Philosophy
AFCO believes the most effective way to positively impact financial
performance in the Suburban Lodge Extended Stay Hotels is through improving the
"top line" revenue. AFCO Lodges is aggressive with expense control,
especially labor, but so because many costs are fixed and the operation is lean,
it is difficult to "save your way into profitability". AFCO has taken a
very proactive approach to sales and marketing for each hotel in the belief that
this activity will improve revenue in multiples of the cost of execution.
The objective is to develop a culture of sales and marketing within the
organization that incorporates employees at every level. No two hotels are
alike in the markets they face, so every marketing plan has unique features to
maximize our impact with limited resources.
The annual sales and marketing plan is prepared by AFCO with input from the
hotel management and is presented for approval by the hotel owners. The
written plan is specific by activity, timing and cost. Annual budgeted
costs exclusive of management time are in the range of 2-3% of gross revenue and
cover everything from business cards to billboards.
Early in Suburban Hotel's history, AFCO Lodges could fill a hotel exclusively with extended stay guests; however, the market has changed materially over time. The supply of hotel rooms has increased dramatically in the last ten years and the demand for hotel rooms has been dropping for the last two years. AFCO Lodges must now compete for nightly guests for some percentage of its occupancy on a regular basis to achieve acceptable revenue levels. The weekly vs. nightly mix can vary widely by market and by season at the same hotel.
AFCO Lodges sees many more economy extended stay hotels competing for the same business. There simply are not enough extended stay hotel guests to fill all the rooms developed for them. In addition, many of the traditional nightly hotels have retrofitted with microwave ovens and small refrigerators and begun offering weekly rates near the Suburban price point. This market shift means that extended stay hotels must market to a wider target audience on a regular basis.
The first task in positively increasing revenues is to properly price the rooms. This requires a thorough market research of the competition . Then, based on that information, rates are set taking into account variables such as seasonality, special events, groups, corporate client rates, etc. AFCO Lodges supports the concept of yield management. If plenty of rooms are available with little prospects of filling them on a particular night, then management may heavily discount the rooms to avoid someone walking out based on price. Conversely, if there are only a few rooms left early in the evening, and special events may drive demand all night, management may choose to close out all low room rates and ask for what the traffic will bear.
AFCO Lodges has developed a number of strategic marketing materials that have been incorporated into use in nearly all of its hotels. AFCO emphasizes direct sales and supplement it with direct mail and telemarketing. AFCO advertises through outdoor media, print media and occasionally broadcast media. AFCO uses a wide array of collateral materials many of which are developed exclusively. AFCO supports a public relations effort at each hotel and enlist support from franchise corporate staff to maximize the benefits of royalties paid.
AFCO views marketing data, especially from direct sales, as a corporate resource that must be maintained and protected. If salaries are included, each hotel is spending thousands of dollars identifying, qualifying and developing relationships with sources of business. This information cannot be left to managers' memories and shoeboxes of business cards. AFCO utilizes an inexpensive contact management software program that has been refined and proven over many years of use. The program keeps notes, future action dates, files all correspondence and provides functionality to make mass mailings, faxes or email messages. One of its key benefits is that it will produce a weekly marketing summary which is submitted to AFCO's managers for review.
The benefit of reservations varies considerably between the hotels managed by AFCO Lodges. AFCO's current reservation system of choice, InnLink, is utilized through most of the managed properties. InnLink ties the hotel into the Global Distribution System with providers like Sabre, Pegasus, Galileo, Amadeus, etc. In addition, it provides connectivity to the internet based providers such as Travelocity, Orbitz, Travelweb, etc. Reservations are also obtained through the promotion of the hotel chain's proprietary websites such as www.suburbanhotels.com.