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The Drowzey Hotel
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The critical numbers of the business will be tracked through the following means:
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Sales are currently higher in the category of introductory level rooms. As marketing efforts pay off over the next two years, unit sales for mid-level and premium level rooms are expected to increase relative to introductory level rooms. Room service sales are driven by room nights sold. Generally, every night of a premium room rental corresponds to a room service purchase, 75% of mid-level room rentals and 50% of introductory-level room rentals.
Prices are expected to rise on average over the next three years as the business can command higher prices from customers.
Sales are projected to rise towards full capacity (50 rooms x 365 nights per year = 18,250 room nights) but not reach more than 80% of this number. This is due to the fact that it is in the best interest of the hotel to not discount rooms so highly that they are all used at all times. Off-peak times will be slower, but the hotel will maintain its premium-level pricing for the most part through this method.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Unit Sales | |||
Premium level room nights | 3,183 | 4,187 | 4,564 |
Mid-level room nights | 3,756 | 4,665 | 5,084 |
Introductory level room nights | 4,024 | 4,521 | 4,928 |
Room service meals | 8,013 | 9,946 | 10,841 |
Total Unit Sales | 18,976 | 23,318 | 25,417 |
Unit Prices | Year 1 | Year 2 | Year 3 |
Premium level room nights | $900.00 | $925.00 | $950.00 |
Mid-level room nights | $700.00 | $725.00 | $750.00 |
Introductory level room nights | $500.00 | $525.00 | $550.00 |
Room service meals | $50.00 | $55.00 | $60.00 |
Sales | |||
Premium level room nights | $2,865,083 | $3,872,892 | $4,335,546 |
Mid-level room nights | $2,629,516 | $3,381,796 | $3,813,266 |
Introductory level room nights | $2,011,813 | $2,373,477 | $2,710,285 |
Room service meals | $400,629 | $547,018 | $650,454 |
Total Sales | $7,907,041 | $10,175,183 | $11,509,551 |
Direct Unit Costs | Year 1 | Year 2 | Year 3 |
Premium level room nights | $162.00 | $166.50 | $171.00 |
Mid-level room nights | $140.00 | $145.00 | $150.00 |
Introductory level room nights | $125.00 | $131.25 | $137.50 |
Room service meals | $20.00 | $22.00 | $24.00 |
Direct Cost of Sales | |||
Premium level room nights | $515,715 | $697,121 | $780,398 |
Mid-level room nights | $525,903 | $676,359 | $762,653 |
Introductory level room nights | $502,953 | $593,369 | $677,571 |
Room service meals | $160,252 | $218,807 | $260,181 |
Subtotal Direct Cost of Sales | $1,704,823 | $2,185,656 | $2,480,804 |
The marketing expense budget divides expenses into their major categories:
Total expenses will increase as some activities, like the focus groups, are ramped up, and as the cost of doing business increases with inflation. In general terms, advertising and direct mail represent the expense of lead generation, focus groups and Web development represent the expense of lead conversion, and marketing training and quality assurance represent the expense of the service experience.
Marketing Expense Budget | |||
Year 1 | Year 2 | Year 3 | |
Advertising | $60,000 | $63,000 | $66,150 |
Direct Mail | $75,000 | $78,750 | $82,688 |
Focus Groups | $30,000 | $60,000 | $80,000 |
Web Development | $60,000 | $63,000 | $66,150 |
Marketing Training | $12,000 | $12,600 | $13,230 |
Quality Assurance | $24,000 | $25,200 | $26,460 |
------------ | ------------ | ------------ | |
Total Sales and Marketing Expenses | $261,000 | $302,550 | $334,678 |
Percent of Sales | 3.30% | 2.97% | 2.91% |
The key marketing metrics will be reported each month. The marketing manager will create this report out of the CRM system and share the results with the CEO in the monthly review meeting.
Leads (including all referrals, website queries, and attendees of the virtual tour) are expected to grow at a steady rate. Lead conversion is expected to increase as the hotel establishes its name and preeminence in the Somnigstad area.
The average dollars spent per customer transaction is between one and two nights and will grow as more customers stay two nights or longer and move to higher priced rooms in the coming two years. The ability of the company to charge higher average prices for its rooms as capacity is better utilized will also drive this number up. It is estimated that 20% of leads will be from referrals which will be generated from customers and corporate relationships.
PR mentions will be tracked by the PR agency and they will provide a report on this data to Drowzey Hotel once a month along with all clippings or copies of mentions.
Testimonials will be derived from the best 10% of customer comments. These customers will be asked to expand their comments into a testimonial after their visits in a follow-up email. These customers will be offered a gift of Drowzey Hotel chocolates or other sweets as an incentive for expanding their comment into a testimonial.
Key Marketing Metrics | |||
Year 1 | Year 2 | Year 3 | |
Revenue | $7,907,041 | $10,175,183 | $11,509,551 |
Leads | 15,917 | 21,550 | 22,628 |
Leads Converted | 16.75% | 20.00% | 21.00% |
Avg. Transactions/Customer | 1.00 | 1 | 1 |
Avg. $/Customer | $1,252 | $1,693 | $1,863 |
Referrals | 3,183 | 4,310 | 4,526 |
PR Mentions | 191 | 300 | 315 |
Testimonials | 270 | 345 | 380 |
Focus Groups | 3 | 6 | 10 |
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