One place that many hoteliers would be better off emphasizing is optimizing their base business strategy, an often-overlooked foundation for any successful hotel. Having a strong and solid ‘base’ of guests is a core building block.
NB: This is an article from Lighthouse
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In this blog, we will help you understand what base business is, some actionable examples of base business that you can pursue today, methods for evaluating base business, and how to use this core component to build toward better profitability and more revenue growth.
Base business isn’t just extended stay
Extended stay guests can certainly comprise much of our ‘base’, but length-of-stay is not what determines whether a piece of business is base business. Even short one night stays can be included in our base business if they occur regularly enough.
In fact, it’s exactly this reliable and recurring nature of certain stays that qualifies them as base business.
What are some examples of base business that aren’t extended stay? Consider a flight attendant that stays almost every Thursday through Sunday at your hotel, or the traveling nurse who comes in 2 weeks every month, or even your reliable business-transient guests with local negotiated accounts that come rolling into the lobby every Monday afternoon for their mid-week stay.
How to build base business
Building up a reliable base is a fundamental function of hotel sales. A good salesperson is always working on drumming up new business for their hotel, but also maintaining relationships with existing clients.
Sales people do this by completing RFPs (requests for proposals), visiting local businesses, CVBs, and acting as the public face for the hotel with prospective groups and other sales inquiries.
Building base business is a cross-functional exercise though, so if you are a revenue manager don’t assume that sales will be able to build your hotel’s base business completely independently.
Find relevant demand drivers that are producing room nights in your market
Here is a quick list of some excellent demand drivers that can be used to help you start building base business. While some of these may require a more formal RFP process, in many cases a more informal approach can work as well. Sales and revenue can work together using a mixture of market intelligence and open source data in identifying if any of these may impact your hotel.
Military bases / Government facilities
These government-segment demand drivers often generate large amounts of hotel stays throughout the year either for official training, contractors, or any other number of purposes. There are some upper-constraints to what you can charge these guests due to rules with Government Per-Diems and stipends, but the length-of-stay and steady demand these facilities offer can often be worth it for hoteliers who want to capture this segment.
The negotiation process for capturing this kind of business usually requires a formal RFP, often through a governmental agency or online portal.
Airports + Flight schools
Airports are a great demand driver for developing base business, and close proximity to an airport will almost certainly guarantee a certain level of baseline demand, but there are other levers you can pull to get the most out of being near one. For larger hotels with capacity to spare (especially with those that offer shuttle service or transportation to and from the airport), participating in a distressed passenger program can ensure that you capture a few rooms during inclement weather events, and other unexpected periods.
