Running an independent hotel business is hard.
You have to master the hospitality experience as well as figure out an optimal mix of booking channels.
Most independent hotels rely on individual bookings.
OTA (Online Travel Agency) websites like Expedia are a low-hanging fruit to acquire a high volume of guests with relatively low effort and minimal need to invest in marketing and sales initiatives.
But there’s a catch 😬
There are many disadvantages of being dependent on OTAs and you maybe already be familiar with a few of them:
- A strong dependency on these channels to secure bookings
- Squeezing your margins - they prioritize properties where they have the highest commissions
- Extremely low up-selling opportunity for food & beverages, activities and transfers
- Monopoly behaviour - they try to dictate your prices and give you restrictions (i.e. you’re not allowed to offer a lower price on other channels or on your website)
- Poor retention of OTA customers
There’s nothing necessarily bad about working with OTAs, in fact, they could be an essential part of your channel mix, but being 100% dependent on them is definitely not the best idea. Unfortunately, there are many hotels in this trap.
If you play it well, group bookings can be an attractive alternative to individual bookings from Expedia/Booking/Airbnb.
Almost all hotels want to attract groups but very few actually figure out how to do it. I’m going to share some tactics and knowledge I’ve learned over the years to get them in this article.
Your goal should be to create a healthy mix, not to replace existing bookings from OTAs.
Pros and cons of group bookings
In talking with hundreds of hotel managers, I've learned that most of them think one of two ways.
Some idealize group bookings, seeing only the positive aspects, while others do the exact opposite and fear hosting groups because of the additional admin work (e.g. weddings) or risk to damaging property (parties).
Overall, hosting groups has mostly advantages:
- More predictable revenue management - groups are usually booking a significant time in advance
- Opportunity for up-sells on other services (catering, transfers, activities)
- Reasonable rooms rates (comparing to for instance last minute OTA discounts)
- Less work if the processes are standardized or if you’re working with a partner
- Usually better occupancy rates in mid and low season
- Lower dependency on OTA websites like Booking
- Overall a healthier mix of bookings brings you less stress
As with everything, there are few cons to hosting groups as well:
- It takes time to master the group experience and build your processes
- There’s less room for improvisation once the group is onsite
- Blocking your capacity gives you less flexibility (a real problem for small hotels that don’t have many rooms)
- Handling risky group behaviour (especially weddings, stag parties and young leisure groups)
Types of groups
99% of groups easily fall into one of the following categories or a combination of them:
- Conferences
- Students and universities
- Business meetings
- Team building retreats
- Family & friends reunions
- Religious groups
- Weddings
- Sports teams
- Tour groups
- Hobby groups and associations (i.e. bird watchers)
- Stag/hen parties
- Yoga/meditation groups
Consider your capacity, location and infrastructure
I see this mistake all the time…
Many hotels are attracting the wrong type of group based on their infrastructure and location.
Let me give you some examples:
- Hotels with mediocre WiFi infrastructure and meeting/event spaces trying to organize company retreats. I've heard it dozens of times “We’ve never hosted a large group but our staff use the internet connection every day and it’s OK”. They often don't understand what good WiFi infrastructure actually means. To host a group for a company retreat, WiFi coverage needs to be everywhere, fast, stable and able to handle 3x more devices than the number of participants. On average people usually have 2 or more devices (laptop, mobile phone, etc.) connected at once.
- Organizing weddings and not having a proper indoor space(s) in case of a bad weather is another common mistake. There are so many epic small hotels and villas promoting themselves as wedding venues but the whole experience is designed for outdoors. They just expect that the weather is going to be fine because “we usually don't have any rain in June”. Once the rain starts, there’s isn’t adequate space indoors to host a dinner or party. Often, this leads to guests destroying the property in the online reviews afterwards.
- At Surf Office, we partner with hotels that are a maximum 1h drive from an international airport. Ideally, 30 minutes. When you organize an international company retreat, there’ll be many (if not all) delegates travelling to the venue by plane from abroad. The last thing anyone wants after hours of flying is to spend another 2-3 hours in a car or bus. On the other hand, this type of distance can be perfectly fine for student groups or family reunions.
- With most types of groups, it’s usually OK to share rooms together. But when it comes to corporate events, in most cases they requite a private room for each of the participants. This is often the case with premium yoga/meditation retreats as well. Commonly, properties will communicate a certain capacity but the number of rooms is smaller in comparison lowering the capacity when there is a need to accommodate everyone in private rooms. This ends with property managers having to come up with “creative solutions” like partnering with a neighbouring property to increase their capacity. This type of “deal” is rarely a success, ending either with the customer not accepting the new setup or if they do, having a poor experience as a result. Bad reviews for the business, again.
Practical tips
By reviewing hundreds of property partners at Surf Office, I’ve found a lot of interesting tactics for those looking to start hosting groups or step up their current game.
#1 Pick maximum 2 types of the groups, then research and test ⭐
The common mistake is to target many types of groups. You can easily end up with no group bookings at all and give up. Or you’ll have a few different groups and gain no insights from them in terms of expanding your business. Less is more in this case.
#2 Iterate something you already have traction with ♻️
If you already hosted at least one group of that type or if you get a significant amount of inquiries, you may consider pursuing this direction further. There’s a much lower chance that you’ll completely waste your time because you’ll already have a basic knowledge of the needs of your end customer.
#3 Try to find complementary groups 👯
A good example of complementary groups are weddings during the weekends and company retreats during the week.
You can focus on complementarity between the seasons. For example, one very well performing small hotel I know on the coast of southern Spain combines family gatherings during the high season (July/August) and sport groups (mainly cyclists) during the rest of the year.
#4 Combine groups with other channels ➕
Hosting only groups won't maximize your revenue. There will be a lot of gaps between group bookings and it's a good idea to combine them with other channels. This is where OTA websites like Booking or Airbnb can come in handy.
#5 Try to build long-term relationships 🤝
I know a couple of people who organize premium yoga retreats every year in multiple locations. The last thing they want is to scout new properties all the time. Once they have an amazing yoga retreat experience, they want to repeat it. Don't be opportunistic, play the long-game and make your partners happy. It will pay off when they return year after year.
#6 Provide as much necessary info as possible on your website ✍️
It's crazy to see how many hotels have mediocre websites with very little info and only a few nice pictures, but when you contact them by email, they’ll send along a pdf with every single detail you can think of and dozens of amazing pictures.
Put it on your site! Don't hide the valuable things your property brings to the table.
Very few people are going to write you that email. You will get tons more leads and save plenty of time for you and your customers if you put all that information in an accessible space like your website.
#7 Make your offering flexible 💫
The more flexibility you provide, the more groups you can close.
I often see 2 extremes: Hotels who promise you whatever (sometimes even things they don't know how to provide) and others, that are extremely close-minded with very little opportunity for customization.
Do you have a premium catering menu because your property is premium? There are many types of groups that are looking for the type of property you have but are less willing to pay for overpriced catering.
Simplify the menu and make a more affordable catering package. You will sell more rooms.
#8 Make your infrastructure flexible 🏨
Could a bright yoga room be converted into a workspace? Of course it could.
But you need to have a top-notch internet connection and flexible (but still comfortable) furniture that can be quickly installed. This way you can combine hosting yoga retreats with hosting corporate groups.
If you want to cater to different group types and offer solutions, you need to share more details on how your space can support them. It’s as simple as that.
Take pictures of the room with different setups, explain details like the capacity. Don't tell your customers “of course, anything is possible”, rather show them that this is true.
#9 Test your infrastructure with one day events 📅
Meetup.com is a great site to find local groups and event organizers. Contact them and host a workshop/meetup.
This way you can test your infrastructure, learn more about the type of groups you want to target, and capture pictures of groups using your property that you can showcase on your website and social media.
Do you want to host company retreats? Think about whether you could first host a Coworking Day with local freelancers, remote workers and startups.
#10 Try to find unique niches, don't copy every hospitality business around you 💡
I’ve gathered so many insights from random hotels I’ve stayed at while traveling, just by chit-chatting with hotel staff. Managers don't see you as a competitor when you come from abroad and are happy to share their insights.
Once I hiked the famous Rota Vicentina trail in the south of Portugal and heard about a guesthouse that was there. You would expect that most of their bookings come from hikers, but this guesthouse had a very unique type of clientele: they somehow targeted organizations around the world that connect people interested in birds.
The guesthouse receives dozens of group bookings every year from people who come to watch birds together.
#11 Master the customer acquisition or delegate it 👑
It’s extremely difficult for independent hotels to build their own system for acquiring leads for group bookings.
And it’s even harder to qualify and convert these leads without help. There are simply no resources to hire experienced online experts and sales people. If you’re able to master it, good for you.
Alternatively, you can focus on operations (customer experience) and delegate sales and marketing to partners like Surf Office (in the case of hosting corporate groups). There are similar partners to be found in each of the group niches if you take the time to connect with them.
I hope all these tips were helpful. It takes time to create a balanced channels portfolio but it will give you more stability in the longterm if you do, opening the door for you to focus on expanding your business. Good luck and let me know how it goes!
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