I live in Washington state and recently as a family we were discussing that we’ve never been up to Vancouver, British Columbia and would really love to check it out. We booked train tickets on the Amtrak Cascades (huge fan of Amtrak btw) and planned a family get away to Vancouver, BC.
When we talk about yield, many people would describe my next steps in picking a hotel as the part where competitors came into play. We looked at reviews, rates, and locations and settled on a nice hotel in downtown Vancouver, BC.
Alas, it was not meant to be. Recently, I saw that Disneyland is celebrating its 70th anniversary and thought. It has been over six years since we went to a Disney Park, so we should go! I thought, I bet that is expensive; however, after reviewing rates, I realized that Vancouver was more than Anaheim, and hence, a change was born. After a family discussion, Vancouver, BC, was cancelled, and now we are headed on a five-night trip to Disneyland.
I tell this tale, not because you are probably interested in my family’s upcoming vacation plans (as exciting as they are to me), but because this reveals a lot about how much of leisure hotel demand takes place. It is not between you and some arbitrary competitive set, but between destinations and even more broadly as an allocation of entertainment resources within a family. Let’s explore how this relates to how we yield to our hotels.
The Traditional Competitive Set isn’t Serving Us as Well as We Think
Early in my career, I worked for a Marriott hotel in Southern California. To the revenue management approach at this hotel, the competitive set was everything. We would live or die by how we ranked on RevPar in this competitive set. We would raise and lower our rates based on those five other hotels and often benchmark our group pricing. There is value in this, but perhaps we take this too far in modern hotel yield.
At the end of the day, it matters to understand the health of our business to understand how we are doing against nearby competitors, but perhaps it narrows our vision of what is possible too much. In an earlier blog, I wrote about how this can perhaps limit our results, but here I’d like to explore more about how it limits our mindset about the business that we are in.
Ultimately, we aren’t in the hotel business. We are in the leisure and hospitality business. This small shift in framing can change everything in how we see pricing. When we see ourselves in the hotel business, we see a narrow set of competitors. When we expand our vision of what we do to hospitality, the options for re-allocations of guest money are broader, and our competitors aren’t just those other hotels nearby.
Let’s take one segment that is often perceived as the most competitive: Group business. If I’m planning a group of executives for their annual strategic planning retreat, I’m not necessarily looking for a hotel. What I’m looking for is the human connections caused by the retreat, the creative solutions to our business problems that might come from that.
I could get that at your hotel, sure, but I could also get that through a nearby retreat center or even a series of events and meals right at our corporate offices. When we see our role as competing with our nearby competitors, we limit our vision of how we paint the picture for a potential customer. When we see it broader, suddenly we are competing not with just a hotel down the street, but against alternative activations of the idea of why a trip is happening at all. It is “here is how I’m going to activate your purpose for this time. Here’s our value proposition.”
When we compete for Trip Purpose, We Create New Demand.
Your market will never surpass the vision in your imagination of what’s possible. If you limit your market of potential customers to those who are also considering your competitors, you will not find new and innovative people to fill your resort. When you expand your imagination, your actions will become expansive, and you will find new people to drive demand. I like to call this competition on purpose, versus competition just on price and amenities.
Here are three ways LuxePricing advises you to implement this into your sales approach:
When you receive an inquiry for a group or of any kind. Start with understanding the trip or events purpose. Then sell based on painting a picture of what’s possible to bring that purpose to life versus quoting rates and amenities versus a competitor.
Market to the emotions that underpin the trip and not the trip itself. People make decisions with emotion more often than we think. Don’t try and use logic to drive trips to your resort but make certain you tap into their emotions about why they want to go.
Make sure that you don’t limit your pricing strategies to straight line comparisons on price. Once you are tapping into emotion and selling purpose your resort will surpass the competitors. Make certain your pricing algorithm takes that into account.
How does this tie into what we do at Luxe Pricing
At Luxe Pricing our revenue management platform HouseCount, has always used a competitor free assessment to set prices. This allows us to monetize purpose driven selling for you autonomously everyday.
In conclusion, in my opening story, I spoke about switching from Vancouver, BC, to Disneyland. Was it the price? Not entirely. It was the emotional call from Disneyland to bring the family together. You see, my daughter will be going off to college, and this will be a reunion of sorts. The emotion and ideas of being together as a family spoke to me. Trust me, emotion sells a lot more rooms than logic and price comparisons.