The New York Times recently reported that Manhattan hoteliers are slashing their room rates by as much as a third in a desperate attempt to fill vacancies. How can corporate housing providers keep pace? Well, price is only one of the 4 P’s of Marketing (product, price, place, promotion). Perceived value is so much more powerful than price alone, and many factors combine to create this perception.
Product. Any simple hotel-corporate housing comparison will easily prove to your client that you have a far superior product to offer. After all, on average corporate housing offers at least double the square footage of a hotel room, separate living/sleeping areas, free local telephone, and more. Take the space on your website to lay out a comparison, and ask your salesperson to repeat key points verbally to the client, to remind them that they’re getting the best value for their money.
Price. According to the Corporate Housing Industry Report put out by CHPA, “The overall average daily rate for corporate housing in the United States was $117 in 2008, up 1.2% from $ 116 in 2007. In comparison, the overall lodging industry gained 2.4% in average daily rate according to Smith Travel Research.” This statement is incongruous with what The New York Times reports above, which is that hotels are slashing rates in order to fulfill their mortgages. Still slower growth in price in the corporate housing market than in the hotel market would imply that despite the slow economy, corporate housing still offers better value at less expensive rates.
Place (Distribution). Establishing inventory in cities and neighborhoods with a strong presence in the cityscape, as well as decent access to public transportation and major highways is key. But the provider can take it one step further by becoming involved in their neighborhood. What’s going on with your building? Especially if it’s a condo association, you may want to keep an eye on the decisions that are being made.
Promotion. Recessions are not the time to cut back on your advertising budget. Period. Robert Sharp Associated posted a wonderful blog on this subject, and there’s a concise ezine article as well. The NBTA, or National Business Travel Association, used to have a guide on their website called “How to Develop a Hotel Program” that I had previously blogged about. The guide has since been removed from NBTA’s website, but basically the steps were this: 1.) Organize Solicitation List, 2.) Select Hotel Partners, 3.) Create RFP Package, 4.) Analyze Completed RFPs, 5.) Negotiate with Hotels, and 6.) Select and Notify Hotels. Thrown in there were also some basics like defining goals, and assessing company culture. Anyway the same material can be reverse-engineered when you approach corporations with your cost-benefit analysis of why corporate housing is the better value over placing employees in hotels.