Effective Ways of Providing Value Through Effective Packaging
By Lanny Grossman, President, EM50 Communications
Each of us as a consumer at one point or another has uttered the phrase “Ok, it’s worth it.” We have evaluated a situation that required the expenditure of either personal or financial capital and made a judgment call as to the value of what was being spent versus what is being received. When booking hotel or travel packages, travel agents and consumers alike go through that very process.
The most common and basic “package” offering in a hotel is simply Bed and Breakfast. Although I would argue this is not really a package per se, it does get hotel operators thinking about assembling a bulk offering that ultimately translates into a savings for the guest. That said, the goal of packaging is to of course drive reservations, but to also generate media coverage and consumer interest by offering something new and exciting, and most importantly, of value. Those components will organically then deliver the desired business goals.
Strategically Use What You Already Offer
In order to go above and beyond the typical Bed and Breakfast offering, hotels must use all of their resources. The first step is to strategically use what you already offer. Similar to the cable companies that offer bundled services, take the services and amenities you already offer, whether complimentary, or for a fee, and put them into a package that makes sense. For example, for a package targeting business travelers take your Wi-Fi, breakfast, parking, business center, access to the gym and other relevant components and turn it into a special package that speaks to them. Sure you offer most or all of the components anyway, but when the guest sees a variety of services and amenities all listed together it not only gives them a grand sense of the hotel but gives them an opportunity to feel that they are getting more for their money. Hopefully, items that come at little or no cost to the hotel, but normally carry a retail rate for guests, can act as newly created added-value illustrating a savings. Alternatively, even if many of those services are already complimentary, there is a sense of perceived value for receiving so much at once. From the travel trade side of things, travel agents will often search the GDS using the code for ‘special packages’ first. In that scenario, even if your rates wind up being the same or similar, the special package will display before room-only rates during their search.
Form Partnerships to Create a Mutually Beneficial Relationship
Although bundling services that are already offered or easily accessed is a good start, more is required to meet the goal of offering great value and creating interest from guests, as well as the media. In order to include interesting added-value, form partnerships to create a mutually beneficial relationship. For example, if you would like to create a holiday shopping package, having a close proximity to great stores is not good enough. Instead, reach out to a few retailers and create a partnership that will benefit both the hotel and store. For the holiday shopping package, maybe there is a clothing store that is willing to provide $25 gift cards to include in each package. The store knows most of their items are well above $25 and it will bring extra traffic into their store. While the hotel has now built an extra $25 worth of value into the package price at a zero wholesale cost, allowing more of the package price to go directly to the room rate. This can also be achieved by negotiating wholesale rates with local vendors. For example, if brunch at a local restaurant is normally $50 per person, try to make a deal to pay $30 and include it in the package giving you an extra $20 in value and added cushion to the bottom line. It helps to first identify a theme and then search for partners that fit the theme and are attractive to the desired target audience. If offering a Mother’s Day package, perhaps work with a florist or chocolatier to create the appropriate added value; Girls Getaway maybe a spa or salon etc etc.
Figure Uut the Lowest Possible Room Rate
Depending on the nature of your property, the room may just be the way to attract guests to have them spend incremental dollars on other services or amenities. Besides the out of the box offerings that inspire and excite, rate based packages are some of the most attention getting. Figure out the lowest possible room rate you can take and allow the package to be rate driven. Or if the extra amenities or meals you offer have a lower cost basis, absorb those into the rate. We see this in Las Vegas a lot, as well as full service resorts. The room rate will be quite low, coupled with a resort credit or some meals. In the case of Vegas, they want people to gamble. In other cases, if you offer a $50 credit to the spa during the off season and all treatments start at over $100, the attractive rate has gotten the guest to your property and will put them in a more free-spending mindset once on property.
Imperative the Rate Assigned to the Package is 20-30% Less
In order to make sure the value of the package is recognized, it is imperative the rate assigned to the package is 20-30% less than the retail value of all of the components. With the Internet, it is very easy for consumers to shop, compare and analyze. The last thing you want is for a potential guest to discover that the package is actually a worse deal! Be aware of the room-only promotional rates and be sure to always have rack rates listed on your booking engine to further reinforce the value proposition.
In the current economy there is value to be had across all sectors; from real estate to clothing to electronics and travel. Consumers are smart and know hotels have become more aggressive with room rates compared to a short time ago. Packaging is not the answer to all problems but it creates an opportunity for the consumer to look at it and say “It’s definitely worth it” or “I wasn’t planning on getting any spa treatments but with the package it is completely worth it.” If done correctly and effectively, packaging can, and will, create an extra interest in your property from both the consumer and the media. Travelers have become more sophisticated in this era of comparative shopping and are very in tune to what rates include and most importantly what are they getting for their money. Make it interesting, different, experiential and full of value. The sophisticated consumer will do the rest.
Lanny Grossman specializrs in PR, luxury lifestyle marketing and consumer outreach. He began working with notable hotel properties such as the Waldorf=Astoria in New York and Le Byblos in Saint-Tropez, after which he became the Director of Public Relations for two of America’s famous restaurants, Tavern on the Green and the Russian Tea Room. More recently, Mr. Grossman was Director of Brand Communications for Small Luxury Hotels of the World, an international hotel consortium whose portfolio boasts over 450 of the finest hotels in more than 70 countries. Mr. Grossman can be contacted at 646 861 2801 or firstname.lastname@example.org Extended Bio...
HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.