How to Sell To Two Customer Bases
A reader writes:
The hotel I work at needs to change markets. Over a 3-year period we are renovating all our tired looking rooms with $50 thousand going into each room! We are open during renovation. Our traditional clients are rate resistant and will not pay for the new rooms. The "corporate" clients our new product is designed for are resistant, based on past product and clientèle. How can I attract the new clients for the new rooms, while still filling the old rooms with the old clients until the change is complete?This looks like a problem, but it's actually an opportunity. Your goal is to get the rack rate (i.e. no discounts) for every room that you've current got available. I can't guarantee that, but I can help you get close. Here's how:
Step 1: Create "two" hotels. Treat your hotel as two separate businesses, one catering to the upscale, and the other catering to the downscale. Give the upscale hotel a new name and a separate entrance (!). Don't renovate your current lobby/reception area; build a new one, even if it means sacrificing some ground floor rooms. Eventually you can convert the old reception area into guest rooms -- once you no longer have any downscale rooms to rent.
Step 2: Focus your marketing. Move 95 percent of your promotional dollars into the new hotel. Don't mention the old hotel at all or that it's a renovation. You're selling something completely new. Distance yourself from your past. Copy the promotions and marketing that are work for upscale hotels elsewhere in your region. You're playing with the big boys now, so play by the rules.
Step 3: Maintain Your Base. Take the remaining 5 percent of your marketing dollars and create a "frequent stayer club" for your downscale customers. Your goal is to keep them coming as long as possible to the old hotel, so that your old rooms remain full. Get the rack rate by offering "frequent stayers" the possibility of an upgrade to a room at the "new" hotel. Only upgrade them if 1) you have a new room empty, and 2) you can fill the old room with another customer.
Step 4. Partner with another hotel. Approach your competitors in your area that serve the downscale market that you'll no longer be serving. Offer them your customer base and "frequent stayers" at their rack rate with a 10% kickback to you. Use the incoming downscale reservations to book rooms in their hotels. If you're really clever, get them to pay you some money to rename their hotel what your hotel used to be called.
Most importantly, if I'm ever in town, offer me a free room. (Just kidding; journalists can't accept gifts.)
Let us know how it works out, eh?