Can locals bolster your balance sheet?

Q: I’ve recently employed a new manager who says we need to target local people to increase our profitability. I haven’t really given it much thought, but is it something I should concentrate on? A: You’ve said you run a small hotel just on the edge of the town centre which means you are ideally situated to take advantage of local footfall; in fact, there are very few hospitality businesses who are unable, or have no need to focus local. Attracting local has several advantages compared with other trade, because: It’s easier to gain repeat business; you may well have a loyal customer base, however even if they stay with you once per month, that’s only 12 times a year; whereas local people are more inclined to pop in on a fortnightly, weekly or even daily basis – as long as you have you model right. They won’t spend quite as much each visit because they aren’t staying overnight, but their total spend per year shouldn’t be sniffed at. You’ll benefit from word of mouth; if someone enjoys dinner in your restaurant, it’s highly likely they’ll bring friends or family the next time, or potentially encourage friends to go themselves. You can of course encourage this with a drinks or dining loyalty card that benefits them more each time they come. It costs you less to attract and service them; unless you spend oodles on Groupon or local voucher sites, once you start getting local trade, it costs less to market to them regularly than to obtain new customers. It is also likely to up your daily income during the week. This means increased revenue for lower marketing spend per head, and also means lower staffing costs per pound spent, as you won’t need to change sheets or do laundry, for example. So how do you take advantage of local? Start by looking at your facilities then at your model. Are you a hotel restaurant, or is it a world-class facility on its own? Can you make your bar into a cosy snug, or can you dedicate an area to the best coffee and cakes around? Be honest with yourself about this, because it’ll help identify and focus your attention to the right local audience. Once you know what you have to offer, work out who you are targeting Remember, this is where you need to be honest. Near me, I have four-star hotel with a gorgeous mezzanine bar, coupled with small, intimate areas that make it a great place to have a business meeting and indeed, that is where they target their effort. Similarly, there is one that makes a great wine bar and hosts upmarket wine tasting and one that has a ‘local country pub’ feel with one of the biggest selections of real ale anywhere in the county. What each has done is create their identity, tailor their offering to the most likely target audience and then begin the marketing. You can also offer incentives to encourage first-time visits ...or more regular visits of existing punters. Holding a wine-tasting night, or a seven-course taster menu, a local beer festival or a board games night can all help put you on the map and encourage initial and then repeat business. Whatever you do, make sure it is different to those around you, then take advantage of local PR, e-marketing, local ‘what’s on’ listings and whatever else you can think of. If possible, to get you started bring in a complementary partner who can expose your venue to their database in exchange for their own exposure; for example a local guest chef, a renowned sommelier, a cigar expert, local brewers and so on. Once you’ve got them there, find a way to obtain their data You can use this to keep them coming back. Run a business card prize draw, devise loyalty cards for local people, and/or provide incentives for them to try other services e.g. your health facilities or restaurant. This gives you the chance to market to them directly, make them feel appreciated and special, and encourages them to return and bring friends. One of the best programmes I have seen is a hotel who gave out a booklet of added value; it featured 12 pages, with one added value offer a month for a year; this included a free glass of wine with dinner, £2 off any event or theme evening held at the hotel, a taster menu session at a reduced price per head, and so on. Guests were free to use each voucher as many times as they liked within the given month. The hotel cleverly encouraged visits which would generate an income, at the same succeeding in building a generous reputation and advertising all of their services and USPs. Guests booked several months in advance for things and the word-of-mouth marketing went through the roof. What’s more, they encouraged people to sign up so that they too would gain a voucher booklet at the beginning of the following year. Whatever you choose to do to market locally though, make sure your service and facilities are exemplary as one false start can damage your reputation immeasurably in the local market. One final piece of advice; if you have a local charity that you actively support, a fundraising evening is great for them, as well as your CSR, local PR and gaining new business. Don’t do it unless you believe in it, but it can be a great start. By Angie Petkovic. This article first appeared in the December 2014 issue of Hotel Owner