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Source: Hospitality Copywriting

Now that we're in the shoulder season, and most of us are busy trying to create our budgets for 2018, there is one essential question we're all facing.

It's a simple question, but it's a hard one to answer...

How can I guarantee I'll be more successful in 2018 than I was in 2017?

It's tough, because 2017 was such a great year... and because there are so many market forces in play...

But the options are pretty straight forward.

During your budget decision making process, you can either:

1. Keep doing what you've been doing and hope for similar results. Maybe this is 'the endless summer'. Or,
2. Step back for a moment and look at where things have been, historically, so you can figure out where they're going – and position yourself for success.

I think the choice is pretty clear. That's why I put this article together to share a section from my new book, Hospitality Marketing Synergy.

To start, we need to remember that the hospitality industry is kind of like the stock market. In that, there are moments of fear, when people tend to 'hide in their shells'. And moments of greed, when people feel free to make big, bold moves.

It's just human nature. And this is the key in understanding where things are going in 2018 and beyond.

So let's map out how most people's comfort zone (CZ) reacts during good times and bad:

Now let's think back to the double-dip recession of 2008, for an example of what happens during times of stress and uncertainty.

During this time, (#3 on our chart) we see that when things get tough, budgets get cut, sales teams have less success, and hotels tend to avoid hiring replacements when team members quit. They're not sure if they can handle the HR expense, after all, so they look for a less risky way to get things done. Their comfort zone (CZ) tells them to change their mentality from that of a 'hunter' to that of a 'gatherer'.

Ironically, this leads to stage #4, where hotels become even more reliant on the OTAs to do most of the 'heavy lifting'.

During this period, OTAs enjoy the majority of their revenue growth, evidenced by the fact that Priceline went from a financial loss of $19M in 2002 to $1.1B in profit by 2011. That double dip recession created a double spike in OTA dependency!

Luckily, as the economy and revenues continued to improve, confidence also returned and we move back to the top of the revenue cycle again, (stage #1), starting around 2014.

Everyone is back in their comfort zone, which is probably why 2016 was known as the 'Year of Direct Bookings'.

To this end, technology, agency manpower and innovations in distribution strategy have all come together to help hoteliers 'fend for themselves' again. This has helped many hotels take back, or at least maintain their share of direct reservations.

Now, however, as a 'soft landing' is predicted in the economy, we're moving into stage #2, where security, via guest loyalty, is the main concern.

Even with the stock market at historical highs, political tensions and international showdowns have everyone on edge, and that can easily sap one's confidence… driving us back to stage #3.

This brings us back to the big question. How can we make sure we're just as successful in 2018 as we were in 2017?

By looking at the historical cycle, I think the answer is clear. If you want to avoid the bottom of the 'CZ cycle', you need to guard your confidence at all costs.

That means you should make needless cuts to your own marketing initiatives, even when the OTAs provide an easy way out.

History has shown us that every time hoteliers decide to outsource their distribution, the OTAs move in to 'fill the power vacuum', and that puts hotels in a weaker, more dependent position.

On this point, I need to issue a warning.

Emotions are cyclical. That's why emotions are somewhat predictable according to the changing seasons. But technology is always advancing. It's always getting bigger, better and more pervasive. And, because of that, we need to realize that the OTA competition is always getting stronger, regardless of what economic 'season' we're in at the moment.

To illustrate what I mean by that, let me use an analogy:

Looking back, when we were in stage #3, back in 2008, dealing with the sudden 'economic winter' of the sub-prime loan crisis, it might have felt like the OTAs were a pack of wolves, trying to pick off your prey...
... by the time 2010 rolled around, it probably felt like you were up against a sleuth of bears...
... 2014 brought a pride of lions to your area...
... and 2016 saw packs of hyenas moving in...
... and if this keeps up (just like the pace of technology keeps up... and publicly traded companies keep pushing to grow their revenues), by 2020, it might feel like you're dealing with machine gun toting gorillas... and laser fitted pterodactyls... all while dealing with the next economic downturn.

Unfortunately, all this means that the OTAs will be controlling a greater percentage of total reservations and that will ultimately put your hotel at a sharp economic disadvantage. Ouch!

No, history will not repeat itself. Progress will continue. And so will the OTAs.

But human emotions will predictably shriek away from environmental challenges in favor of safety.

When the going gets tough – sorry to say – most just want security.

That means that during the next downturn, it's predictable that hotels will stop investing in their own marketing, in favor of 'a sure thing' through the OTAs... even if it's expensive...

... and the OTAs, watching their stock price fall in a depressed economy, will predictably do everything they can to secure their future, as well, getting even more aggressive with their marketing.

"The only thing we have to fear is fear itself", FDR famously said. I think the situation I'm describing here was exactly what he was talking about.

When things start looking shaky, don't respond like most people do by pulling back on your marketing budget. Instead – double down.

There are more agencies and more technologies on your side, right now, than there have ever been before.

There are tons of places you can get free traffic, on-line.

There are ways you can partner with local event organizers to contract room blocks, year after year.

And there are new advances in revenue management and digital marketing happening every day, which can help guarantee you're not leaving money on the table...

My point is, the last thing you should do when you feel like you need help is to give away your direct connection to potential guests… or undercut your own rates by opting into an OTA's discount program. That's just like throwing your competition a big, juicy steak bone and hoping they go away... when you know that will only make them stronger.

Remember, fear leads to failure.

So make sure your budget shows you know how to fend for yourself! It's time to get out there and hunt!

All the best,
Jeremiah

Jeremiah Magone
Consulting Copywriter
Hospitality Copywriting