Ms. Knutson

Executive Leadership

The Marketing Sage Says Hotel Leadership Is...

By Bonnie Knutson, Professor, The School of Hospitality Business/MSU

I am a marketer. One of my close friends is an accountant. We love to banter back and forth about which function is the most important in a hospitality business.

"Marketing, "I declare. "Marketers make the money."

"Accounting," my friend counters. "Accountants manage the money."

This friendly rivalry has been going on for years with each of us constantly looking for arguments to bolster our respective claims. One day, he is ahead; the next day, I am ahead. While we both know that marketing and accounting are mutually important to any hotel company, we still have a lot of fun playing "one-upmanship." So it was with particular glee that I found the ultimate truth to confirm the fact that marketing rules, the wise Marketing Sage told me. And I could not wait to lay it on my accountant friend. I was salivating. My heart was racing. I was ringing my hands in glee. I lay in ambush, waiting for him to come around the corner so I could spring the trap.

"So, Mr. Accountant," say I, "Tell me again why you think that accounting is the most important function."

"Simple," says he. "We manage the money; we control the budget. Just look at the first line of any business plan and you will see 'Estimated Revenues'. That is money; that is us; that's accounting. We're Number One!"

I could not wait to jump in. "Ah ha! You forgot one critical fact. You forgot what 'Estimated Revenues' really are."

He looked bewildered, so I continued, "Come with me to the wise Marketing Sage; he will tell you; he will show you the light."

So off we went to the office of the Sage. He looked up when we walked into the room. I told him the reason we had come. As I talked, he slowly turned towards my accountant friend, looking somewhat like Yoda did when he faced the challenge of explaining The Force to young Luke Skywalker. His eyes were sympathetic for one who had not yet seen the error of his ways; yet they were also hopeful for one who would soon know the truth. His voice was reassuring. "So my young friend, you think that because 'Estimated Revenues' is in the first line in a business plan, the accounting function, which counts the revenues, is the most important to a hotel."

The accountant nodded.

"But," the Sage continued, "Where does 'Estimated Revenues' come from? How is it determined? Who controls it?"

Without batting an eye, my friend shot back. "Why, that's easy. 'Estimated Revenues' is simply your best guesstimate of income based on historical data plus sales you expect to get in the future."

The Sage got a slight twinkle in his eye. "Exactly! And who controls the sales you expect to get in the future?"

My friend looked perplexed as he pondered the Sage's question. Suddenly, his eyes began to widen, his palms began to sweat and he began to hem and haw as if he could not quite bring himself to admit the obvious. Finally, he could hold back no longer and in a somewhat meek voice, uttered, "Mmmmmmmmarketing."

"Yes, yes, yes... marketing is the right answer!" shouted the Sage as he jumped up.

I just stood there beaming as the Sage put his arm around the accountant and continued. "You see, my young friend, marketing is more than advertising, brochures, and media buys. Marketing is the control system for the organization."

He went on to explain that, in the 21st Century, marketing serves as a change agent for the whole hotel brand because it focuses on rapidly changing needs and wants of markets. It researches, designs, and develops strategies that respond to an increasing unpredictable and competitive global lodging environment. At its core, then, marketing is innovation. In other words, it makes adjustments to change; it is the change mechanism - the innovator -- for the hotel organization. While marketing is not the whole organization, the Sage pointed out, it is the heart of the organization.

The accountant began to nod in understanding. I could see the light going on in his eyes.

Continuing, the Sage showed him how innovation is necessary in today's business world. A hotel brand must innovate or die, he pointed out, and it can only do it in one of three ways. First, it can make major, fundamental changes in the way the markets function. Inventions such as all- suites, limited service, and time-share properties fall into this category. Second, it can make functional changes, which are minor changes within an industry segment. Breakfast included, value-added weekend packages, and online reservations go into this group. The third type of innovation is adaptive, and is where most changes are made by most hotels. Adaptive innovations are changes that do no require major behavioral changes in guests. Here, you will find changes in room rates, kiosk check in, the "Heavenly Bed", or value added weekend packages.

Then, the Sage sighed. He sat down in his comfortable old desk chair and stared out the window at the leaves swaying in the breeze. Finally, he turned back, his gaze falling on the accountant and marketer standing before him. Looking at us both, he spoke carefully and deliberately. "Creativity is the engine for innovation, which is the lifeline of any hotel. Without innovation, there can be no future for the brand. The leaders of the future will be creative people who look outside their company to see what is going on. They will take it all in and expand on it. They will be the point of convergence of all stimuli; in other words, they will have a wide camera lens versus a narrow lens. They will be marketers."

I beamed. "Thank you, thank you, thank you. Thank you for showing my friend the light of the future." I took my friend's arm and started towards the door.

The Sage smiled softly and nodded. But as we turned to go, he winked at my friend and whispered, "Accounting is important too."

Our bantering continues...

Bonnie J. Knutson is a professor in The School of Hospitality Business in the Broad College of Business at Michigan State University. She is an authority on emerging lifestyle trends and innovative marketing. Her work has been featured in The Wall Street Journal, USA Today, and on PBS and CNN. She has had numerous articles in industry, business, and academic publications. Bonnie is a frequent speaker for executive education as well as business and industry meetings, workshops, and seminars. Dr. Knutson is also editor of the Journal of Hospitality & Leisure Marketing. Ms. Knutson can be contacted at 517-353-9211 or drbonnie@msu.edu Extended Bio...

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