Do you have the right commercial team for a successful expansion?

20 May 2021
The key to successfully expanding your independent hotel group is by setting up the commercial team for expansion. Some roles can support an extra hotel, while a new hotel also needs dedicated commercial functions, such as sales, to build healthy revenue.

Many hotels had grand expansion plans before the outbreak of the pandemic. Hotel companies paused or canceled these plans for many reasons, such as lack of financing and an uncertain outlook for travel and tourism. Financially strong hotel companies have also seized the opportunity to acquire distressed properties in good locations with an expected recovery after the pandemic. The few investments have been about real estate during the pandemic and improving the physical guest experience, like contactless solutions. Some independent hotel groups have invested in room refurbishments and renovations of the lobby and F&B outlets.

Very few small independent hotel groups have invested in their commercial teams and commercial activities to prepare for the recovery. Most hotels brook up their commercial organizations by laying off marketing, sales, and revenue roles. Without a commercial team, it will take a long time to recover from the impact of the pandemic.

Recovery comes first

Hotel companies with expansion plans have to build a two-step plan to get back on track. The first part is to rebuild the revenue streams for the current hotels, including newly opened hotels. The second part is to restart the expansion with new hotels. Commercial activities are crucial for both steps.

Build a commercial team for expansion

Every hotel is unique based on star rating, type, concept, facilities, and location. Therefore, the set-up of the commercial team will also be unique. An independent hotel group often operates different types of hotels, which requires some creativity to form the commercial team's roles. The starting point is to find jobs and activities that benefit from being coordinated between the different hotels. Building and maintaining the hotel websites and booking engines, direct-to-consumer marketing, and creating visibility for all hotels in Google, metasearch, and other places would benefit from having one centrally located role. Sales roles might make more sense to have at each hotel, especially if the hotel has substantial meeting capacity. With the proper system support, revenue can handle a cluster of hotels, preferably the same types, at similar locations.

When an additional hotel enters the pre-opening phase, the commercial team executes the commercial pre-opening plan. Most likely, the centrally located marketing role can handle one more hotel. The new hotel might need a local sales role. The hotel will belong to one of the revenue clusters or might need a dedicated revenue manager. Expanding the number of hotels uses existing commercial resources and only adds necessary resources for the other hotel. There is, of course, a limit for how many hotels one marketing role can manage. At some point, marketing will need more resources.

Balance activities between old and new

When expanding with more hotels, it is tempting to draw on existing commercial resources in the other hotels to save money. The risk is that the existing hotels are neglected and start to slow in the recovery or even lose revenue. Lack of attention to existing hotels is much more costly than saving on adding the needed resources to secure a successful opening of a new hotel.

The key to success is thinking through setting up the commercial team for recovery and future expansion.

For more ideas, download the white paper "Create a High-Performance Commercial Team."