Wednesday, August 25, 2010

The Right Market Mix - Pure Gold

Can enough really be said about the need for the “right” market mix in a successful Hotel?
It’s a trick question, or I guess, more accurately, a rhetorical question, because as far as I’m concerned the right market mix is critical to prolonged success, and I don’t personally believe that enough Hoteliers focus on this to the extent that they should.
Not only is the right market mix key to prolonged success, but if done correctly it is also a preventative measure to protect you from sudden and significant shifts in the market.
As a point of example, when I was in Victoria for a time, there was a Hotel that was very heavily into the Japanese Tour market, almost to the exclusion of every other market.
What’s more, they were ignoring other lucrative markets, especially during the high demand periods when the Japanese buses were anxiously lined up to get in their driveway.
Granted, the average rate that they were getting at the time for this business was very high, but at the Hotel that I was managing at the time, which was also in the Japanese Tour business, we were getting equally high rates for that business, but, we were also getting similar rates from other markets during the same time, balancing our commitment.
Further, we actually turned down some of the Japanese Tour business at the time, because we did NOT want to be so dominated in any one market as to lose our competitive edge, and, we did NOT want to be in bed with any one client to the extent that they could hold us hostage if they suddenly decided to do so by threatening to pull their business if we did not yield to whatever their particular demand may have been.
And, when the bottom fell out of the Japanese Tour market, that competitive Hotel that I referenced earlier took over a year to recover to any measurable degree, because they had suddenly lost about 60% of their annual business, and they had no idea how to replace it. 
They had been too busy patting themselves on the back for having cornered the market on the golden goose to have ever thought about what would happen if the golden goose ever died, and die it did, big time.
Fortunately for us, we had a very balanced market mix at the time, as had been our strategy.  The Japanese Tour business for us, had represented about 20% of our annual business mix, and we did have a plan for when that market suddenly fell off to the extent that it did.
Because, as a function of the process for completing the annual budget and marketing plan, every year, we would go through several exercises to;
Review our market mix.
Determine what our ideal market mix was.
Identify any gaps between our current market mix and our ideal market mix.
Create an individual plan for each of our key markets to close the gap, and lastly,
Identify shifts in our market mix, or, new markets that we would go after, in the event that any of our current key markets fell off by more than an acceptable percentage.
In short, we had a plan, it was a key priority, and we worked our plan. 
As a result, we were very well prepared for shifts in the market, and we successfully weathered more than a few “storms” over the years.
What about you?  Do you have safeguards in place to protect your Hotel from sudden and unexpected shifts in the market?

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