Designing incentives to reflect Management goals.
Is your sales department responsible for total room revenue of the property including transient and group? If not, they may overbook group blocks at the expense of transient, to fulfill their group goals.
Does your sales incentive program reflect your fluctuating seasonal goals, higher rates when demand warrants and higher volume in the off seasons? Sales can book a large volume of group business in summer at significantly less than rack rate. If the sales incentive plan was based on annualized group revenue and the demand for group rooms was significantly higher in the summer than in the winter. Therefore, if the sales department was going to make bonus they had to ‘make hay’ while the sun shone in the summer. By re-weighing the sales incentive program so that group rooms booked for the summer months account for a smaller percentage of their annual bonus with a much higher percentage for group business booked in the winter, you can re-direct their efforts and benefit both themselves and the property’s goals.
The urgency for measuring sales effectiveness when demand is high may seem to be misplaced but is your hotel doing as well as it could be doing? Remember, a rising tide floats all boats and when the tide begins to go out, it is those properties with sharp sales efforts and the methods for measuring that performance that will thrive.
The answers to the following three questions can give you an indication of how well you are really doing and where you will be positioned in the fourth quarter:
1. How does your sales staff use its time?
If your sales staff is busy servicing incoming customers and groups how much of their time is being spent prospecting for new business for the fourth quarter and next year. It is up to the GM or whomever else monitors sales department activity to ensure that the operations is sufficiently supporting sales, and servicing incoming business. Only by reassuring the sales department that their client’s will be taken care of will they go out on the road, and it is up to their supervisor to give them the ‘push’ in the right direction.
2. What is your current market penetration and yield in relation to your competitive set? When everyone is running full most nights except perhaps a particular weekday, it is difficult not to look good. Your market share penetration may have increased slightly but this may only be a wound dressing and not a cure, if your market share was ailing prior to the summer season. If your market share has increased by a smaller percentage than that of your competitive set, you may have a problem. If your penetration was below 100% prior to a few months back, what steps have you taken to fix it? Another important thing to consider, are you giving priority to the customers that will still be there to support you during the off-season, albeit at a lower rate than you might be able to drive from the leisure sector? This leads to the yield management side of the equation where you absolutely need to control your rate and inventory by market segment. Have you designated a set number of rooms to market segments that may be lower rated but will continue to use you the rest of the year?
3. What percentage of your staff is seasonal and will leave prior to the end of your busy season – how many experienced and trained staff will be gone by the end of the year? Unemployment is high but we hear the same lament from General Managers and Corporate Executives – there are few trained employees available and the ones that are, are not trust worthy. There are two solutions to this problem. The first solution involves continuous recruiting, that is, always hiring and always looking out for a good recruit even when you have no openings. You should give your business card to every good receptionist that serves you and to every attentive retail employee that sells you anything? If they’re good and are interested, hire them NOW. Even though you don’t have an opening now, you will soon and it’s worth a few extra weeks of payroll to have good well-trained staff.
First of all you have to provide training that gives them the tools to do their jobs. It is a chicken and egg question – should you invest in training them when they are just going to leave in six months or will they leave in six months if you don’t train them? The employee in an exit interview rarely cites lack of training, but knowing how to do the job that you are asked to perform, increases job satisfaction. Think about it. Furthermore, can you estimate how many guests you may have lost or will lose over untrained and unresponsive staff? This is one of the factors driving our customers to alternate distribution channels such as those available on the Internet.