The $64,000 Question: Who Really is Your Hotel's Competition?

By Bonnie Knutson Professor, The School of Hospitality Business/MSU | November 24, 2013

No matter how game show formats might change over time, the design remains the same: If you answer the question correctly, you win a prize. There is a strong similarity between this game show design and the hotel business today - especially as it relates to identifying your competition. If you can answer the BIG question, you can win the prize. And the BIG question is: Who, really, is your competition? The prize, of course, is increased sales and increased profits.

Unfortunately, many hotel managers and owners don't know who their competition actually is. Oh, they confidently give you an answer when you ask them. And it's probably based on the Star Report, scouting other hotels' reader boards, or additional covert actions. But, more often than not, that answer is incorrect or only partially correct. Why? Because the hotels which management identify as competitors are identified from management's perspective, not from the perspective of the people who truly know the answer: your guests. An example: A hotel with an upscale seafood restaurant was developing a new three-year marketing plan for its eatery. When I started working with them, one of my first questions was, naturally, "Who is your competition?"

Their reply came quickly and confidently. "Oh, that's easy. We're up against 'Restaurant A' and 'Restaurant B' and other fine dining places like these.

"Are you sure?" I asked.

"Oh yeah. Our competitors are all the fine dining, white tablecloth, upscale seafood restaurants in town."

But when I asked their guests (both hotel guests and locals), however, the answer to the competition question was quite different. To them, the competition was not 'Restaurant A' and 'Restaurant B' and other fine dining, white tablecloth, upscale seafood restaurants in town. It was Red Lobster.

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Guest Service: Empowering People

Excellent customer service is vitally important in all businesses but it is especially important for hotels where customer service is the lifeblood of the business. Outstanding customer service is essential in creating new customers, retaining existing customers, and cultivating referrals for future customers. Employees who meet and exceed guest expectations are critical to a hotel's success, and it begins with the hiring process. It is imperative for HR personnel to screen for and hire people who inherently possess customer-friendly traits - empathy, warmth and conscientiousness - which allow them to serve guests naturally and authentically. Trait-based hiring means considering more than just a candidate's technical skills and background; it means looking for and selecting employees who naturally desire to take care of people, who derive satisfaction and pleasure from fulfilling guests' needs, and who don't consider customer service to be a chore. Without the presence of these specific traits and attributes, it is difficult for an employee to provide genuine hospitality. Once that kind of employee has been hired, it is necessary to empower them. Some forward-thinking hotels empower their employees to proactively fix customer problems without having to wait for management approval. This employee empowerment—the permission to be creative, and even having the authority to spend money on a customer's behalf - is a resourceful way to resolve guest problems quickly and efficiently. When management places their faith in an employee's good judgment, it inspires a sense of trust and provides a sense of higher purpose beyond a simple paycheck. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.