2014 is completely within our control now. But don’t let it get away. The first step is often ignored and that is the business plan, particularly a digital business plan!

What does that entail?

Start with your brand. What does your hotel or company stand for? There is no need to be academic here, just have a fundamental understanding of what your firm represents. Whether it be “to create the most luxurious experience with constant pampering” or “to create a value experience for the discerning business traveler” or “a high quality budget/economy lodging experience for today’s vacationers,” the key is to articulate and communicate it to your team members and to your target market.

Prioritize your digital goals by laying out your short and long-term business goals first to form a foundation. Start with the metrics you have on hand for each of your digital platforms. That might include your newsletter and website for starters. Your email “open” rates and web “bounce rates” are a good place to begin. The old saying “content is king” holds true here. Content creation and distribution are paramount to the success of your digital marketing – good content grabs and holds attention!

Digital Marketing

We at R A Rauch & Associates, Inc. have become big believers in digital marketing and employ buuteeq as our digital marketing firm for each of our 16 hotels. The Seattle-based firm is incredibly responsive, bright and ahead of the curve. Its product/platform typically costs a few hundred dollars per property. With the pace of change in this area, we would not be able to keep up without a web “refresh” at $10,000 per shot, twice a year. The combination of great web sites, always fresh layout and content and no additional development costs upfront (or otherwise) is what made them our choice.

Reputation Management

It is essential to diligently follow a reputation management program/system. How are your third-party reviews? How do you handle them? A strategy must be in place to capture positive reviews and secure and engage cheerleaders for your business. This can be done on your own or with the use of a third-party reputation management firm. Prices typically fall into the $100-200 per property per month range for most of the companies out there. We have been using Travel Media Group, TrustYou and Revinate and know there are many options out there.


The present and immediate future are mobile. SoLoMo (social, local, mobile) is a trend that is growing exponentially. According to a recent survey that was presented in Hospitality Upgrade this summer, 76 percent of guests want an alternative to carrying something in their wallet. This could jump start the use of mobile gifts that will compete with physical gift cards. Keep digital customers coming back by using rewards like mobile coupons. Target your active online users, give them reward choices and make it easy to use as well as to cash in.

Lee McCabe, Head of Travel, Global Vertical Marketing at Facebook says “utilization of social media is still in the early stages of development in the travel industry.” He expects the use of Facebook for direct marketing to match your own database; Millennials, often referred to as Generation Y, age 18-30, are the key market here as 90 percent of them are on Facebook. Keep in mind, any Facebook promotion must show a return on investment!

Revenue Management

The cost of attracting, booking and retaining guests must be a factor in determining what segment of the market to pursue. The reservation cost per channel, optimum channel mix and more is critical for use by the revenue manager. All of this information must be put into play instead of just driving occupancy; the key is not rate but net profit per occupied room. Digital marketing performance measures include social media and web analytics, especially mobile! Today’s revenue manager should be a highly valued team member and part of top management.


At the end of the day, whether you are owner, operator or both, net income and the value of your hotel is a key indicator of the market strength and your team’s performance. Capitalization rates, which determine value by providing an estimated return that a buyer will receive on your current net income, are the best barometer for determining value. Today, these rates range from 5 to 11 and average 8. This means an investor would receive a first year return of 8 percent on a cap rate of 8. Boutique hotels, resorts and top tier metropolitan areas are lower than average, meaning that your price would be higher (lower cap rate means higher value). Now is a great time to invest as net operating income (NOI) was up 10.6 percent in 2012, according to PKF and increasing again over the next three years. Values are nearing previous highs of 2006 and 2007. The Wall Street Journal’s global CFO Network says we will see 2 percent per year growth over the next three years. Areas to watch include but are not limited to taxes, cyber security, energy and infrastructure. Stay tuned!

Robert A. Rauch, CHA – rauch@hotelguru.com , www.rarhospitality.com

2014 Business Planning Forecast (Part 1) Social media inspires hotel design

Leave a Reply

Your email address will not be published. Required fields are marked *