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Why This Property? |
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Rainbow Hearth Sanctuary and Retreat Center is a
health and wellness focused retreat center located
in Burnet, Texas. Aside from occupancy revenue, this
retreat center also generates income from on-site
dining, spa services and products like supplements
and yoga DVDs.
This retreat center provides the
perfect subject for this case study for two reasons:
Common Issues: The difficulties it
was facing are common among businesses today.
Small Size: The retreat center's
overall marketing budget was relatively limited
compared to many of the other inns in the area. This
small marketing budget will allow the reader to
understand the effectiveness of the Occupancy
Builders
Marketing System, its non-reliance on a large
marketing budget as well as its ability to help a
business compete against larger competitors.
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The Issues |
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Rainbow Hearth was having a number of challenges
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Declining revenue |
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Outdated marketing without an
emphasis on the Internet caused occupancies to
decline as more travelers turned to the Internet to
make their travel plans. Additionally, as a
regionally-based business, Rainbow Hearth did not
have a community presence. |
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Increasing marketing costs |
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The increased prevalence of the
Internet forced the owner to locate third party help
to market the retreat center. The perceived
complexity of Internet marketing and a lack of
knowledge about marketing or business management
forced her to enter into agreements with
advertisements and services that were expensive and
ineffective. |
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A faltering economy |
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According the
National Bureau of Economic Research, the United
States was officially in a recession beginning
December of 2007. The effects of this recession were
felt during the entire time I managed Rainbow
Hearth. |
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Analysis |
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Rainbow Hearth's marketing was not
evolving with the rapid progression of the Internet.
While the retreat center did have a web site, the
site was outdated and did not provide clear
messaging. The web site also did not provide guests
with the information and tools they needed to plan a
vacation and was not search engine friendly.
Rainbow Hearth's overall Internet presence was quite
weak. It only ranked well in the search engines for
its business name and had virtually no visibility in
search engine results for popular keyword phrases or
Local or Universal Search.
While the inn did have advertising and directory
listings on various web sites around the Internet,
these listings did not reinforce the inn's brand and
many were under-performing. Additionally, listings
were not present on some of the most important
web sites in the industry. A lack of analytical data
from Rainbow Hearth's web site made these issues
worse because there was no information available to
determine which advertisements were worthwhile and
which were not.
Most guests were unaware of the additional
services and amenities available at the retreat
center prior to their arrival. This lack of
awareness resulted in difficulties generating
revenue from on-site spa services and dining.
While at the retreat center, many guests were
confused by a lack of informational material. There
were no directional signs, no guest books, and no
written information about products that were sold
like food supplements and DVDs.
The owner's lack of marketing and business
experience caused her to purchase services and
advertisements from companies without the awareness
to pre-screen them properly prior to contracting
their services. Subsequently, marketing costs were
rising while these services failed to provide any
results.
Finally, the declining economy only made matters
worse with less people vacationing due to an
uncertain economic future. This resulted in a need
to increase visibility just to maintain current
occupancy levels. |
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Strengths |
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Rainbow Hearth had some important
strengths including a current stream of income that,
while not covering expenses, did provide some funds
to invest. The property itself also had a very
unique character that guests loved. Once there,
virtually every guest raved about their stay.
Rainbow Hearth's health and wellness related
services were very much in demand from an overworked
and stressed society. |
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Implementation |
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Occupancy Builders Marketing Company's
involvement with Rainbow Hearth's began in late May,
2008. Among the solutions implemented were the
following: |
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Revenue Generating Changes: |
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Developed core messaging to
reinforce Rainbow Hearth's unique brand. |
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Created a new web site that: |
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Was developed around Rainbow Hearth's messaging. |
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Was modern and rich in photography. |
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Provided visitors with the information and tools
they needed to book rooms. |
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Alerted guests, prior to their arrival, of on-site
services that were available. |
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Was search engine friendly. |
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Utilized analytics software to track results. |
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Put more marketing emphasis on
up-selling additional services to guests such as
bodywork, on-site organic meals, and dietary
supplements. |
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Implemented effective Search Engine
Optimization. |
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Engaged in an active public
relations campaign. |
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Updated all advertisements and
directory listings to reinforce Rainbow Hearth's
brand and messaging. |
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Identified new, quality advertising
channels. |
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Determined where competitors were
getting their web site traffic from and targeted
those sources. |
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Tapped into the larger marketing
budgets of bigger inns who brought visitors to the
area by developing a web strategy that piggy-backed
on their marketing. This provided Rainbow Hearth
with additional exposure without the added expense. |
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Implemented systems to obtain and
market reviews from past guests. |
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Implemented systems to encourage
repeat business from past guests. |
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Created a large amount of onsite
informational material improving the overall
experience of guests, as well as enhancing revenue
from products and services sold at Rainbow Hearth. |
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Expense Lowering Changes: |
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Dismissed the services of an
expensive marketing company that did not provide
results. |
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Eliminated under-performing
advertising over the course of one year, as the
analytical data from the new web site and guest
interviews revealed those advertisements that did
not work. |
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Educated the owner in proper
marketing and business techniques, limiting the need
for future third party assistance. |
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The Results |
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Rainbow Hearth saw a 120% revenue
increase in 3rd quarter 2008 over 3rd quarter 2007.
We begin with the 3rd quarter of 2008 because this
was the first full quarter of Occupancy Builders
Marketing Company's involvement with Rainbow Hearth. |
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Screenshot from the Texas State
Comptroller's public web site for Q3, 2007 (one year
before Occupancy Builders): |
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Screenshot from the Texas State
Comptroller's public web site for Q3, 2008: |
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*The capacity numbers are incorrect on this site for
many of the properties. |
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Each quarter since implementing the
Occupancy Builders Marketing System, Rainbow Hearth has
seen significant improvement in revenue. In fact,
the graph below represents new revenue records for
Rainbow Hearth in every quarter...during a
recession! |
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Remember, these numbers are for
hospitality taxes only and do not reflect the steep
increases seen from add-on services like dining and
spa services. These add-on services realized
significant revenue increases due to higher
occupancy numbers and better marketing of those
services. Those are private numbers and are not
published here. |
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Competitor Comparison: |
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These results were not just a case
of Rainbow Hearth benefiting from improved tourism
in the area. All tourism businesses in the area were
feeling the effects of the recession, and Rainbow
Hearth's nearest competitors were no different.
This graph displays the percentage of change each
property experienced in their own occupancy revenue
compared with the same quarters of the previous
year. |
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As you can see by the graph above,
Rainbow Hearth thrived during the recession with
record- breaking profit while its competitors'
revenue declined. In Fact,
according to STR Global,
occupancy dropped nationaly by 10.9% in the United States in the first half of 2009
in year-over-year measurments compared with 2008. Unlike it's competitors, Rainbow Hearth did
not experience these problems.
With proper marketing and
management systems in place, Rainbow Hearth should
continue to see great gains in the coming quarters. |
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Comments from the Owner of
Rainbow Hearth |
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"The business was in trouble on
every level, from unreliable help on the day-to-day
aspects, to archaic business practices, to lack of
advertising presence on the web, to severe cash flow
problems. During the 9 months they have been with
me, and thanks to their efforts, every problem
previously mentioned has been transformed, improved
and/or solved. They have made my life so much easier
and more empowered, not only doing things but also
teaching me how to handle them myself, or to get the
help I need."
~Rainbow Hearth Owner |
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About The Numbers Used In This
Case Study |
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The revenue mentioned in this case
study is represented quarterly because that is how
information is presented on the Texas State
Comptroller's web site. Quarterly numbers also
demonstrate the speed at which results were seen.
Additionally, revenue per available room (RevPar)
was not used anywhere in this case study because the
numbers used to calculate RevPAR (occupancy and
average daily rate) cannot be verified by the
reader. Therefore, this measurement is simply not
within the scope of this case study. |
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Resources Used In This Case
Study |
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Rainbow Hearth:
http://www.rainbowhearth.com
Texas State Comptroller:
http://aixtcp.cpa.state.tx.us/hotel/hotelqtr_all.php
National Bureau of Economic Research:
http://www.nber.org/cycles/dec2008.html |
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