It's Time: Get Recession Ready
Slowdown talk is picking up speed in hotel circles.
I attended CBRE's Hotel Sector Update and Forecast call last week, and the data seems to bear out what I've been talking about since back in April.
The short version from CBRE is:
Signs point to an economic slowdown.
Hotels have been growing RevPar through ADR; ADR growth is weakening.
Labor pressures are eating up profit margin; NOI growth will be diminished by the convergence of salary/wage growth and weakened ADR.
This is not going to be a sky-is-falling, 2008-style recession, but rather a softening of the conditions that are currently allowing hotels to grow RevPAR by driving rate.
Profit margins are about to get squeezed.
What worries me on behalf of my hotel pals is that a good percentage of the sales teams who are currently in charge of top line revenue at individual properties have never worked through a down cycle and don't have strong business development muscles.
The truth is, hotels can do ALL KINDS OF THINGS now to protect themselves against tough times, but the sales people don't seem to know how.
I encounter hotel after hotel that can barely find the time to respond to all of the incoming leads they receive. I see properties turning down business due to space conflicts constantly, even when the RFPs clearly state that dates are flexible. I watch sellers scratch their heads when asked who they are prospecting and what their target accounts are.
Remember how I said up there that profit margins are about to get squeezed? As we've seen before when this happens, every expense will be scrutinized as a result. Look at your direct expense lines now and find a way to invest in business development training for your team.
I'm a big believer in professional sales training and help, but if that's not an option, guess what? Everything you have ever wanted to learn about is available -- for free -- via Google search.
And if you don't have time to learn something new (which....is maybe a problem?), here's a novel idea. Pick. Up. The. Phone. Call someone, and ask for their business. Repeat until you get good at it.
What are you waiting for?
And speaking of free, you can take the Recession Readiness Stress Test here free for a limited time. It's confidential with no strings attached, and you'll get customized recommendations and resources to help your hotel prepare. What are you waiting for?
Hey. Thanks for reading! If you like this, share it with a friend. If you think I'm off base, let me know what I got wrong. You can read more in my #recessionready series here or here.