Introduction Hospitality industry is a fluctuating industry. One of the reasons is that because it is an industry that depends highly in seasonality period (Font, Penalva & Sampol, 2011). Seasonality according to Butler cited in Weidner (2006) is “the temporal imbalance in the phenomenon in tourism”. In hospitality industry, seasonality can be illustrated as in a period of time, hotels will be facing its peak season where there will be high occupancy and in another period of time, it will face low season where there will be lower occupancy. The hospitality industry also fluctuates as the result of global economic crisis (Kapiki, 2012). The financial crisis in 2008 could be one of the examples that can serve as a significant reason why hotels manager should always be ready and able to find a way to maintain the hotel business during tough economy times. After the economic slowdown in 2008, it was recorded that the average hotel room rate around the world was 14% cheaper in 2009 than the room rate in 2008 (Kapiki, 2012). This has later caused a decrease in the revenue earned by many hotels. Although lowering the price of the rooms can attract guests to book the room during the tough economic times, it is not an efficient strategy to be implemented in long term. Many strategies can be implemented for hotels to sustain its business and there are seven strategies proposed in the case study for hoteliers to apply during the economic crisis. “Pushing value instead of lowering price” is selected to be evaluated further in this study. Price Price, according to Oxford Dictionaries (2014), is the amount of money paid or given to obtain certain products. Products, in this case, include both goods and services (). In hospitality industry, pr... ... middle of paper ... ...fluences in the European Hospitality Industry. A Case Study of A Four Star Hotel in Spain, Germany and England” MA European Tourism Management. http://www.du.se/pagefiles/5053/vosslawrence.pdf [accessed 26 April 2014]. Wagner, N. (2014) ‘The Advantages of Word-of-Mouth Marketing’ Chron. http://work.chron.com/advantages-wordofmouth-marketing-3567.html [accessed 25 April 2014]. Weidner,S. (2006) ‘Seasonality in Tourism: A Review of Seasonality of Hotel Accommodation in New Zealand’ Grin. http://www.grin.com/en/e-book/122991/seasonality-in-tourism-a-review-of-seasonality-of-hotel-accomodation-in [accessed 29 April 2014]. Wilkening, D. (2009) ‘Add Value, Don’t Lower Rate’ Hotel Interactive. http://www.hotelinteractive.com/article.aspx?articleid=14405 [accessed 6 April 2014]. Williams, C., et al. (2003) Service Quality in Leisure and Tourism. Buswell Wallingford: CABI.
The sample represents all U.S. regions and several different hotel location types, including city (47.7%), suburb (15.2%), airport (15.2%), and resort (21.9%). The total data presented here are from hotel managers (N = 98) and hourly employees (N=66) who completed a baseline survey followed by daily diary telephone interviews for eight consecutive days.
fixed costs to total costs. The high level of these costs stem from the fact that hotels must constantly be managed to achieve the most costeffective usage of resources applied to decor, equipment, preoperational expenses and finance. The aim of hotels is to fill their rooms as profitable as possible as a result some of the most important thing that the hotel industry must realize is that it must be able to market themselves and provide quality services so that customers will want to return back to the hotel. The demands of these two characteristics are very high and it requires a lot of effort. In terms of building a hotel, the capital requirements for a hotel project are so high that hotel cannot easily be traded and must remain as a longterm investment purpose. As a result the industry is subjected to large amounts of cost advantages or disadvantages based on the size of the hotel. Furthermore the success of a hotel is also sensitive to the location, management, and the quality and expertise of the staff which is vital to the functionality of the hospitality industry.
Economic factor: - Due to the economic crises there is huge business impact on hospitality industry. Hotel occupancy level has gone down drastically more over there is 20% of tax people has to bear on their expenses. Collaborated companies with the hotels are moving to another hotel due high rates. Because of all this hotels has reduced their pricing in all the products they are offering which is directly affecting the profitability of the company. Hotels are restructuring their business in order to cut cost as much as possible by merging several departments doing redundancy of staff. 6
The economic theory of supply and demand dictates that an excess of supply (hotels) to demand (customers) leads to a lower price consumers are willing to pay. This creates inelasticity within hotel pricing and places substantial pressure on management to meet the pricing needs of customers while providing an attractive and unique service. Hotel services are also intangible in nature, placing increased burden on hotel owners to utilise all available rooms through discounts and deals.
On a closer look at the third important operational metric which is the Average Daily Rate (ADR) of traditional hotels in the USA, Televisory found that the ADR of the budget hotel segment declined by 14.5% on a YoY basis and was worst impacted among on all chain scale in 2015. A declining ADR for the budget segment somewhat explains unaffected occupancy rate despite direct competition from Airbnb and increasing guest preference towards the accommodation provided by Airbnb, as budget hotels reduced their tariffs to compete with
4. As the Hospitality industry’s major source of income is the meetings , conferences and ceremonies which are held in the hotels. So, hotels have different pricing strategies as per their requirements.
This leaves the American consumer confidence laying low, and people are being more cautious on their spending and not splurging. This ties in with the pace of recovery for the hotel industry. But a stronger hit came to the industry, when the trend developed in the market for substitutes to hotels and motels. The consumer due to the economic decline has developed a taste for an economical traveling experience, these substitutes offer cost undercuts. According to the United States Department of Labour, the unemployment rate in the US averaged to 8.9% in 2011. Higher unemployment rates strains discretionary spending, which in turn reduces the leisure travel by the customers. Sluggish wage gains and credit crunch are all expected to keep customers relatively cautious in 2012. Thus, a weak economic outlook for the important markets of Hilton Worldwide would put pressure on its top line and bottom line growth (Hilton Worldwide, 12). The pricing factor is almost hard to match by the hotel industry, the consumer is becoming more demanding but also exigent in terms of low pricing. Switching costs range from negligible to high, but a factor that motels can’t substitute are the various benefits including spas, restaurants, or a community holiday feel brought with the package of any chosen hotel/motel. But the consumers in the US for example see the switch as more of a necessity rather than
If one were to ponder the question of whether hotels should overbook their rooms the answer may appear to be quite simple. Why would a hotel owner want to book more reservations for rooms than they actually had available? This is an issue that has faced the hotel industry for a number of years. Contrary to what the average person may think about hotels overbooking their rooms, it has actually shown itself to be a noble strategy in achieving maximum profitability when done accurately. It is imperative that it is done in an appropriate manner so as to not give the hotel a corrupt name or lead to guest dissatisfaction.
The luxury hotel industry has become a significant segment of the general hospitality industry and is undergoing expeditious expansions. Hilton’s goal is to create value for its constituents, customers, owners and shareholders, employees, strategic partners, and the communities where each hotel is located-by delivering a consistent value
The tourism industry should also consider human resources. The interaction between the staff and the customer determines the perception of quality. Unlike tangible products where the customer buys certain features, production quality,
I am covering the nuances of resort fees, bags fees and the overall measure of customer satisfaction through websites like Trip Advisor, Yelp and such in this essay. In today’s hyper competitive hospitality market where there is little to no difference in overall services offered, small charges like resort fees and baggage fees make a big impact in customer satisfaction. It can mean the difference between excellent reviews and negative reviews on websites like Trip Advisor and Yelp.
Thanks to these factors, pricing becomes one of the primary uses with which hotels attract customers. However, due to customers’ independent nature, there influence over industry players is limited. In the high-end segment of hotels, price influence becomes even less as hotels find it easier to differentiate themselves from the competition and customers become less price sensitive coming to expect higher prices as a symbolism of superior quality and services. Lastly, corporate business and tour operators can exert more influence due to their large purchases but this affect is of a limited nature and does not extend across the whole
In today’s dynamic scenario and ever changing economies it is necessary to evaluate the revenues and expenses of your hotels and keep track of records in an updated tabulated way. For the same, analysis of certain industry ratios like the Revenue Per Available Room (RevPAR), the Average Daily Rate (ADR) and the Occupancy Rate, it becomes quite convenient to make a comparison between the previous year and the present year. Revenue Per Available Room (RevPAR), is certainly the most crucial ratio popularly used to assess the
Moreover, the InterContinental Hotels & Resorts is considered the first international hotel brand in the world, as it began operations in the year 1946 (About InterContinental Hotels Group Brands, 2015). Over time the hotel group has evolved to encompass quality hotel rooms not only in North America, but in Central and South America, Europe, the Middle East, Africa, Australia, and Asia-Pacific (IHG – InterContinental Hotels Group, 2015). In addition, they have acquired extended stay facilities and the Hualuxe Hotels & Resorts, which specifically “celebrates the essence of Chinese hospitality” (About InterContinental Hotels Group Brands, 2015). In my opinion, this shows that their target market has changed by expanding their scope of travel, which means they are traveling to farther and farther locations and require the familiar surroundings with equivalent product quality at the final destination. The InterContinental Hotels Group is in the fourth and final stage of the product life cycle, which is the decline stage (Editorial Board, 2014, p. 212). Indeed, the brands lengthy history indicates it has loyal customers, but its addition of innovations indicates the targeting of new customers for the organization, which are clear signs of a business in the decline stage of the product life cycle (Editorial Board, 2014, p.
The Hotel industry has become very important in the past years due to immense traveling and growth of international business. The Hotel industry not only plays an important role in the life of people but as well as the economy of the country. I spent an hour of my day relaxing in the lobby at the Fontainebleau resort in Miami, while on vacation with my family visiting from out of state. It was my first time staying at the resort so I was eager to check it out, after seeing such great reviews on Yelp and hearing great things from friends who have been there in the past. The employees working at the resort were very welcoming, professional and willing to go above and beyond to help their guests. The check-in process was very quick due to having