Seven signs your hotel is about the go bankrupt
May 18, 2020|Hotel Marketing
7 signs your hotel is about to go bankrupt
If you are a hotelier, you should be on the lookout for telltale signs that your business is about to go bust:
1. You have high employee turnover.
You are changing your department managers and rank-and-file employees every couple of months. Ultimately you are left with no seasoned team in place who are invested in the success of your hotel.
High employee turnover can have subtler causes like frustration with management or losing belief in your brand. More often than not, your employees are only there for the paycheck because they are not emotionally connected to your property and your organization.
It is more costly to hire and train new employees than to keep the ones you already have. It is a vicious cycle that can eventually kill your hotel.
2. Your numbers are down and you do not even know why.
Your year-over-year revenues are down, but you cannot figure out which segments need work or which accounts are not producing. You do not have the right coding strategy at your front office to ensure that every reservation is correctly coded by segment or source.
If you do not have the right rate codes, or you have all your reservations under one rate code, there is no way for you to determine what segments or sources you are gaining from or missing out on. You will find your revenues flatlining with no hopes of resuscitation.
3. You do not have the right management strategy.
You are treating your hotel like an office space or rental building, which means you have only one rate for the entire year. You do not adjust your room rates based on pickup reports, upcoming room blocks, and competitor rates. You hope that you will get the best value out of using the same price every day.
The beauty of the hotel business is that your room rates can vary every single day to meet the demands of the market. Maximize this to your advantage. Otherwise, you will either lose potential customers to your competitors if you charge too high or lose potential income if you charge too low. Either way, it is a surefire way of killing your business.
4. You are complacent.
You think you already have enough sales. You do not consistently market your property. You do not innovate to meet the demands of your market.
Once competitors swoop in, they can easily steal your clients because you do not have a strong presence and a sustainable competitive advantage. Remember, complacency is fatal.
5. You do not have a follow-up strategy.
Your salespeople call a prospective client only once. If the sale does not go through, they do not make any follow-up.
It is typical in the hotel industry. 25% of hotel salespeople make only one call. Given how busy and distracted people are today, it takes more than one, about 5-8 calls, before they would pick up the phone.
Call follow-ups are where the money is. When done right, it is a sustainable revenue stream that will keep your business afloat.
6. You do not have a mixed revenue source.
Your business is dependent on a single big account or revenue source. You do not have anything on your pipeline to replace an account if it closes.
If another property steals your most valuable account, you are over. You do not have enough negotiation power because you do not have an existing client base to leverage.
7. You are not asking for referrals.
You might be working with a tour operator who is producing a lot of revenues for your hotel. If they are happy with your service, they will happily give you referrals.
87% of your customers will give you referrals if you only ask. However, 70% of salespeople make the fatal mistake of not asking for them.
If you are currently experiencing any one of these scenarios, we believe that your property is already on the edge of bankruptcy. Give us a call at 888-999-8086 or email firstname.lastname@example.org.
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