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 pandemic. Hotel companies paused or canceled these plans for many reasons, such as a 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 in real estate during the pandemic and in improving the physical guest experience, such as 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 break up their commercial operations by separating marketing, sales, and revenue roles. Without a commercial team, it will take a long time to recover from the pandemic's impact.
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, defined by its 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 identify jobs and activities that benefit from coordination across the different hotels. Building and maintaining hotel websites and booking engines, direct-to-consumer marketing, and creating visibility for all hotels across Google, metasearch, and other channels would benefit from having a single, centrally located role. Sales roles might make more sense to have at each hotel, especially if the hotel has substantial meeting capacity. With proper system support, revenue can handle a cluster of hotels, preferably of the same type, 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 the cost of adding the resources needed to secure a successful opening of a new hotel.
The key to success is thinking through how to set up the commercial team for recovery and future expansion.
For more ideas, download the white paper "Create a High-Performance Commercial Team."
