Grudge Match: Why Small-Medium Size Hotel Operators Can Battle the Big Boys Coming Out of the Pandemic
By Michael Kalman
Despite warnings from the CDC, one could argue that domestic travel is starting a sustainable recovery in the U.S. According to travel and data analytics firm STR, some key metrics are starting to shift in favor of the travel sector.
Perhaps it was President Biden’s announcement that all U.S. adults are eligible for the COVID-19 vaccine as of April 19th. But more likely, U.S. consumers just have a tremendous pent-up desire to travel because we know that when Americans are told they can’t do something, they want to do it more.
Revenue per available room (RevPAR) is a key statistic used by hotels to measure performance. It’s calculated by multiplying a hotel’s average daily room rate (ADR) by its occupancy rate.
Weekly RevPAR rose to $65.34, which was a 4.2% increase week-over-week and the industry’s highest level of the past 56 weeks when indexed to 2019.
The travel industry is on the cusp of benefitting from this pent-up demand and the small to mid-sized hotel owners can capitalize and regain market share at a pretty rapid rate. Consumers want to travel, but they want to do it in locations where they feel safe and comfortable.
Harnessing the momentum
Today’s average American has 5 vacation days per year and they will use them wisely and get the most out of their vacation. People will not want to travel just for the sake of traveling. Vacations have always been about finding downtime and indulging yourself. Many are viewing vacations as a way to escape the current reality and detach from as much COVID life as possible. Consumers want a personalized experience that creates an emotional connection to their destination.
As a hotel marketer, capturing the attention of those consumers is your primary goal over the next few months. Earlier I mentioned that small to mid-sized hotel operators are well-positioned to take some market share away from the hotel goliaths in the space. Here are the reasons:
Regardless of the industry, one advantage that small businesses have over large corporate competitors is agility. Smaller guys are not constrained by corporate bureaucracy and layers of management to get an approval. They can act quickly and launch marketing campaigns in a matter of hours, not days.
In a small business, if someone on staff has a great idea or campaign for a season, the process from ideation to activation can sometimes be as easy as a walk down the hall. If there is a summer travel boom the way some are predicting, having the ability to apply budget before the competition can be the difference between full occupancy and last-minute discounting to fill rooms.
Pivot to digital
The mid-sized and boutique hotel chains have access to the same resources as the “big guys” through digital advertising. Gone are the days of static big-budget media buys. Digital advertising enables mid-sized hotels to compete with the large international chains through sophisticated data and agile strategy.
Agency partners can craft custom digital advertising campaigns, tapping into audiences with a propensity to travel. Analytics can predict consumer behavior before the purchase, enabling hotel and travel brands to reach the ideal customer at the ideal time. Clients see significant growth in metrics like ROI based on the revenue available per room value.
Travel will return, marketers need to act now
Shifting consumer behavior may also be playing into the strengths of small and mid-size operators. Recent reports show that consumers are road-tripping more than they did pre-pandemic.
If consumers are going on shorter duration local excursions, having local knowledge is a huge advantage. Those operators will be able to help travelers find the hidden gems in their local areas. Whether it’s a great spa, restaurant or family attraction, building trust with your guests will not only provide a great experience but it will also build equity the next time they are traveling in your area.
Michael Kalman is CEO/founder of MediaCrossing, an independent digital advertising agency.
This is a contributed piece to Hotel Business, authored by an industry professional. The thoughts expressed are the perspective of the bylined individual.