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on competitive set analysis, 'push' marketing tactics and a reluctance to embrace new media, are all part of the outdated business model still being clung to by many hoteliers across the globe.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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Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. 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.