Business Marketing Journal
Topic – Hospitality (Hotel Room Division)
1)Overview of the Industry
Even today several people consider that hospitality extends to restaurants and hotels. It extends to multiple sectors, for example, airlines, tourism (Pleasure as well as Medical). The hospitality industry is the second largest in the world. According to the recent survey by Deloitte, the lodging business keeps up dependable execution and is anticipated to manage substantial 5– 6 percent development all through 2018. Europe and Asia are the essential regions of the industry since they have the highest occupancy figures. The hotel industry has grown overall. However, their small markets across the globe hotel face numerous challenges to survive in the market, for example, New York City has risen 55 percent to 634 properties and 115,000 rooms. The Hotels are Simultaneously competing with private accommodation rentals, to keep the hotel at 100% occupancy hotelier must offer attractive rates. Cost cutting is hampering opportunities for growth and development. With the oversupply issue, a few hoteliers are turning to reductions in labour, maintenance services which ultimately hinders the overall quality of the product.
A) B2B Customers
Conference / Banquet
Corporate Dynamic Rates
Corporate Flat Rates
SMERF (Social, Military, Education, Religious, and Fraternal groups)
Source – https://image.slidesharecdn.com/iclass5-stpv20140419postingfinal-140605023601-phpapp02/95/stp4210-9-638.jpg?cb=1401936231
3)Organizational Buyer and Buying Behavior
A property management is a useful tool for managing Room Division department. The tool helps in forecasting, pricing and is used for daily hotel operations. Hotel management must thoughtfully select the PMS (Property Management System) to ensure the best productivity. They must assure that the staff has required training to work on the software and required infrastructure.
The process of Selecting PMS (Property Management System)
1)Analyzing System Requirement – Property management system is sophisticated software which requires advanced digital infrastructure to run the software effectively. Before selecting a PMS, a committee should be formed which includes people from the different department in which digitalization is required. The finding from this research must be consolidated into a report and distributed to vendors.
Points to be considered while selecting a PMS software
1)Type of Hotel – Luxury, Budget etc.
2)Reports – Types of report required(Room Variance Report, Forecasting Report etc.)
3) Desired Functions – Misc function that management wants on property management system for effective operation. For example, possible tasks for the back office may include accounts payable, accounts receivable, payroll, budgeting, financial reporting, inventory control, etc.
4) Staffing Volumes and level of operations
5)Employees – Job experience, level of skill and knowledge, experience with computer and typing skills
2)Request for Proposal
Once verdicts are made all results are consolidated in the report commonly known as RFP. The report should contain the following
Property Profile. – A report of the operational procedure and its computing needs.
Solicitation Instructions and Condition – Terms and condition for the purchase and instruction on how vendors response to RFP will be evaluated
System Specifications – Specification of computers required in each department or operational area
The requirement should be presented in questionnaire format
Once the response from each vendor is received. Management analyzes it and does a comparative study. The Vendors are rated on various criteria. The one with the highest rating is awarded the deal/contract.
Rating Scale Examples
1)Collins Rating Scale
4 = satisfies system requirement
3 = satisfies system requirement with minor modifications
2 = satisfies system requirement with major modifications
1 = does not satisfy system requirement
2)Lonam Rating Scale
4 (yes) = meets the system requirement
3 (yes-but) = meets the system requirement partially or in a manner different than stated
2 (no-but) = does not meet the system requirement, but development is planned or can be custom programmed
1 (no) = does not meet the system requirement
3) Buchholz Rating Scale
1 = more than meets the requirement-above average
2 = meets the requirements-average
3 = does not meet the requirements-below average
Reference http://digitalcommons.fiu.edu/cgi/viewcontent.cgi?article=1128&context=hospitalityreview4)The Legal ethical and regulatory framework and crises management
Legal Framework and regulatory framework
There are numerous laws which have to be followed before commencing operation of a hotel. Many rules differ from licensing, food hygiene and fire safety.
1)Business name act 1985 – Under owner name act hotel must display a notice highlighting owner name and relevant information. It also applies invoices, business letters, receipts, purchase orders and accounting information.
2) The Trade Descriptions Act 1968 – Hotel must provide accurate information about the product and avoid employing misleading way while engaging in marketing activities
3)Data Protection act – While performing any booking process hotel must fallow both the Credit Card Order act 1990 as well as the Data Protection Act 1998. The guest privacy must be protected credit card information must be secured. Any surcharge for the credit payment must be identified on the guest bill.
4)The Health and Safety at Work Act – Under this act protective equipment are required while handling substances which may cause injury or illness to the staff. Staff cannot work excessive hours or in shift pattern which may cause an accident due to fatigue.
5)Safety Signs and Signals Regulations Act 1996 – Safety and hazard must be displayed where there are chances of potential hazards as well illuminated fire exit sign.
6) Compulsory Insurance Act 1969 – Employers must provide insurance for the employee as well as present the insurance certificate inside the hotel.
7)Licensing Act 1964 – The law specifies all aspects of serving liquor, for example, the tidiness of optics, pipes and glasses and also the unit measures which hotel outlet can sell. In case if the hotel is intending to serve liquor during mealtimes, it will require a residential and restaurant licence which is now and then known as a Function’s License.
8)Food Safe act – This act ensure safe, and hygienic practices are employed while cooking and storing food. It also simultaneously ensure that guests get safe and nutritious food.
9) Fire Safety Regulations 1988 – This act ensures that fire retardant material furniture are used while designing new hotels. Latest fire detectors sensors must be present in all room and corridors. There should be fire extinguishers place at multiple locations in the building. Each room must have a fire exit map behind the main door. A Periodic inspection should be done for fire detectors and fire extinguishers.
Contingency and Crisis Situation handling
While nobody like to consider disasters, but ultimately it pays to be prepared and have a Contingency and Crisis Situation handling plan in place. Few important points that hotel should consider while planning contingency plan are as follow
Create a social media crisis policy. During a sudden emergency, having a quick response, social media strategy can unquestionably reduce reaction time and mitigate any adverse effect to your hotel. Prior consideration must be made on who has the access and authority to respond in the absence of the Primary person. How much information is to be shared with media. All potential scenario should be considered while planning.
Respond in real-time. While doing this, make sure that your most senior social media communicators are included to guarantee that you keep up your image voice and remain reliable with your informing.
Keep the only top official and the necessary person involved – While handling crises make sure only concern persons are involved. These individuals can be communication or public relation team, who are excellent at writing and answering questions.
Avoid doing sales Promotion during crises –Promotion during crises makes the matter worst for the organization. Management should ensure that all promotion activities are suspended until the crises get solved.
Follow up with the official response – Once the matter is resolved to give an official response and publish it on all sources (online, TV, radio)
5)Concept and context business strategy
Developing a good strategy for business is crucial. However, successful implementation of these strategies is key to success for any organization. Hotels services are intangible. Including customer relationship management. Innovative products and services can produce differentiation from our competitors. Frequently hotels use balance scorecard in designing new strategies this allow companies to measure budgets and financials as well as non-tangible assets such as customer relationships and brand awareness. The customers demand supreme value and quality services from any reputable brand present in the market.
Important Business strategies that hotel implement for a competitive edge to sell rooms
Customize the experience: Make tie-ups with nearby restaurants, places of interest and include them in your package which will eventually promote the sale.
Invest in specific channels: The Hotel should make sure that it only invests in particular channels which are relevant to the target market.
Differentiate on booking packages: Innovate with room packages. Offer bundle services to render cost benefits which are not offered to the regular customer. ((e. g. an iPod room where you have a fully charged iPod with music in the room or a package with a day at a nearby spa).
Loyalty Programmes: Reward returning client who have made booking through direct Channels. This can be effectively accomplished by offering, e.g. 10% rebate code for any repeat business offering bulk bookings; it is significantly less than the commission hotel pays to an online travel agent.
Leverage social media: Have a presence in the most popular social platforms. It isn’t only an approach to expand your online presence; it is additionally the option of new communication channels. With social media, you have a stage where you can speak with clients on a more casual level and exploit your little size to transmit a friendlier vibe to your guests.
Real-time sharing of room available – Hotels should provide real-time room availability to travel agent, booking site so a booking can be easily made. This also avoids revenue losses which occurs due to the shift of booking to competing for hotel
6) Market Research
Marketing research plays a pivotal role it ensure that hotels design an appropriate product which suits the target market. Therefore market research is the most important part for the existing and new hotels.
In designing a business to the business product, it is very important to consider the following points while doing extensive research.
Nature of Competition
The lodging industry is a monopolistic competitive market has the following characteristics:
• Many sellers
• Differentiated products
• Multiple dimensions of competition
• Easy entry of new firms in the long run.
Coming up of New Hotels in the existing market – The entry of new competitors can be a potential threat to all existing hotel. The new hotel brings an innovative concept of selling room which can be profitable. The new hotel simultaneously offers supreme value and a different experience to the guest.
The introduction of Short-Term room rentals – Nowadays hotels are facing a direct challenge from the Short-Term room rentals website These websites offer attractive rates which are lower than the room rates provided by the hotel. Online travel agent websites are limiting the amount of information they are sharing with the hotels.
A website like Air B&B aims to provide an economical accommodation to its guest; the website has expanded over the period. However, it only focuses on value but fails to meet complex demands. The Guest demands are becoming sophisticated in this competitive environment. The Demands for different travellers differ from each other services like (Gym, Pool, SPA etc.) requires a considerable investment which can only be provided by hotels.
8)Segmenting Targeting and Positioning
Market segmentation – Typically B to B segmentation is based on two methods: business and channel. Business refers to the purpose of travel where the channel refers to the source of booking which can be corporate, travel agent, etc.
Targeting – The data from the past five years is fed in revenue management software to decide which segment produces the maximum profits. The software also estimates the cost to acquire each segment. With that information plus data generated during a guest’s stay, the hotel makes customer personas utilizing stay data and spending pattern. Which ultimately help them in targeting the right customer.
Positioning – Positioning is the implementation of your marketing strategy. Positioning should match your customer expectation. The customer should give positive feedback to ensure repeat business from other business(Travel agencies, OTA etc.)
9)Creating Product or Service and the Value of Offering
Consider the Brand
The Luxury brand doing B2B business should not go with discounting techniques. They should offer packages that offer excellent services to the guest discounting hampers the brand reputation. However, if your property falls into the “budget” category, promote the savings, the guests will enjoy because of package pricing.
Identify your target market
While designing any promotion for B2B; the hotel should identify the travellers who would take advantage of the promotion. If you have a business or conferences hotel located in downtown area, consider targeting business that target cooperates client.
Choose your partners
The hotel should choose a travel agency or online travel agency that caters to your target market.
Work in the add-ons
While making a package try to include add-ons like honeymoon package, adventure sports, safari etc. The Add-ons will make the package more attractive and will undoubtedly offer more value
10)Innovation and Competitiveness
The hotels’ products have evolved over the period. Incremental innovation happens in the form of minor renovations. However, in the last decade, many radical changes have significantly improved comfort in the guest room and services. These innovations sometimes become a USP for the hotels.
1. Smart In-room Technologies – Smart in-room technology is taking the hospitality industry by storm. These include Wireless speaker, messaging seats in the living room, led lighting wireless charging pad which are required by cooperate and leisure travellers. Many new hotels offer these facilities as standard.
2) Robots in the Hotel Industry – Last year the first hotel run by robots became operational. The concept breakthrough in the industry. It led to the implication of artificial intelligence in the hospitality industry.
3)iBeacons and Location-Based Tech – These techs are used to trace guest location in the hotel. If any guest approaches any outlet in the hotel his name and room number would be displayed on the computer screen present at the outlet. Which would enable the employee to start a conversation in a much more personalized manner by using the last name of the guest
4) Self-Serve Tech – It fully automated system which assists the guest. It also enables quick check in and in-room checkout.
5) Be your concierge (Or let Siri be your Concierge) – These days big hotel chains usually develop an app which can be downloaded on IOS or Android devices which help you keep track of hotel bills, book SPA appointment and help you with general queries.
11)Hotel Price in B2B market
Pricing for Online Travel Agencies – In the case of pricing for an online travel agency, A contract between a hotel and an online travel agency provides for ‘rate parity’: The contract is an official document from hotel confirming the lowest possible rates, and it allows penalties to the hotel if a lower price is found elsewhere. In general, these rates are close or more economical than best available rates of the hotel which are determined by demand and supply. Travel agents usually charge commission on these rates.
Bidding for group business – Usually, group business hotel usually offered. The Bidding process is online, the hotel which complies with the requirement and offers the lowest price is given business.
Cooperate Business Pricing – Usually, in corporate pricing, the customers typically fill an online form which is present on the hotel website. The Customer must disclose the requirement. The sales reps acknowledge their need, and if found suitable they visit the organization for further negotiations. Negotiations generally include prices, room night contract etc.
Airlines – For airline crew business ALREC is the chief negotiator. It ensures that right relationship is established between the hotel and airlines. The entire process is professional and transparent, including a full inspection report. The process starts with matching crew requirement with the hotel. Qualifying hotel is awarded the contract the hotel usually offers fixed room rates to airlines since they provide bulk business.
Usually, in B2B business, there are three types of pricing
1)Cost-based -The Approach is very simple estimate all cost in the business and price the product along with profit margins. The cost includes both the fixed and variable cost.
2)Customer-based – The room is priced according to perceived value. When a customer wants what they desire they are usually ready to pay an added dollar.
3)Competitor-based – Competitor-based pricing suggests hotel should conduct a complete assessment of rivals’ pricing strategy. Consider the rates they apply for every room type, the different amenities, their refundable and non-refundable terms etc.
12)Business Development and planning
Steps for B2B Development
1)New Product Strategy
3)Screening and Evaluation
The B2B market is dynamic, and hotel brands have to develop the right strategies to appropriately target the right target market to ensure the success of the product and an overall increase in profitability.
Business Development strategy
Hotel business development applies to the full spectrum of the hotel business, from strategic or day-to-day operations to expanding the organization’s market exposure.
The hotels need to consider following points before entering into new Market
1)Hotel Services – Before entering a new market hotel needs to analyze the potential and services required for the new market. Different B2B customer requirement are different from each other.
2) Supporting services – Supporting services are not essential to providing the core benefit, but they are essential to marketing the operation. Supporting services are used to differentiate between the competitors. For instance, a restaurant is not a necessary component of a hotel but could be used to distinguish one property from another.
3) Service Quality -While designing a new product. We need to make sure that our service quality is as per the positioning strategies.
4)Integrate Differentiation – Customer in the hospitality industry appreciates innovation. People like smart hotels with a fully automated system, change in service styles, fusion restaurants etc.
5)Involve Final Consumer In the designing phase – While developing a product for a new market, The hotel should involve the consumer in the designing phase. The Consumer can input valuable suggestion which can make your product better.
6) Establishing the business development framework – Involve critical success factors while planning for the new business development
operational, strategic direction and market understanding,
branding and marketing,
operational management and staff – skills, training and experience,
operational and construction standards – education, implementation and consistency of standards,
national and local government regulations – taxes, duties, policies, legislation, town planning and building regulations,
accessibility – for guests, staff and suppliers,
feasibility – financial, market, physical, macro-environment,
design efficiency – meeting budget, operational efficiency and guest satisfaction,
development of strategic and project objectives,
development team – team leader, executive management, key operational staff, consultants, and advisors, and contractor – cost, time, quality,
Forecasting for Business in Newmarket
Forecasting is very important for hotels since the hotel room are perishable. So its very important to do an accurate forecast to ensure higher revenue and occupancy. To plan for B2B business hotel consider the following points to ensure success in targeting and planning.
Break Down Your Forecast by Segments – Once we have obtained basic data from we should divide it into various segments
Segments Can be as follows
Forecast per origin – A forecast based on the different countries guests visit from.
Forecast per distribution channel – A forecast is outlining each major distribution channel.
Forecast per business type – A forecast which divides visitors into types: business, leisure, groups, etc.
Forecast per room – A forecast is looking at demand for specific rooms, suites, or guest houses.
This will help to exactly understand where the business is coming from and how we should customize our package to make it more attractive
Forecasting based on Google search volume data – Google search volume data gives accurate data on a number of night sold, buyer behaviour which helps us understand the need of the market. Ultimately enabling the hotel chains to design a better package which can be ultimately sold to travel agents, airlines, group etc.
Property Management System – Modern PMS uses a hi-tech computer which uses complex algorithms to forecast. The data from the past five years can be used to estimate the occupancy, potential business channels or segments.
The Nature of Sales and Sellers – The lodging industry is a monopolistic competitive
Sales and Marketing Department
A hotel deals with all B2B market segments Travel agents, Tour operators, Event Planners, Corporate guests, online travel agents and travel consortia.
Hotel sales force organization
Sale force is organized in the following patterns
2)Market Segment (Meeting, Incentive, SMERF)
3)Market channel (Travel Agent, Third Part Website)
Pay and Motivating Professional Sales Staff
There are three basic types of sales force compensation plans
Combination Salary and Commission
Companies also use a supplementary motivator
Provide a break for routine, a chance to meet with executives, and a chance to air their feeling
2) Sales Contests
Act as a motivation to perform better sales contest usually have an attractive gift like vacation package, complimentary stay in a hotel.
14 (B2B Branding)
Level of Services- The Branding can be by the level of services provided by the hotel which can vary from economy to luxury. The customer also vary in each segment, some travel agents or online website target families, students, jet-setters, business travellers while other focus on luxury, occasion celebration etc.
Rates-based strategy(Customer Spending Power) – Lodgings are always allowed to promote their rates given rates. The hotel may make the accommodations-versus-rate mix based on budgetary needs of their clients. For example Third part website target various client a student exploring Europe and a business official gracing a meeting unquestionably have a different measure of cash to spend. Cheap, dormitory rooms appear to be extremely appealing for undergraduate students whereas a business executive has high demands from the product.
Co-branding – It is a strategy in which two major hotel brand merge to form another brand. This type of strategy is used to enter a new market for example – ITC Luxury Collection where ITC is an Indian brand and Luxury Collection is a product of the Starwood hotel chain.
15)Channel Relationship and Supply Chain Management
Channel (Direct) – Hotel usually sells using a direct channel to travel agencies and to all the B2B business. However, in many cases, a commission is involved where the room is sold to the final consumer with the involvement of a third-party agency which is usually a website, travel agency etc.
Managing Supply Chain
Demand Management – The Demand from a certain market segment is inconsistent. Usually happens with the travel agency, OTA and website like trivago, make my trip where demand usually depends upon seasonal factors, the promotion run by a particular website. Hotel chains need to study past years trends patterns and ensure that room is available when required by the travel agency. This also ensures that the hotel is occupied during peak season and it also leads to maximum profitability.
Inventory Management – While dealing with airlines, the hotel needs to ensure that it keeps spare rooms to give in case of unforeseen circumstances like a flight delay or cancel. Airlines might come up with room demands at the very last minute. These rooms can also be offered to other segments which offer higher profitability, but this should be done when conditions permit. Especially during off seasons.
Supply Management – During peak season hotel should sell the room to business that charge less commission. Because during peak season the demand is not a concern. The hotel has to make sure it makes maximum profitability by giving minimum commission.
Adopting Just in time Inventory – hotel rooms are perishable. Keeping room empty or an anticipatory business is futile. It advisable that hotel should make great use of PMS which integrate artificial intelligence to sell the same room to alternative business which can be a cooperate clients, airlines etc. It also ensures room are available to all B2B clients whenever required.
16) IMC – Promoting In the B2B Business
1)Personal Selling – The B2B is done majorly through personal selling where sales associates visit the clients promote the product select the qualifying buyers and make a final sale to the buyers.
2)Hotel Tradeshow – Hotel actively promotes its product at a trade show where travel agents from across the globe visits and hunt for a hotel matching their requirement and destinations. Hotel chain take this event seriously since it has ample potential to generate revenue.
3)Online – Hotels also promote its product online. The lastest service innovation is actively promoted on the hotel chain website which attracts B2B customers. Linked in is also used to promote hotel products and packages. It the easiest means of reaching the B2B consumers. Apart from that the majority of hotel chains have a presence on Trip Advisors, Facebook, Instagram.
4)Loyalty Programmes: Reward returning client This can be effectively accomplished by offering, e.g. 10% rebate code for any repeat business offering bulk bookings.
Hotels UK: Regulations, Laws & Industry Practice << Hotel …. https://www.assetsure.com/business/hotel-insurance/hotels-laws/
https://hotelguru.com/competitive-strategy-for-the-hospitality-industry/7 tips to achieve hotel differentiation online – GuestCentric. https://www.guestcentric.com/7-tips-to-differentiate-your-hotel-online/
The Lodging Industry Market Structure – by Manmohan Shetty. https://www.hotelnewsresource.com/article32324.html