Recently in a conversation with sales leaders from some of the largest hotel management and ownership groups in the country, an interesting trend asserted itself into the conversation. Sales leaders are being asked to justify the need for a sales team. In the nearly two years since COVID overwhelmed the industry, this is a sign that leaders have become short-sighted in the recovery process.
Throughout 2021, leisure demand has led the path to recovery. In managing leisure demand and growing rate in the absence of normal demand, revenue managers have emerged as king, proving the proverb, “In the land of the blind, the one-eyed man is king.”
This is not to say revenue management is not important—it’s vital. The fallacy of the idea stems from the belief that leisure demand is here to stay, thus rendering sales efforts unnecessary or less important.
However, as strong as leisure demand was throughout the summer of 2021, weekend demand never exceeded the demand levels of 2019; from June through August, U.S. hotels averaged a weekend occupancy of 75.2 percent in 2021 compared to 79 percent in 2019.
This was during a time when pent-up demand was constrained by travel restrictions and still, demand levels did not match those of 2019. So, while revenue managers were able to capitalize on the demand and combined with staffing shortages constraint grow rates to above 2019 levels, it doesn’t mean sales teams were unnecessary. What it does mean is it’s time to reevaluate what the sales role should look like both in recovery and post-recovery.
2019 Is Not the Goal
While 2019 might be the promised land for occupancy and revenue, it might not be what the industry should be looking to from staffing levels. In fact, hotels should completely reevaluate what sales teams should look like and how they are deployed.
Prior to COVID, hotel sales teams were often bloated and focused on tactical versus strategic efforts. RFPs had taken over the day-to-day, with limited focus on building a pipeline through proactive sales efforts.
Individuals within teams were deployed against single market segments and often even within those segments there was additional segmentation. All of this served to make the teams look busy and the buoyancy of the market made the deployment look successful. Teams were busy, but were they productive?
As group business returns to the market, this same model won’t be sustainable. Salary costs have risen, groups are smaller, and there is more competition for the groups that are returning. Now, more than ever, well-trained, proactive sales teams are vital to the long-term health and profitability of hotels.
The Challenges of the Sales Environment
For most hotels, sales teams were decimated in the immediate fall out of shutdowns and extended low occupancy months. Many companies found when they were ready to staff up, former employees had discovered other opportunities or had no interest in returning.
Hotels were left with the option to go deeper into their furloughed roster or hire different salespeople (from other hotels or from outside the industry). However, with staffing already stretched thin, who was left to train these individuals and deploy them appropriately to capture the business that was returning?
In many cases, there was either no one to conduct the training, or the new sellers were given perfunctory training and let loose. Little thought was given to where they should be deployed, what they should be focused on, or how they should be selling. It was as simple as “go sell something.”
Additionally, no thought was given to the external tools good salespeople would need. Even worse, many of those tools were cancelled as a cost-cutting measure. These challenges resulted in poorly trained salespeople without the appropriate tools being left to wander and wonder what to do next.
This combined with the return of RFPs made it easy for sales teams to fall back on the bad habits of being reactive versus proactive. However, the RFPs returning were even more disjointed than before the pandemic. They seemed plentiful, but if examined closely, they weren’t always a fit for the hotel. This cycled back to busy salespeople who weren’t terribly productive, which led to the real-world scenario of ownership and management asking, “is sales necessary?”
Gaining a Better Understanding of the Sales Process
Let’s examine two solutions to solve these challenges. Each is dependent on where a hotel is in the recovery curve. But for either solution, start at the very beginning—take a hard look at the hotel’s sales process before the pandemic. Be honest and answer the following:
- What was the size of the team? This should encompass direct sellers all the way down to the people who pushed the paper.
- How was the team deployed? For the direct sellers, were they deployed by region, market segment, industry segment, etc.?
- What was the average production of each salesperson? This needs to be measured by salesperson and segment, by month across multiple years. Then analyzed to gain an understanding of whether the hotel still needs to commit to those segments or even those individuals.
- What was the percentage of true repeat business per salesperson? This comes from the source of the business, not the name of the organization. If the source of the business was strictly from an RFP, it’s not true repeat business. Repeat business should only be counted with business booked when sourced directly by the salesperson.
- Where did each salesperson spend the majority of their time? This reflects sales activities, so was at least 50 percent of their time spent in active prospecting?
- How did the team acquire leads? This goes hand in hand with where they spent their time. If most of their opportunities came from RFPs, chances are they were reactive, not proactive.
Looking back is necessary to understand what teams were doing and to avoid repeating bad habits throughout various stages of recovery.
Gaining Better Insight to Establish Proactive Selling Techniques
Work through these sequentially or in pieces and parts:
- Understand the market. What is booking in the hotel’s market? The best pre-COVID accounts might not be the best opportunities now. Insight into what is booking beyond a hotel’s comp set is key to understanding the next item.
- Deploy based on strengths. Having a single segment or extremely narrow deployment concentrations will not be effective. This is a time for strong utility players who can do it all. Creating broader categories that cover the segments with the most opportunity at this moment in time is critical.
- Execute the proper sales tools. Investing in the right tools to make sure salespeople know what organizations are booking and where is crucial to maintaining deployment in the short and long term.
- Re-evaluate the RFP process. Prior to the pandemic, many hotel companies had a requirement to respond to all RFPs within two or three hours under the premise that first equals best. With RFPs returning in a more diffuse way, it is necessary to be more thoughtful in how teams respond to RFPs. Smaller teams need to focus on targeting the business most likely to convert.
- Develop a proactive sales plan. Activity goals related to proactive sales need to be assigned. This should cover both accounts they are sourcing on their own and accounts that are sourced via RFP. Each account should have detailed action steps based on wallet share.
- Training. Formalize training processes for how to sell, how to use the tools available, and how to pivot at every stage of recovery. Leverage relationships with vendors to facilitate training and analyze product usage to make sure the hotel is getting the full value of its toolset.
Monitor the process as the hotel shifts into the different stages of recovery and adjust all or some of these steps. Paying attention to the stages is key to remaining nimble enough to adjust quickly and avoid falling behind the market performance.
Align the Sales Strategy With the Recovery Stage
Different hotels and different markets are in varying stages of recovery (baselined to 2019 performance). These can be broken down in four ways and these steps should be worked equally and monitored closely as market and hotel performance changes.
- Hotel and market 90 percent or above 2019 demand capture: Focus on maintaining and growing share. Staying focused on market trends, deployment, and proactive sales process will keep you pacing with the market.
- Hotel 90 percent or above demand capture, market below 90 percent of demand capture: At this stage, the hotel is outperforming the market. To maintain this advantage, monitor deployment against market conditions while deepening the proactive process.
- Hotel below 90 percent demand capture, market 90 percent or above demand capture: At this stage, the hotel has not adjusted to market demand and is missing out on existing opportunities. Hotels in this stage need to work the first three steps heavily then pivot to intensive training. It might also be necessary to look at staffing to ensure the hotels has the right number of people and the right people in general.
- Hotel and market below 90 percent demand capture: This stage will require the most intensive efforts. The hotel will need to spend more time understanding what is happening in the marketplace and deploying staff to capture existing demand.
Break Down the Sales/Revenue Management Silo
If the revenue manager is a one-eyed king, sales must be the one-eyed queen. It’s time to drop the last silos between sales and revenue management. There is no one in a hotel better able to understand the trends of the markets than a revenue manager.
Partner with revenue manager(s) to understand what companies are traveling (they are likely the ones meeting as well). Work together to create action plans to target those companies, pricing strategies to attract those companies, and then implement the plans quickly.
This partnership needs to be tighter now than it ever has. The daily business review needs to adjust to be more strategic. Deeper conversations related to wallet share need to occur to make sure you are being proactive in how you approach accounts.
Where Do We Go from Here?
COVID has changed the industry, possibly forever. It’s time to change how hotel teams do things as well. While it might seem shocking, perhaps an owner’s question about the need for sales needs to be adjusted. The question should be “What should my sales team look like going forward?”
Taking a long, hard look at old processes and where to go next is the correct answer. By streamlining the processes and making it easier for sales teams to operate, hoteliers can do more with less in the future. Hotels that tackle this head-on will recover first and emerge more profitable going forward.