by Sandy Soule
Although the economy is gradually improving, and both leisure and corporate travel is on the upswing, we continue to operate in a highly competitive environment where consumer purchasing is primarily value-driven.
Innkeepers are under increasing pressure to think creatively about different ways to keep their RevPar (revenue per available room) maximized; effective use of packaging is certainly worth considering. After all, it’s more feasible to increase revenue per available room than it is to increase your room count. In general, there are two types of packaging -- all-inclusives and add-ons. We’ll be discussing both in this article, along with some survey results from both innkeepers and consumers.
Survey results: Innkeepers
After the second quarter of 2010, we surveyed both innkeepers and consumers to determine packaging preferences. We asked innkeepers:
Do you offer packages to potential guests?
- On BedandBreakfast.com & other B&B sites: 55%
- On my own website: 77%
- Telephone inquiries: 45%
- After arrival at the inn: 13%
- On other travel websites: 28%
Comment: Many innkeepers think that packaging is synonymous with discounting, and avoid it for that reason. Others realize that value-added packaging can increase income and reservations, and can be an excellent alternative to discounting.
Suggestion: About 20% of innkeepers aren’t taking the few minutes required to cut and paste their package information from their own websites to their directory listings. Give it a try -- you never know what will attract a potential guest to your listing, your website, and your inn!
If you don’t offer online booking of packages, why not?
- No guest interest: 21%
- Don’t want the extra work: 25%
- No package components available: 22%
- Technological/website limitation: 32%
Comment: Of approximately 600 respondents, 400 skipped this question, 200 replied, and 118 commented. Responses included many who said they don’t need or want online packaging; some misunderstood, thinking that packaging involved either discounting or high commissions; and a number were interested, as soon as a new website was ready; others had PMS issues that either didn’t allow for packaging or the setup made it overly complex.
Suggestion: Both packaging and rate discounting are viable strategic marketing techniques, each with different advantages and disadvantages. Investigate them both to decide which approaches will work best for your property during different dates and seasons. When testing pricing levels, be sure that you understand both the fixed and variable costs of renting a room (or having it sit empty), so that you can balance the cost of an unsold room with one that is booked.
If you do offer online booking of packages, what has been the effect on sales?
- Increased: 39%
- Decreased: 2%
- No change: 59%
Comment: The fact that almost 40% of respondents found that online booking of packages increased sales makes it well worth testing.
Survey results: Consumers
Have you ever booked a package at a B&B or inn?
Comment: Many consumer comments ran along the lines of "it depends on whether it’s a good value," while other remarks reflected confusion about what constitutes a package. Several mentioned singles as a neglected group. Some samples:
"If the packages are a good value, I like to book them, but if it's just a way to increase the price, then no.”
- “I especially like packages that include a reasonable price for fine dining nearby.”
- “We booked a wedding package for our small ceremony; it was wonderful!”
- “I love getting away on my own, but packages are always for families or couples. Change that, and I'll be there!”
What kind of package add-ons interest you?
- Food: 73%
- Activities: 50%
- Romance: 35%
Comment: Food was clearly the most appealing add-on. Consider offing a dinner certificate as a profitable extra on busy weekends, or make it a freebie to build occupancy midweek. In either case, work with high-quality locally owned restaurants, and negotiate a discount with the owner. To test this, contact local restaurant(s) and offer to pay $40 for a $50 gift certificate for two entrees (or whatever amount is appropriate for your area; excludes tax, tip, drinks). Guests get the dining certificates at check-in. You pay the restaurant the $40 when/if certificates are redeemed. The restaurant owner is happy because of the added covers on a slow night; their 20% discount softened by extras (alcohol, dessert). You get a two-night midweek reservation for a cost of $40. Some guests won’t use the certificates, costing you nothing.
“Activities” was the second most popular add-on; work with local outfitters to offer bike, kayaking, fishing, riding, and other experiences. They should offer you a commission or discounted price that you can incorporate to make your package attractive to potential guests.
“Romance” packages generally include some combination of roses, chocolates, champagne or sparkling cider, and often, two wine glasses with your inn’s name. Purchase these elements as needed for your packages at discounted rates, so that you make a small profit when offering them to guests.
Packaging online: all-inclusives and add-ons
The Castle in the Country in Allegan, Michigan effectively promotes and books both all-inclusive and add-on packages on its well-designed website, giving potential guests the choice of telephoning or reserving online. Their all-inclusive Celebration Package, for example, makes it easy for guests to enjoy a special occasion escape while generating significant additional income for the inn with relatively little effort. Use of the RezOvation Booking Engine makes it easy for guests to read reviews, check pricing, and select the room of their choice for their preferred dates. If a potential guest is not interested in an all-inclusive package, add-on upsell items like a massage, flowers, etc. are also presented as part of the checkout process; this makes it easy for guests to pick these extra items. Innkeeper Ruth Boven was exceedingly generous in sharing some of her advice on how packaging works for them:
“We sell a lot of packages because they are a great way to give guests exactly what they really want in a getaway experience. Value is created not only by the package components, but also in the service we provide by bundling together the best of what our inn and area offers. Here are our primary packaging objectives:
- “Sell multiple night stays: Potential guests must view us as a destination getaway location, allowing us to compete with other lodging alternatives such as casinos and resorts with multiple activities/attractions, plus more centrally located B&Bs. Our all-inclusive packages make it easy for the guest to understand how much our area offers for them to do, despite our slightly out-of-the way location.”
- “Increase revenue: We want to make money on our packages because they cost us money to implement. For long-term sustainability, we aim for a profit of at least 30%. We prefer bundled packages so we can recoup our costs over several components. We sacrifice this profit only when we need to increase reservations with specials.”
- “Brand our unique selling proposition: Not only do our packages make the guest experience different from a stay at a competitive property, but the take-away package components continue to remind them of their experience here.”
Packages increase SEO
If travelers wanted to find a country B&B in which to celebrate Thanksgiving, they might enter a term like “thanksgiving bed and breakfast” into Google. If you have such a package, you might end up with a three-night reservation from folks who would never have found you otherwise.
Promoting your packages: In describing and promoting your packages, keep these goals in mind:
- Keep the descriptions concise, clear, and appealing, with the focus on WIIFM (what’s in it for me, the guest).
- Enhance your written description with great photos relevant to your packages.
- Work with state/local chambers/tourist offices to promote your packages and your property.
- Send press releases to local media about your packages, especially those with a timely theme and/or a news hook.
- List your packages prominently on your website, directories, state B&B association, CVBs, etc. and ensure that your staff is well informed about this as well.
Social Marketing: Use your blog, Facebook and Twitter pages to attract potential guests possibly looking for package options. Younger guests often use social marketing sites as an alternative to email or telephone when doing research.
Take-away: In conclusion, bear in mind that packaging is not for every property. Test packages that will grow income by increasing RevPar and/or occupancy, while avoiding packages that require too much time or money with no guarantee of success. Offer simple up-sell packages online in your checkout to increase revenue risk-free.