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How to build a hotel sales pipeline

14 July 2021
Hotels that are not using a sales pipeline lack insights into potential deals, have a less productive sales process, and cannot adjust the resources needed to win more business.

The competition for customers will be more challenging during the recovery after the pandemic. Hotel salespersons need a solid sales process to win the business. The sales pipeline is probably the most crucial part of the sales process and will make a significant difference to the bottom line.

Why do hotels need a sales pipeline?

There are many advantages of having a sales pipeline. First, it will visualize the sales process by showing where in the sales funnel the deals are, where sales are stalling and which sales activities bring in the most revenue. Second, it adds accountability, makes goals more straightforward to reach by breaking down the sales process into small, trackable activities, and gives sales management an overview of all deals and activities.

What is a hotel sales pipeline?

A hotel sales pipeline is a way to visually organize and track potential buyers (corporate, travel agent, meeting planners, etc.) as contacts or reservations progress through the stages in the buying process. In addition, it's a way of illustrating potential contracts and reservations in their journey from inquiry to a confirmed booking. The sales pipeline will show dates, size (rooms and total revenue), and actions for each potential deal. Finally, the sales pipeline is a vital tool for hotel salespersons, who often juggle many potential customers and contracts and cannot afford to miss any of them during the recovery period. If the hotel company has several salespersons, the sales pipeline is an essential tool for the sales manager to get an overview and coach each salesperson individually to win more business. Through the sales pipeline, it is possible to track vital KPIs to improve the sales process continuously.

Because a pipeline is such an important sales tool, hotels need to make sure they have specific information about the hotel, sales team, customers, inventory, and additional products and services. Before the sales team can start working in the sales pipeline, there are some preparations.

Define the sales process

A sales process is a straightforward, structured, step-by-step process to close a deal.

The first step in any pipeline is finding prospective buyers who need accommodation, meeting rooms, or other hotel-related products and services. In hotels, there are two distinct ways to start a potential deal. The first one is reactive and is when the hotel receives an inquiry. The second one is proactive and is when a salesperson actively contacts a company or travel agent to sign a contract for future business.

1 Inquiry

Hotel sales have always been more reactive than proactive. Traditionally, reservations come at a steady flow, and if more complex, they come as inquiries. Even corporate negotiated business and travel agent agreements often come as inquiries. Therefore, the first stage in a hotel sales pipeline is "inquiry." Potentially qualified contracts can also use this step even if the hotel has not received an official inquiry.

2 Proposal

The second step in a hotel sales pipeline is to respond to the inquiry with a proposal or an offer. Therefore, the second step in a hotel sales pipeline is "proposal."

3 Negotiation

The third step is to follow up on the proposal and negotiate the content, prices, and terms. Thus, a good name for the third step is "negotiation."

4 Updated proposal

Fourth, the salesperson sends a revised proposal/contract for the customer to sign. The fourth step is "Updated proposal."

5 Verbal yes

The fifth step is to follow up on the revised proposal. If the customer says yes, the deal moves to "Verbal yes," which is the same as the status code "preliminary" in many hotel PMS or sales & catering systems since the hotel has not received a signed contract.

Won or lost

When the hotel receives the signed contract, the deal moves to won, and the status code in the PMS changes to "definitive."

If the customer rejects the proposal or later cancels the reservation, the deal moves to "lost," and the salesperson adds a lost code to keep track of why the hotel lost the business.

These five steps are a straightforward process for most hotels. Please keep it simple and align the steps in the sales process with the status codes in the hotel PMS and sales & catering system.

Finally, there might be some confusion about when a deal can move to the next stage. Be specific and discuss how each potential sale qualifies to move to the next step to avoid confusion.

Download the job description

We have put together a comprehensive but not too detailed job description for a sales manager. You are welcome to download the job description and adapt it to your hotel company and your salespersons.