Hotel Revolution and the Hospitality Industry's Business Model Evolution: Steam, Diesel or revPAR?

By Jean Francois Mourier Founder & CEO, RevPar Guru Inc. | March 18, 2012

Hospitality is one of the world's largest and oldest industries, with lodging as the most prominent segment. The product, i.e., the service delivered by hotels, motels and resorts, is very easily defined: shelter, a clean room and bed and perhaps a meal. This core concept and basic market demands haven't really changed since the medieval days of roadside inns, and it is this age-old simplicity which has been the hotel industry's greatest asset.

Paradoxically, it is also its greatest barrier to innovation and especially when it comes to pricing, sales and marketing. For years, hotels have employed traditional methods in these operational categories, even as the marketplace changed around them. Historical pricing, excessive reliance on competitive set analysis, 'push' marketing tactics and a reluctance to embrace new media, are all part of the outdated business model still being clung to by many hoteliers across the globe. However, if anything positive has come out of the current state of the economy, it has been to show the lodging industry how ineffective these strategies are compared to newer, more forward-thinking, efficient models being used by leading properties worldwide.

For the rest of us, there is more good news - these initiatives are available and ready for your hotel to implement - all that's needed is a willingness print("code sample")to look beyond the tried and easy methods and to embrace the newest tools available. Are you ready?

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As you'd expect, these tools are found primarily online. It's been said that the prevailing business models for the hotel and hospitality industry have been evolving over the last decade ONLY because of the rise in internet bookings. So just how important is the online channel?

In 2008, about 44% of the hotel market was online - a substantial jump from 21% in 2002. Experts predict that by 2012, 57% of the hotel market will be online, representing a $65 billion online hotel market.[1] Clearly, such rapid growth over such a short period demands a different way of doing business - and progressive revenue management firms are there to help you.

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Coming up in February 2018...

Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.