Cornell Says, “Its Time For Hotels to Start Marketing”

As a regular reader of Hospitality Marketing Blog you know we have recommended hotels Advertise Aggressively in a Recession. We wrote an article about it on February 17, 2009 and followed it up with Advertise Aggressively in a Recession – Part 2 two days later.

There are numerous other articles on this blog, all full of research and case studies on how to survive in difficult times. A list appears at the bottom of this article.

So in the interest of piling on, let’s add another piece of research. This is a recently published Cornell University Study of nearly 1,000 hotels from around the world. Written by Sheryl E. Kimes the study is titled, “Successful Tactics for surviving an Economic Downturn.”

Cornell Study Findings – a Summary

• Discounting was the number-one tactic used to offset the effects of the recession. Most hotels that cut  prices agreed discounting was not particularly successful in maintaining revenue.
• One of the keys to success in a down market is to avoid offering across-the-board price cuts.
• Luxury hotels with an ADR higher than  competitors have the same or slightly lower occupancies, but have a 8- to 14-percent higher RevPAR than their competitive set.
• Hotels used 13 different marketing tactics which Dr. Kimes separated into four basic categories – Discounting, Rate-Obscuring, Marketing and Cost-Cutting.
• Performance – respondents were asked to evaluate the performance of each tactic on a 1 to 7 scale, where 7 = very effective. Marketing tactics were considered to be the most effective strategy (4.99). Responses did not vary by world region or hotel star level.

Questions for Hospitality Marketing Professionals

• If marketing is the most effective way to increase revenue in a steep recession why is it one of the first line items to be slashed when things get tough? There is more than ample research indicating it’s the wrong approach.
• If discounting is the least productive way to survive a recession why do so many hotels do it? My hypothesis? Far too many hoteliers think price is the only thing that matters to consumers.

The last thing any business should do is get into a price war with a competitor that doesn’t care what they sell their product for. But that’s exactly what hotels do in a recession.

Now I have to admit that Dr. Kimes’s study really doesn’t conclude that, “It’s Time For Hotels To Start Marketing.” Her research only says the most effective way to survive a recession is through marketing.

Isn’t it logical then to surmise that the best way to prosper during a recover is through marketing?

Let me know what you think.  Safe travels.  Madigan Pratt

Articles on How to Survive a Recession

Here is more ammunition for hospitality marketing professionals can use to defend their marketing budgets:

• Marketing to Succeed in Difficult Economic Times – published Feb. 13, 2009. Sounds very similar to Dr. Kimes Study doesn’t it?
• Lessons in Recession Marketing for Hotels – Published January 28, 2009.
• Wharton B-School’s Crash Course on Recession Marketing - Published December 9, 2008
• Marketing in a Recession – Retailers Respond - Published December 3, 2008
• Recession Lessons for Hotels – Published November 17, 2008