Sustainability with the New Trend, “the deal”, is impossible!
Another OpEd piece, this time by Frederique Philip, Co-owner and Creative Director of the multi-award winning Sooke Harbour House. This will resonate with many in the hospitality business.
“We have observed in the last few years a substantial increase of ‘SPECIAL DEALS’ offered by companies like Groupon, Social Shoppers, Ethical Deal, Daily Deal and so many more that assure the companies they advertise with these deals that it will bring them more customers!
At Sooke Harbour House we have been caught also and entered into these contracts thinking it would help our cash flow in the slower season. I was never very enthusiastic about doing these contracts, I remembered the late seventies and early eighties – our first years at Sooke Harbour House – when every restaurant in Victoria advertised ‘two meals for the price of one’ and thinking then how is this possible; either the restaurants were gouging before and still made a profit at half price. We never did this in Sooke and managed I guess because then we lived in the basement of Sooke Harbour House and did all the work ourselves every day and with just a few very passionate staff members, our overhead was very small, we made it because we were fed and had shelter and didn’t take any salaries. We were sadly aware that such a scheme especially with food prices in restaurant is an impossible gamble and brought then bankruptcy to some well known restaurants. The margin in pricing food for meals in restaurant is very small, not at all like the margin in manufacturing, fashion and other sectors where 200% margin or more can be the norm. The margin is higher for guest rooms and it is well known that the ‘bread’ is in the ‘bed’.
Lets look at the deals that we have offered at Sooke Harbour House and that you have been able to benefit from: The company that advertise the deal through their large database first ask to be given a price that is 50 to 60% off regular price, then the part you don’t see for their advertising these companies take between 15 to 25% of the other 50%, it may means after everything is paid we rent you a room and our end revenue is $50.00, I wrote revenue but is it? Or is it a loss every time I have rented this room?
In this ‘deal economy’ there is no profit, so no sustainability. There is loss often and no room for quality. Is there room for repeat business as advertised by these companies? I don’t believe so as the trend I have observed is that most consumers even the ones that have the means want the deal and I think this is a natural reaction.
I don’t have any answers as to what to do to still be able to offer great quality of service with enough staff to cater to the needs of our customers, in our food offering with a menu that only offers the best quality of ingredients, prepared by skilled chefs and cook that deserve to receive a good salary, with a resort that is kept in good shape top to bottom including landscaping and with all the technology required to satisfy our guests expectations. The cost of everything – especially food – has gone up dramatically in the last few years, our prices have gone down or are the same than 10 years ago!
The increased in the numbers of resorts especially in our area ( BC and Vancouver Island) and the way the hospitality and travel industry has been transformed by the internet, by social media has a very great impact in the way customers find and decide where they will take their holiday – short getaway or longer time away from work. Catching the customer when he is ready to make a reservation is an art now that very few of us have yet mastered.
I would like to be able to attract more customers by differencing us from others not by offering incredible low deals but by offering the best quality and the most unforgettable experience not just because of our location, our reputation, but because what we offer is done with integrity, with our heart and with the idea that first our small community of Sooke Harbour House: our staff, the artists and crafts people who have made Sooke Harbour House what it is and our suppliers deserve to be paid properly.
To be sustainable there need to be a profit, these deals that offer sometimes up to 70% off are not sustainable. Always thriving to the lowest denominator (our 21st century society’s trend) can only have the lowest results.”