As the United States begins to slowly reopen the economy this month, businesses are preparing to ramp up their operations and implement alternative strategies in order to prosper in a post-COVID-19 world. We are witnessing a major shift in marketing strategies, priorities, and methods for budgeting, planning, and evaluating.
In an article written by Margaret Mastrogiacomo on nextguest.com, she goes into depth and great detail about the phases and strategies needed for hotels to reemerge as a dominant industry. Reading through the three-part article, I recognize the real-life applications of promotions and advertising, and how critical these components of a marketing plan are to monitor and modify, especially in our current climate.
Referring to chapter 11 of the course text, there are several methods for budgeting a marketing plan, and they all come with their advantages and disadvantages. The percentage of sales method is commonly used in the hospitality industry, allowing for a higher budget towards marketing given an increase in sales. Typical percentages range from 2 to 8 percent of gross sales. The issue with this method is that it is counterintuitive; more resources should be allocated to marketing if sales are on the decline. This can signal an issue with misguided resources failing to reach a target market or unifying a message across all channels. The strategy that Margaret is discussing is more of a desired objective approach. As the economy struggles to hurdle over this global pandemic, it is essential for businesses in all sectors to reevaluate objectives and in a sense, retrofit marketing strategies suitable to this novel environment.
With new developments occurring almost every day, it is more imperative than ever for marketers to constantly monitor changes in consumer behavior and preferences, economic changes in policies, and emerging safety guidelines in order to ensure relevance in the market. Such information needs to be utilized in the desired approach method of budgeting because a new environment constitutes a new set of rules, and the players are the businesses trying to stay ahead of the curve. This strategy has tremendous benefits that include specific and measurable goals as well as precise objectives for the type and amount of promotions and advertising will be carried out. Typically, this strategy is viewed as very time consuming, and therefore, not widely used. During the stay-at-home orders, however, businesses have nothing but time to prepare for our “new normal”.
Margaret’s strategy is divided into three main phases for hotels to adopt, each phase being a different time period associated with a different level of demand: (1)“While Travel is on Pause”, (2)“Initial Rise in Travel Demand”, and (3)“Travel Demand Strengthens”. The objective that each of these phases contributes to is that this proactive planning for a rebound in travel demand will help make up for lost revenue and ultimately re-establish the value of the hotel industry as a whole. Each phase includes a specific set of “considerations” that can be implemented into a hotel’s marketing plan.
Phase 1’s “considerations” are centered around the idea of staying connected to past guests and fostering a strong brand relationship. The important key point in this phase is to maintain up to date and clear communication to consumers by developing a preventative plan, implementing flexible cancellations policies, utilizing CRM to engage with past and future guests on social media and offering advanced offerings for specifically targeted audiences by making this information easily accessible. This downtime is a critical period for many hotels with a looming and anticipated date for reopening by summer. The CBRE has estimated 6 to 10 months for hotels to recover giving them a June target and 12 to 16 months in order to recover ADR and RevPar, which gives a clear indication as to what objectives hotels need to focus on.
During the 2nd phase, the initial rise in demand, marketing efforts need to increase focus on strong brand awareness, attempt to recapture canceled reservations, and implement strategies based on the marketing funnel. Margaret expands on the marketing funnel advocating for its usefulness in the months following Phase 2. Given the best- and worst-case scenarios that are presented in the article, it can take anywhere from 3 to 5 years, respectively, to recover pre-COVID-19 volume and profits. Therefore, using the marketing funnel to nurture as many prospective customers into the lower portion of sales and designing a month to month plan will help re-stabilize those lost numbers. The figure below is a visualization of the specific strategy that Margaret is suggesting.
As California begins to approach phase 2, it will be interesting to see which smaller chain hotels will take heed to this advice. I naturally assume that world-recognized brands such as Marriott and Hilton are already implementing these strategies as they have more capital than their small-scale counterparts.
Only successful hotels will see phase 3 as the travel demand strengthens. A strong phase 1 and 2 strategies will highly increase their success rates. The main focus of phase 3 is to consistently align marketing strategies with revenue management strategies while maintaining a strong focus on lower-funnel marketing (getting the actual purchases). The hotel industry, and the whole hospitality industry for that matter, are faced with many challenges in our current situation, with many more to come as new avenues of strategies are explored and past marketing programs become irrelevant in our current climate.
Does this mean we can expect an overhaul on marketing curriculums for hospitality and business programs in universities? Could this mean the end of boutique hotels since they have a much smaller capital to allocate towards marketing and even technological and safety upgrades as they are developed?
About the author
Malinna Martin is a junior attending the Collins College of Hospitality at CalPoly Pomona. She has worked in the hospitality industry for six years in several entry-level positions including hosts, baristas, servers, banquet servers, and bartenders. Malinna has been bartending for five years, which has become her passion. She started bartending at Embassy Suites in Glendale, CA, and then the Marriott in Seattle, WA where she was a head bartender for the restaurant bar overseeing a new cocktail menu. She currently works at Foothill Co in Pasadena, CA, and runs her own private events. Upon graduation, Malinna will seek a position as a head bartender and eventually open her own bar.
· Mastrogiacomo, M. (2020, April 13). COVID-19 Hotel Recovery Strategy: Top 10 Digital Strategies While Travel is on Pause. Retrieved from https://www.nextguest.com/blog/covid-19-hotel-recovery-strategy-top-10-digital-strategies-while-travel-is-on-pause/
· Mastrogiacomo, M. (2020, April 20). COVID-19 Hotel Recovery Strategy: Top 10 Ways to Prepare your Hotel for the Rebound in Travel Demand. Retrieved from https://www.nextguest.com/blog/covid-19-hotel-recovery-strategy-top-10-ways-to-prepare-your-hotel-for-the-rebound-in-travel-demand/
· Mastrogiacomo, M. (2020, April 24). COVID-19 Hotel Recovery Strategy: Top 10 Digital Strategies to Thrive in the "New Normal" when Travel Demand Strengthens. Retrieved from https://www.nextguest.com/blog/covid-19-hotel-recovery-strategy-top-10-digital-strategies-to-thrive-in-the-new-normal-when-travel-demand-strengthens/
· Reid, R. D., & Bojanic, D. C. (2006). Hospitality marketing management (4th ed.).
· White, R. L. (2018, August 14). How the Marketing Funnel Works From Top to Bottom. Retrieved from https://trackmaven.com/blog/marketing-funnel-2/