Hoteliers Use Barter to Build Name Recognition
Barter advertising in the hospitality industry involves the exchange of unsold rooms for advertising. Unsold rooms are a perishable product that is lost when left unoccupied, and advertising, an essential expense for increasing occupancy, requires hard-earned cash to acquire.The key to barter advertising is to turn unsold rooms into an asset by using them to pay for advertising. Three main players are involved: the hotel that commits the unsold rooms;
Bartercard the company that provides the media on trade; the hotel's advertising agency that evaluates the quality of the media. It is a misconception to think that there is always a direct connection between the advertising placed and the barter guest who ultimately uses the room credits.
The advertising for which one barters is aimed at the markets usually used to increase occupancy. Barter guests brought to your property via the Bartercard Network represent corporations presently trading within the Bartercard Network.
The end result of advertising purchased via barter is actually cheaper, than advertising purchased with cash profits. The cost of providing a hotel room that would NOT normally be sold for cash, is significantly less than purchasing with cash. For example, when purchasing anything for the Hotel with Barter (that is providing a Hotel room that is not normally sold for cash), the Hotel’s fixed costs remain the same (labour, rents etc) where the only cost to fill the empty room NOT sold for cash, is the cost of say the laundry (to change the linen) and maybe a little extra for electricity.
And traditionally, the guests would spend cash of F&B purchases and sundry items within the Hotel, thus increasing cash revenues.
Guests using Bartercard to stay in the Hotel are all business owners or senior Manager’s, thus attracting a new market of business clients for the property.
Most Hotels will boast about occupancy rates, but in fact, it is the unsold rooms that are costing the hotel valuable cash resources.
For example, if a hotel had 100 rooms, ran at an average occupancy of 80% (factored over a full year) this would mean that 20% of their rooms (20 rooms) each night would not be sold, and if they charged 2,000 Baht per night, that would equal a staggering loss of gross income of around 14.6 million Baht per year (20 rooms x 2,000 Baht x 365 days) and that is based on a small hotel and does not include the additional income generated via F&B and Sundry sales.
Imagine, if the Hotel could fill those rooms and utilize the Bartercard revenue to purchase items currently paid out of cashflow or to increase their advertising budget (without increasing their cash budget) both domestically and internationally, which would ultimately attract more cash paying customers and increase occupancy rates.
Advertising, does not need to cost Hotels huge amounts of cash, they can simply convert unsold inventory (rooms) into advertising credits, so it is truly smarter to barter.