How to Increase ADR

During the recession, most hotels dropped rate to capture occupancy. It worked! Now that the travel industry is rebounding, hoteliers need to look towards increasing rate. As we approach the 2011 RFP season, now is the time to test the waters with them and then dive into rate increases. Here are some basic strategies for a successful increase in ADR for next year:

  • Revenue Management
    • Analyze your current rack rates to see if you can increase them during high demand periods. Additionally, consider charging a premium for popular room types.
    • Maintain minimum length-of-stay restrictions during peak nights and minimize inventory on lower-rated rate plans.
    • Qualify all non-fenced discounted rates, e.g. Government and AAA, and train front desk agents to verify discount identification at check-in.
  • Locally Negotiated Rates (LNR)
    • Visit all top accounts and ask decision makers strategic questions about their 2011 travel budgets. For example:
      • “What changes do you anticipate in your travel program for 2011?”
      • “What changes do you anticipate in your travel budget for 2011?”
      • “What is most important to you regarding hotel needs for next year?”
    • If your contact(s) has not visited your property in the last year, invite them out for a tour.
    • Remember to ask key decision makers for referrals.
  • Value Selling
    • Communicate your hotel’s unique selling features and how they differ from your competitive set.
    • Show cost savings and bundled pricing when possible.
    • Articulate benefits, not just features, to your customers and your guests.

One of the hardest things for a sales person to do is walk away from low-rated business, especially if there is a genuine friendship that exists between the sales person and the contact. If this is the case, enlist the help of your General Manager and hotel team and support your case with facts. For example, present actual room night production compared to the anticipated room night production in the original agreement. If necessary, a friendly out is to offer an alternative property to your customer.

Travel industry experts have high expectations of continued economic recovery in 2011. A proactive strategy to increase rates as we approach the 3rd quarter and RFP season will ensure ADR and revenue increases next year. Plan ahead now!