Recession-Proof Your Hotel: Key Strategies to Boost Revenues 

Build Loyalty, Leads, and a Resilient Brand with These Revenue Management and Marketing Strategies

As the summer travel season begins for many parts of the globe, the hotel industry is seeing weekly room demand skyrocket past per-2019 numbers. However, fueled by rising food and gas prices, supply-chain issues due to events in Ukraine and China, and an American red-hot labor market with all-time high wage growth – predictions for a relatively shallow recession by 2024 are still on hoteliers’ and consumers’ minds. While a recession isn’t 100% inevitable, as we saw in the last decade, it is certainly something to take seriously as the travel industry tends to get hit hard.  

But history is clear; travel is resilient. Savvy hoteliers and owners ignore fearful impulses. They prepare for the upturn and find opportunities to maximize people, processes, and marketing strategies for when travel recovers.

While we don’t know what lies ahead, leaders need to ready their technology and data strategies just in case. They need to continue to focus on ways to attract new guests and increase the ADR of existing reservations. Recessionary periods are nothing new. Downturns are part of the travel industry rhythm – and they can be weathered.

Naturally, hoteliers’ first instinct is to go on the defense, beginning with cutting back on promotions, reducing pricing, pairing back already slimmed-down amenities, and reducing an already short staff. But these reductions and cuts may have more far-reaching consequences than a recession itself.

Instead of engaging in a price war, consider tactics for optimizing systems, building relationships, boosting loyalty, and preserving long-term guest value. Here are our top strategies for facing the tough times that might lie ahead and for moving forward even in the best of times. 

Turn to technology    

With technology, hotels can grow their number of leads, add efficiency, support a smaller or remote workforce, and create future direct booking opportunities. They can also reduce reactionary pricing and strategies with data-driven decisions. Here are a few ways to harness your technology and nurture direct demand.

• Lean into automated marketing programs. Resource cuts can devastate marketing for hotels dependent on manual tactics. Instead, turn to smart automation to maintain campaign continuity – even under resource constraints. Continue to nurture and build relationships through personalized, segmented guest emails, booking anniversary notifications, pre-departure re-booking emails, and promotional emails sent automatically.
• Capture unbooked leads. Second chance bookings and retargeting open new revenue paths. For example, consider a shopping cart abandonment strategy to capture and engage website visitors who looked but didn’t book. This turns booking engine data into valuable leads. Revinate’s research shows that abandonment solutions generate 3 to 5 times the number of leads available for voice and email re-marketing versus booked guests. Spectrum Resorts captured guest contacts from abandoned bookings and followed up with an automatic email, resulting in $600k in additional revenue in three months.
• Spotlight your key metrics. In questionable times, ongoing data monitoring is critical to ensure healthy RevPAR performance. Utilize daily regrets & denial reporting to see where you’re succeeding and where you may have a missed opportunity. Use this information to pivot in real-time if the market pushes back against rate or policy. Then again, if guests don’t resist rates, the opportunity to drive ADR without a decrease in occupancy may be there.
• Your tools to optimize remote work & outsourcing. Chances are remote employees are already part of your reservation sales mix, but with staffing shortages how do you avoid disruption in daily operations? Outsourced reservations support like RezForce is an investment that reduces call disruptions, adds scale, and supports after-hours or overflow calls – especially in virtual work environments. 
• Use slower times for overhauls, training and setup. Peak season may not be the time for software integrations and system overhauls. Consider platform, training, or email marketing upgrades during a lull. This allows easy implementation and ramp-up in anticipation of a busy upcoming season. 

Reach out to past guests

Understand what drives loyalty in repeat guests. Focus on what makes your property different or special and market to those strengths instead of adjusting rate. 

Target in-house and near-term travelers

Existing business is ripe for future bookings and upselling. Consider targeted promotions to extend the stay of already booked guests or those with check-ins in less than two weeks. Avoid explicit rate cuts and focus on service or amenity upgrades. Add automated email upsell or cross-sell promotions to new bookings, too.

Expand revenue sources

Future-proofing means diversifying revenue sources. In the last year, we learned that travelers are now looking to immerse themselves in the local culture and personalized interests. Expand your revenue sources past what you already have on your property currently. Study the trends that are popular for your guests, add yoga classes, guide-led hikes to the local preserve, or partner with a local rock climbing gym. Bring locally-sourced F&B and amenities onto your property to capture new segments and revenue. 

Give attention to your local market 

As we watch gas prices, airline tickets, and other travel-related expenses climb quickly, we still need to understand that, after the last two years guests are still wanting to get out and travel. For some, this may mean a staycation is their only option. According to Longwoods International, 41% of American travelers say record-high gas prices will impact their decisions to travel in the next months with 39% saying they will be reducing the number of trips they plan to take. Leverage your drive-market and close feeder markets, and find ways to offset the rising cost of gas without reducing your ADR.  Some of our clients have chosen to offer free valet or resort credits for stays of two or more days.  Compass Cove in Myrtle Beach is offering a $50 gas credit and free tickets to local attractions to help families offset the price of gas. 

Don’t cut the marketing budget

A popular adage says, “When times are good you should advertise. When times are bad you must advertise.” Studies show the advantage of maintaining or increasing marketing budgets in weak economies. The reasons: competitive noise drops, cost of advertising declines, and mind share for future sales is up for grabs. 

Leave your ADR alone    

We can’t stress this enough. You’ve seen it before: you need to fill room nights. Your neighbor needs to fill room nights. Your neighbor drops their rate in order to drive traffic, you counter. Neighbor counters, you counter. Who’s the winner here? The guest. Whatever marketing or loyalty call-to-action you choose, avoid relying on price cuts. Years of competitive positioning can be erased with published discounts. It’s also not good for your brand – once a discount has been booked, your guests will expect them over and again reducing your brand value.  Go against your competitors with your strength, your quality of service, and your reputation – just not your rate.  

Trust revenue management practices

Resist the temptation to interfere with revenue management systems. A recession is not the time to ignore daily pricing guidance. Management teams must work on strategy – and avoid emotional price responses. If rate cuts are required, consider using opaque channels like Hotwire.com or Priceline.com that obscure hotel information.   

While some price reductions may be in order, a savvy combination of price-based and non-price-based strategies is ideal. 

Non-price levers can include: 

• Compete on quality – showcase your properties’ unique offerings
• Build strategic partnerships with travel agents
• Experiment with OTA commission incentives

Even price-based tactics do not require across-the-board rate cuts. For example, bundled services may disguise room rate reductions. Find what your travelers want and create a package around it. Look at your most profitable campaigns and refresh them. Consider promoting revenue outlets with available capacity (like golf or spa) that don’t add significant incremental cost. 

On the other hand, unbundling makes sense for certain property levels. Discount airlines have used this approach successfully, letting travelers purchase a core product, and charging additionally for bags, wi-fi, and even seat selection. Depending on your segment, a modest base rate plus fees for services may work.

As an industry, we are very resilient, and if a recession does occur, the right technology and strategy will make bouncing back much easier.