On a regular basis, but particularly at this time of the year, we spend a disproportionate amount of time talking about the importance of ‘strategy.’ As most of you are now well into your planning for 2017, there is probably not a day that goes by that someone in a managerial capacity at your properties isn’t talking about strategy for the coming year; what is our plan, who is going to create it, who is going to implement it, etc., etc. While all of these conversations are highly important, none of them really make a difference if the strategic plan that we ultimately create is not dynamic, measurable, and executable. Even if we can achieve these three points, the question remains, how will we know if our ‘strategy’ has truly been successful?
An important part of the strategic plan/business plan process for us involves the setting of targets. These targets ultimately roll up into our new year’s budget, whether in the form of line item expenses or as line item revenues. Not surprisingly, our goal is always the same; increase revenues and decrease expenses. Sounds simple, right? Not so fast . . .
Before we get too far into the traditional Q3 exercises of strategic plan and budget creation, think about some basic questions to consider:
1. Do we understand the dynamics of business in our marketplace for the coming year?
a. Will there be an increase in demand generation?
b. Will there be a decrease in demand generation?
c. Will there be an increase in competition?
d. Will there be a decrease in competition?
e. Will we be able to win the market share war next year?
2. Do we honestly and objectively understand our position, as well as our positioning, in our marketplace? (are you now wondering what the difference is?)
Let’s start with number one above. When we start planning for the new year, we are programmed to think about growth. Growth in occupancy perhaps, growth in rate perhaps, but certainly growth in overall revenue and performance. Fortunately in today’s US hospitality environment, there are relatively few markets that will not experience some degree of growth in the new year, so this is not an inaccurate premise. Now that we’ve established that growth is achievable, how do we set our targets? What do we know about our marketplace in terms of incoming sources of business? What do we know about departing sources of business? Perhaps most importantly, if there is no change in the amount of demand generators in our market for the coming year, how much do we know about the usual suspects and their own business climates? Did “Corporate Account A” have a good, great, or awful 2016, and what are they expecting for 2017? Did one of any number of international incidents of the past year have an adverse affect on “Corporate Account B’s” meeting and travel plans for the coming year?
Before we address these queries, let’s talk about number two above. Is it crazy to think that there is a difference between “position” and “positioning?” Not from our perspective. “Position” is the place that our business occupies in the marketplace. If we are the Doubletree in a market that features a Ritz Carlton, a Westin, and a Holiday Inn, our “position” is clearly in the middle of the pack. With that said, our “positioning” does not have to be the same. Our positioning as the Doubletree in this example might be as the market’s top Group hotel, based on our meeting space, based on our number of guest rooms, and based on other Group-oriented amenities. By the same token, the Doubletree might have a dedicated, state-of-the-art conference center as part of its facilities, leading to its ‘position’ as the market’s conference/small group leader.
What’s the point? As you move into the final stages of your strategic planning process for the upcoming year, you must know the current position of your asset, as well as its current positioning. With this knowledge, you will be best-equipped to define your strategic direction for the coming year(s). We cannot develop and execute against a plan to grow business levels and market share if we don’t completely understand our own strengths, weaknesses, and opportunities.