of course, hotels do not want to have hundreds of different contracts, but there need to be flexible to satisfy customers and win the business. Hotels need to train the sales managers to increase their knowledge in negotiating and all other detailed components of hotel contracts. The result will be contracts that make the customer happy and bring more business to the hotel on preferable terms and conditions.

Contracting for future room nights

Corporate negotiated agreements, travel agent consortia contracts, tour operator tour series, etc., are traditionally standardized contract types. However, after the pandemic, hotels need to be more flexible with the terms and conditions in these contracts. Therefore, hotels need a salesperson with excellent negotiation skills to close and bring in these contracts.
 
Customers tend to promise more than they deliver to get a lower rate and better terms. It is time for hotels to hold the customer to their promises by closely monitoring the production from each contract and taking action before it is too late. The relationship the salesperson establishes is critical for maximizing production from all arrangements for future room nights.

MICE

MICE business is a fast-paced cycle where speed is essential to win the business. Today, the customer expects a quick response when sending an inquiry to a hotel. Therefore, the salesperson must take action immediately. Otherwise, the customer will start a conversation with a competitor that responds faster. Once the salesperson connects with the potential customer, the discussion comes down to customer needs and if the hotel can satisfy these needs at the right price.
 
Revenue managers tend to focus on room revenue while sales managers focus on total revenue. The most important KPI is the total order value instead of just looking at the average rate and additional revenue as a bonus. Hotels need to educate revenue and sales managers to work together to maximize the net contribution from each MICE order.
 
There are three essential measures in the sales cycle for MICE. The first is the initial inquired value, the second is the value of the offering accepted by the customer, and the final is the invoiced value (including an estimated value of guest spending outside the invoiced value). With these measures in mind, hotels can quickly evaluate the total revenue potential from each customer and possibly estimate the profitability and customer lifetime value for each customer. When the pace of inquiries picks up, hotels can then be pickier about which customers they choose.

Systems and processes

A salesperson cannot become highly effective without great people skills and detailed business knowledge. Salespeople need to follow well-designed processes and easy-to-use systems to keep track of customers, contacts, deals, and production to become highly effective. Unfortunately, many hotels hire salespeople and hope they will bring in business. A good salesperson will bring in business but also become frustrated by a lack of processes and system support. When the frustration reaches a point, the salesperson will leave the hotel and start to work for a better-organized competitor.
 
Combining a good structure (processes and systems) and a people-focused salesperson with detailed business knowledge is an unbeatable combination that will lead to long-term success.

Demand Calendar Hotel Sales CRM

Demand Calendar is not a sales CRM, but a Hotel Sales CRM developed to make life easy for hotel salespeople. Automation where it makes sense, the speed where it is needed, and integration with the hotel PMS to capture how much revenue each customer has produced. Essential functions and information that hotel salespeople need to become highly effective in bringing in business to the hotel.