The Answer is Yes, What is the Question?
By Bonnie Knutson Professor, The School of Hospitality Business/MSU | October 28, 2008
Nearly a half century ago, business guru Theodore Levitt said that the purpose of business is to make and keep customers. It might seem that his admonition is just plain common sense, not some cutting edge revelation. On the other hand, growing competitiveness in the lodging industry has forced many executives to believe that the purpose of their hotel is making money. The focus on revenues, REVPAR, ROI, escalating costs, cost containment, and a series of sophisticated business school jargon has drawn attention away from the real purpose of any hotel - i.e. to make and keep guests. No one is suggesting that revenues are not important; they are. Without adequate revenues a hotel "ain't no more." So let's give Levitt's definition a modern lodging marketing perspective: Marketing is managing your hotel's brand so that guests recognize that your hotel will solve their needs better than any alternative.
As a hotelier, you understand your products/services, managerial accounting, how to compute ROIs, establish cost control procedures, and manage your employees. Each of these functions is an essential support to the purpose of your hotel; i.e., your guests. But it is marketing that focuses a hotel on the value of making and keeping its guests.
Therefore, you have to view marketing as a process with three major functions:
Each of these three marketing responsibilities involves a variety of marketing functions: research, positioning, packaging, differentiating, pricing, promotion, servicing, budgeting and analysis - all of which, serve the purpose of increasing occupancy and REVPAR. In other words, we can adopt the mantra of the camp song we use to sing as children: Make new friends (guests), but keep the old; one is silver and the other gold.
To help bring this goal into focus, let me tell you a story about my mentor and his marketing teacher and mentor. My mentor was Don Smith, former director of the hospitality program at MSU, and marketing genius extraordinaire. Those of us lucky enough to be taken under his wing call him Coach. His mentor and marketing teacher was the unparalleled visionary, Winston Schuler of Marshall, MI. Win Schuler knew the restaurant business technically, managerially, and conceptually. He was without equal. In the opinion of many, he was the most intuitive restaurateur of the 20th century. He also had the gift of communication and was always willing to share his wisdom with others.
In 1960, Coach was getting ready to open his first restaurant in Dundee, Illinois. He called Mr. Schuler, who graciously offered to spend a few hours giving him an overview of the business of hospitality. They met and talked in the lobby of Schuler's first restaurant in Marshall. What this genius talked about was not food costs, not profits, not sales growth. Instead, he talked about football! For Don Smith, who happened to be leaving the coaching field after ten years, this was exciting.