The first quarter of the year is both a critical and challenging time for hoteliers. LODGING checked in with Michael Tall, president and chief operating officer of Charlestowne Hotels, to discuss what hoteliers will face in the first quarter, and what they can do to boost occupancy and rates.
What are some unique challenges to maintaining high occupancy in Q1?
After a holiday-packed Q4, a lot of Americans greet the New Year with full hearts and empty bank accounts. As a society, we have become conditioned to view the New Year as a new start and, for many of us, that includes a heightened determination to be fiscally responsible. As a result, we are sometimes deterred from spending money on things like vacations and eating out. Combined with weather-related travel delays and cancellations, hotels can oftentimes see Q1 as a little sluggish.
“A great start to the year can have a wonderfully positive impact on team morale.”
Why is Q1 performance so important?
Q1 performance is important for two main reasons. Meeting or beating budget early widens a hotel’s tolerance for calculated risks later on in the year and grows its chances of capitalizing on lucrative, albeit risky, business. I always tell my team that if we can’t forecast and budget those months closest to the date when the forecast is being conducted, the fourth quarter is clearly a shot in the dark.
Secondly, a great start to the year can have a wonderfully positive impact on team morale. Employees can sense when a business is thriving or slacking and are likely to be better engaged during times of prosperity.
What steps should hotels take to boost occupancy in Q1 without sacrificing ADR?
While hotels like looking month by month, it’s important to keep yourself from going down the rabbit hole of in the month for the month too frequently. A hotel shouldn’t risk its brand integrity with a “75 percent off” sale in January when its average discount is 30 percent. Mastering Q1 performance means proactively managing the predictable—the post-holiday spending aversion of consumers—as well as the unpredictable—inclement weather and travel delays.
Especially in Q1, consumers need to feel like they are making smart, valuable purchase decisions. Therefore, it is imperative that hotels protect their rate by adding value around it. Rather than jeopardizing a hotel’s rate positioning, build value by offering savings with add-on’s such as complimentary breakfast, parking, or local activities.
This same principle can be applied to group and corporate business. If you have a clear understanding of your bookings patterns, and are using data to make decisions, you can adjust your threshold accordingly and close more business during this time with extra perks like coffee breakouts and discounted AV rentals.
As for inclement weather, this can go both ways. Flexible cancellation policies that allow guests to rebook at a later date if their travel plans are affected by weather can quell the nerves of a tentative booker. Really, think about how you can accommodate weather-related cancellations and make sure the messaging is clear in all promotional communication. Ensure reservations and front desk teams are fully aware of the details of the policy so they can confidently answer questions. On the sunny side of things, consider creating “good weather” advisories to your drive and local markets for spontaneous stay-cations.
What is your advice to hoteliers for a successful first quarter that continues throughout the year?
Successful Q1 planning for most of our hotels begins in Q3 of the previous year. Cyber Monday and Black Friday deals, in particular, are a great mechanism to push reservations in weak months and establish base business before the year has even started.
Slower occupancy months in Q1 provide ample opportunity to increase other areas of a hotel’s value proposition. Hotels would be wise to use this time to address any maintenance, renovations, or capital expenditure needs with minimal guest impact. Plus, these enhancements can be leveraged later in the year and help validate an appropriate rise in rate.
Q1 is also a great time to focus on guest satisfaction and reviews. With fewer reservations, hotels can afford to upgrade more guests to premium room types—which certainly ups your chances of the guest leaving a positive online review.
Finally, don’t underestimate the power of networking with your local convention and visitor bureau. Hotels should encourage their destination marketing teams to develop events and programming during this time to help generate demand.