Mr. McKee

Sales & Marketing

Hotel Sales & Marketing: A Dozen New Niches

By Steve McKee, President, McKee Wallwork Cleveland

If there's one thing we know about a successful hotel brand it's that it will attract copycats. And if there's one thing we know about copycats it's that they commoditize the market. That's not good for anyone.

The initial response to copycats usually manifests itself in some form of hand-to-hand combat. After all, who are they to invade our space? But whether it involves expensive branding campaigns or inefficient loyalty programs, competing with a copycat is a drain on the bottom line. If you can't win the battle in the trenches it may be time to reinvent your brand, or at least explore new concepts that can be both exciting and profitable.

The good news is that developing a new niche isn't a random phenomenon that can only result from lightning strikes of inspiration. Many ideas can be generated following a few simple principles.

Most hotel brands, like most companies in general, fall into the common pattern of trying to be better than their competition. In our advertising agency we specialize in working with stale brands and we've learned that what it takes to freshen them up is a focus not on being better, but on being different. In fact, we believe that any company can reshape its industry by looking at it in a new light, subdividing it in a way no one has yet thought of.

This is not a new idea; in fact, industry subdivision is a common occurrence throughout business history, and authors like Trout & Ries have written volumes about it. Consider the automotive industry: you used to be able to get one car, the Model T, in one color, black. Today you can get a cherry-red sport utility 4x4 with a built in iPod port. The auto industry's evolution has included a number of market subdivisions. Cars became cars and trucks. Trucks became pickups and SUVs. Pickups and SUVs became 4x4s and 2x4s. And now there are these new things called Hummers and crossovers. Just when it seems there are no more variations, a new one is introduced. It's endless.

The same thing has happened in the magazine industry, from general titles like Life and Look to highly focused publications like Dog Fancy. Same with the soft drink industry, from Coke and Pepsi to Diet Caffeine Free Dr. Pepper. It's happened with computers (from all things IBM to the handheld Treo), investments (Dean Witter to Schwab and E-Trade), and even meat-now we not only have red meat and white meat, but "the other white meat" and even green meat (Veggie Burger anyone?). Blockbuster, Target and the Weather Channel are all examples of companies that have fostered and taken advantage of industry subdivision.

Identifying a new hospitality industry niche is not all that difficult. It just takes imagination and a willingness to throw out the old rules. There are basically five global possibilities on which you can focus; I call them the Five Ss: something, someone, somewhere, sometime or somehow.

The most obvious area of specialization is something. Eggo was the first toaster waffle, Gatorade the first sports thirst quencher, Volvo the "safe" car. Such a focus can have dramatically powerful results. Witness Subaru, who in 1995 quit trying to be all things to all people and focused on its traditional strength of four wheel drive cars. The following year, sales shot up 30%. In the hotel industry Motel 6 built its franchise on price. And who would have thought back in 1984 that a chain of all-suite hotels would have a chance? The folks at Embassy Suites, that's who.

Similar to focusing on a unique product niche is a focus on a unique audience niche, or someone. This can be defined by demographics, such as Mountain Dew focusing on young teenagers or ESPN Magazine focusing on 18-34 year old men, a group their research showed Sports Illustrated was not serving well. Or it could be a psychographic subdivision such as that pursued successfully for years by BMW, whose core constituency is people who love to drive. Marriott Courtyard carved out a successful brand "by business travelers for business travelers"--so successful that it has been imitated many times.

Enterprise has become the dominant rental car player by positioning itself along somewhere lines: the company to call when you need to be picked up (predominantly hometown rentals). In the computer industry, Dell developed a powerful franchise based on direct (telephone and web) sales of computers. Travelodge was created years ago to give people a familiar place to stay in the places they travel to most.

The sometime strategy is primarily one of convenience. It is what built FedEx as they focused on packages that "absolutely, positively had to be there overnight". This is also the strategy that built Kinko's, which on more than one occasion has rescued me by being open 24 hours a day. (Oddly enough, FedEx and Kinko's are now one.) Residence Inn and Candlewood Suites pursued a sometime strategy, building hotels for the traveler who's there for an extended stay.

Saturn built a new car brand using the somehow strategy. Their focus was not the cars, even though they were stylish and well built. What Saturn used to set its brand apart from the competition was a different way of selling cars. Even their tagline reflected this position: "A different kind of company. A different kind of car." Unfortunately, they have strayed from their roots and their performance has suffered accordingly.

Nordstrom is another good example of leveraging the power of "how" to strengthen a brand, as is the Girl Scouts. They came up with a way to sell cookies-hundreds of millions per year-not because they tasted so good but because customers can't say no to sweet little urchins at their door. Most upscale hotels-including the Ritz-Carlton and Fairmont-are built on the somehow premise.

Try this exercise. Carve out a few hours with your management team and drop every major hotel brand into one of the Five S categories. You'll find that it's an interesting way to view the world in which you compete. Then brainstorm new concepts in each of the Five S categories. It may be hard to come up with ideas at first, but as you keep going you'll get more prolific. Don't judge the ideas at first-somebody may suggest a concept based on the shape of the windows or the pile of the carpet. That's OK-quantity is more important than quality at stage one. Once you've brainstormed several ideas you can begin to winnow them down. You might even come up with the next hot brand.

Many people want to make marketing more difficult than it is. Economic models and statistical forecasts are useful tools, but they won't ever replace imagination, insight and judgment about what's next. After all, no one ever asked for a microwave oven. From where do new niches come? They come from forward-looking leaders who aren't afraid to challenge the conventions of their industries, see where things are headed and lead the way.

Steve McKee is President of McKee Wallwork Cleveland, a full-service advertising agency with significant experience in the tourism, travel and hospitality industries. He is considered a growth company marketing expert and understands the unique challenges growth companies face.Named to the Inc. 500 list of America’s fastest-growing private companies in 2002, the agency is a two-time winner of the American Marketing Association’s EFFIE Award for marketing effectiveness. Mr. McKee can be contacted at 505-821-2999 or smckee@mwcmail.com Extended Bio...

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