DOES YOUR PRODUCT SUIT THE MARKET?

Ensuring that your hotel meets the needs of your customers is a continuous exercise, although it can be a bit of a chicken and egg situation; you know who your current customers are and you can talk to them, but what about the customers you don’t have? What product features could you develop that would attract them? How can you really find out the potential for a new spa facility? Whatever the scale of your operation, delivering the totality of the hotel product is a complex operation. For instance the seemingly simple provision of room service has wide-ranging implications that involve service, both to the room and afterwards, physical things like trays and hot cupboards as well as considerations about the facility to eat a meal in the room.

It is therefore useful to consider your total hotel product as being made up of three components, which all need separate consideration:

• 1Service: Issues such as friendliness, speed, attitude and professionalism.
• 2Environment: Issues such as design, decor, comfort, ambience and atmosphere.
• 3Physical aspects: Issues such as room size, beds, lighting, temperature control, bathrooms, DVDs, internet access and desks.

Product research

It is important that you continuously ask your customers what they think of what you offer. You need to set up a system for collecting and analysing feedback from your customers. This can just be a questionnaire in the rooms or on the tables in the restaurant, although these often give a distorted view. People are naturally less inclined to give positive feedback and you will have a higher proportion of negative comments. Just think how many of these forms you complete yourself when you are out.

Far better to have a proactive system for generating feedback: for overnight guests you probably have their e-mail address so after they check out send them an online questionnaire. Don’t make it too long – up to 10 questions should be OK. (There is more information on the measurement of customer satisfaction in Chapter 10.)

Also consider the views of meeting planners and corporate bookers. They will have good insight into how you rate against the other facilities that they use. If anyone comes up with really interesting ideas call him or her and try to provoke an in-depth discussion.

If you are launching a new hotel then research again is a key activity. Open your mind to the endless possibilities of making a product that is exciting and unusual; continually surprise your guests and they will tell their friends. To stand out from the crowd be a bit quirky or maybe develop a theme that suits your temperament, whether that is music, art, walking, racing or sailing. This way you can laser-target your marketing and attract guests with lots of tailor-made packages and find local partners willing to co-promote with you.

Keep evolving

No market stays still for very long. Customers’ needs and attitudes change and you have to respond. Think about the attitude to smoking and how this has affected the way that you present your room product. Food service has undergone a mini-revolution, forcing all traditional hotels to be very creative about their restaurant offer.

The development of boutique hotels is a particularly interesting phenomenon. They were developed by entrepreneurial individuals as a counterpoint to the formulaic offering from the large groups and were successful maybe because of their design influence, but mostly because they met the needs of a more independent, design conscious traveller. Now that the large groups are developing boutique hotels, will there continue to be the same attraction to the original independent traveller who had ‘discovered’ something new and different?

Room product

Technology has also had a big impact on all areas of your business. Corporate guests are now demanding broadband and WiFi as well as better in-room entertainment with more TV channels and DVD players. Whatever facilities you have it is vital that your staff have at least a rudimentary knowledge of how things work; no client wants to be told to wait until your IT specialist is available in the morning to sort out his laptop. If you provide meeting rooms you need to be prepared for meeting organisers bringing in all sorts of technical equipment.

You need also to consider the different habits of your male and female business travellers. Women tend to treat their room as a home away from home and will often spend the evening in their rooms; they appreciate a bath and a good room service meal. Men on the other hand will often go to your bar and restaurant after their workday finishes.

Whatever your product, whether you are a small hotel in the country or a larger property in a city centre, the demands of your customer are changing all the time. You need to be aware of the trends and decide whether it is profitable for you to change your offer. Sometimes because of your competitive situation you just cannot afford not to change. Be very critical about every thing you do and evaluate your service and facilities. Don’t do things just because it has always been that way. Be prepared to innovate: consider, amongst others things, your bathroom amenities, irons and ironing boards, door security features, safes, CD/DVD players and 24-hour snack facilities.

However don’t innovate just for the sake of it and don’t introduce amenities as an alternative to real hospitality. Many chain properties, and others too, continually add pillows, cushions and throws to the bedroom. This is maybe what they think the customer wants, but it has a big implication for the time it takes to clean the room. As an alternative, I am sure that your guest would rather have a really sincere welcome from the owner/manager. Some of the best ideas come from your team, so don’t leave them out of the feedback loop.

You are the most appropriate person to check your given experience. Spend the night in a range of your own rooms and consider:

• What can you hear through the walls and the windows?
• Is the room clean, with no stains, chipped paint or peeling paper?
• Does the lighting suit the tasks (reading and writing)?
• Is the furniture in good condition?
• Is the TV reception acceptable, can you see the picture from the bed and a chair and does the handset work?
• Do the heating and air conditioning work effectively?
• Is the bed comfortable, without dips in the middle of the mattress?
• Does the room smell fresh?
• Is the bathroom spotless, with good ventilation and no mould around the tub or shower?
• Does the shower head have lime scale, or leak?
• If you have a safe can you read the instructions easily?
• Can you see the alarm clock from the bed?
• Are the desk space and the chair user friendly?
• Are there enough power outlets and in the right place?
• What difficulties are there for overseas guests particularly those who don’t have English as their first language?

I am sure you can think of other items to check. If you are not 100 per cent satisfied then neither will your guest be. With all the competition from franchises and chains you cannot afford to forget the basics.

Restaurant offer

Deciding on the best strategy for a hotel restaurant offer is often a very difficult decision. If you operate a hotel that has more of a pub offering then it is easier to integrate the restaurant into the community. A traditional hotel seems to create barriers that are difficult to overcome. Sometimes you are constrained by other parts of your business; bookers of weddings seem to expect that you operate a full à la carte restaurant.

There is no one particular answer to the dilemma but what is certain is that there is very rarely any place for a hotel restaurant serving ‘a range of international dishes’. Essentially the more you can make your restaurant like an independent outlet the better, and that includes recruiting restaurant, rather than hotel, staff to run it. If you have a separate entrance then you definitely have a greater chance of making a success.

One strategy is to look for specific types of cuisine that are not offered in your area, whether this is Italian, Thai or even Russian! If you combine this with an effective campaign to entice local patronage as well as use by your hotel guests you will at least have a chance of making it a success. Again research is the key, although this too has its limitations, since you have to decide the difference between a fad and a trend. Nevertheless customers are now much better educated about food and do appreciate well-prepared local ingredients at great value for money.

There are a few other options for food service in your hotel. City centre hotels can avoid providing a full restaurant service altogether so long as there is a good range of local offerings. You could benefit from leasing your premises to a chef who is keen to have his own business but has no capital or backing. The only thing you then have to decide is who provides breakfast. Depending on your location your restaurant space may be of interest to a national franchise, particularly one that provides all-day service.

On the other hand a city centre location gives you access to a great many potential customers. In the midst of some very disappointing offerings in London, The Goring Hotel’s redesigned restaurant has shown what can be done if you put in a great deal of thought and effort.

Profitability

The key to understanding the importance of each of the different elements of your product is to analyse their individual contribution and/or profitability. You need this information so that you can plan where to allocate your effort and your promotional expenditure.

The hotel business is no different from a lot of others where most of your profit comes from identifiable days or customers. It can be helpful to use the Pareto principle, which says that 80 per cent of your outcomes will come from 20 per cent of your effort. This is the background to the 80/20 rule that looks at sales and profits and identifies the largest sources of contribution. These are not precise figures but they will help identify the source of the majority of the activity being measured. For instance most restaurants make most (80 per cent) of their profit on a Friday and a Saturday (2 days out of 7 or 28 per cent), which give 80/28 profit to effort.

You should consider analysing:

• menu item sales volume;
• total sales (room nights) per corporate client;
• meeting spend per customer;
• average rate per channel (direct/wholesaler/third parties);
• profitability per department (rooms/F&B/leisure).

To work out the proportions you need to:

• 1Calculate the profit or sales contributed by each of these activities over a given period and add for a total. Make sure the period is representative and not seasonal.
• 2Arrange the values in descending order.
• 3Calculate the value of each activity as a percentage of the total for the period.
• 4Calculate the cumulative percentage in descending order.
• 5Find the row where the cumulative percentage is near to 80 per cent cumulative. Then read across to see what proportion of activities accounts for this 80 per cent. For example, only 10 clients might account for 80 per cent of your corporate room nights and you actually have 40 clients. The ratio is therefore 80/25.

This does not mean that you should ignore the other 75 per cent of your customers! However you should probably review these customers and see if, with some effort, you could develop them into more productive users.

Segmentation

Whatever your product, it will not appeal to the whole of the hotel using market. For instance, just by charging a different price to the hotel down the road you have segmented your market by price. The challenge is to establish segments of customers who have the same needs and therefore act similarly in response to your offer.

Classification

From this you can see that defining your customers in terms of socio-economics (e.g. ABC1 etc), demographics (e.g. men aged 20–35) and geo-demographics (e.g. everyone in the same street) is not really segmentation at all but classification. This classification is not very helpful in marketing terms since the needs of people in the same classification will be entirely different. Two neighbours in the same street may want completely different things from a restaurant; for instance one wanting value for money and the other prepared to pay an above average price if the restaurant is the latest place to go.

Psychographics

From time to time different organisations come up with ready-made segment descriptors that have gone some way to define groups with the same needs. We all remember the Yuppies, the Baby Boomers, Empty Nesters and now there are Generation Y and the Silver Surfers.

Their common attitudes, needs, opinions and lifestyle behaviour may be appropriate to your product but you need to find groups of prospects that you can actually reach, and where the lifestyle variables don’t overlap. This is not an easy thing to do. Ideally you would go through a process where you define your market, find out what motivates your customers, group these customers together in clusters, establish segments and then test your assumptions to see if the segment is viable in terms of access and distinctiveness.

Reality

Often the only real segmentation practised within most hotels is one of ‘purpose of travel’ (and this is certainly better than nothing!). Daily statistics are usually kept that differentiate guests as staying for business (sometimes broken down further into individuals, corporate accounts and meetings) or for leisure (sometimes broken down into individuals, groups and special promotions).

A useful segmentation that can tie in with your other promotional activity is to look at benefit segments. Once you have isolated all your benefits from your list of features (see ‘How does the competition compare? on pages 30–35) you will see that there are different groups of guests that respond to different benefits, depending on their purpose for travel and also other factors. It is reasonable therefore to assume that it is possible to predict buying behaviour from the different benefits that are sought. For instance, think of any fast food outlet and you will appreciate that the only segmentation that is evident is that of the benefits of ‘quick’ and ‘cheap’.

Differentiating

To effectively market your hotel you need to get your offer right by differentiating your product to appeal to specific segments.

For instance, your result could be ‘our leisure market is those people who are nostalgic for old-fashioned hospitality and appreciate home-cooked food’. To implement this strategy you would ensure that your physical product met these needs and you could isolate the segment by the way that your internet site text was written and the keywords that you used for the search criteria.

If you just want more of the segment of customers that you already have you can use them as your research sample. You will already have some idea of why they use your hotel and you can try to find out in detail exactly what they consider to be their main motivators for using your hotel. Use some of the same techniques that are described in Chapter 10 under ‘How to measure customer satisfaction’.

Positioning

Positioning, often referred to as branding, is about creating an image in your customers’ minds. If you understand your target market then you can match their needs and desires with the image that you want to create. Actually having your hotel perceived by your customers exactly as you would wish it is very difficult. The brand image or position is what the customer perceives; it is those attributes that exist only in the mind of the consumer.

To differentiate your hotel from all the others in your competitive set you have to market the intangible elements of your operation. The problem is that most hotels stick to the things that they can see (the tangible elements) and try and promote their hotel by showing pictures of the outside of the building or of empty hotel rooms. All this does is lead to sameness and selling on price, with the hotel stay reduced to just another commodity, not a rewarding emotional experience. You will have heard the entreaty ‘Sell the sizzle, not the steak!’ All steaks (by and large) are the same, so to differentiate your restaurant you need to sell the sizzle. It is only by somehow making this sizzle tangible that you can position your hotel as being different to the competition.

Effective positioning not only creates an image but also makes a promise through a range of benefits that your customer will receive. It needs to offer a solution to a perceived problem. A good positioning statement can be very powerful: Avis Car Rental – We Try Harder. Your positioning strategy is at the heart of your operation and affects everything that you do -advertising, promotions, brochures, facilities, customer relations and everything else that adds up to the hospitality experience. Your positioning is therefore part of your vision.

Unique selling proposition (USP)

It is worth mentioning the concept of the USP, since much literature maintains that every organisation needs one! In some ways this is true, but having set out your vision and established your position you have already well prepared yourself to slay the competition.

It was Rosser Reeves, Chairman of advertising agency Ted Bates, who first formulated the concept of a Unique Selling Proposition in his book Reality of Advertising (1961). He was only articulating what had been the practice since packaged goods had started to be distributed and slogans had been used to promote the products.

The concept may not be as useful today as it was, particularly with the advent of sophisticated global brands. Indeed Wally Olins in his book On Brand calls the concept ‘pseudo-scientific nonsense’. In a way he is right, particularly if a USP is taken in isolation from the vision or brand experience; but if it helps to isolate some key benefits of particular services in your hotel then that must be beneficial. The limitation of the traditional USP is that it can help generate a proposition that is unique but it does not necessarily fully position your product. A USP is a set of words, which don’t always fully articulate your vision.

Features and benefits

Every hotel is made up of a range of products and services and you will be able to list all the features of your hotel. But customers and guests do not buy features; they buy the benefits that they gain from the features. To isolate your benefits you first need to list your features; include all your technical characteristics, services, prices and quality. You need to differentiate between each of your specific market opportunities: rooms/meeting rooms/restaurant/bar/leisure etc. because certain features will have different benefits depending on the market segment you are serving.

A simple way to isolate the benefit from each feature is to ask the question ‘Which means that…?’ For instance if you have tea and coffee making facilities it means that guests can have a hot drink whenever they like, without leaving their room or waiting for room service.

Of course not all benefits are as important as each other, and you can only find this out by asking your customers. Some benefits will not be significant differentiators from the competition and you need to isolate those benefits that are either unique to you or not used by any of your competition.

The benefits depend on the target market and each feature needs to be carefully analysed for each particular segment. For instance, near my home there is a really great little country house hotel that has a resident hawker with about 30 of these birds. He gives demonstrations and keeps some birds on the lawn. This is a really interesting feature but for the majority of that hotel’s customers it is not an important benefit.

Here are some hotel features that have been converted to benefits from the point of view of the business user:

Features	Benefits
Old hotel	There is a sense of history.
New hotel	All the facilities are new and up to date.
Large hotel	There is plenty of room for large meetings.
Small hotel	We know each guest by name.
Large gardens	You can relax and walk to your heart’s content.
Large rooms	There is plenty of space in which to work and relax.
King size beds	You can relax and not feel cramped.
Gym	You can work out after a hard day at work.
Spa	Relax and feel pampered after a hard day at work.
Range of	We can cope with changes to numbers for
conference rooms	your meeting.
24-hour reception	We can respond to any request at any time of the day.
Restaurant	You don’t have to leave the hotel to go in search of food.
Bar	You can have a drink with your colleagues after normal closing time.