Methods for Successfully Conquering the Commoditization Beast
By Amy Bair Career Services Analyst, Florida International University's Chaplin School of Hospitality and Tourism Management | March 17, 2013
Can you feel the winds of change? Optimism is in the air. A recent CNBC article stated "The US hotel industry is booming" and the United States is the "poster child of optimism." However, hoteliers do have some concerns. In a HotelNewsNow article asking operators their top concerns for 2013, they felt low average daily rate, steadily increasing costs and increased commoditization were some of the challenges that could not be ignored.
The last issue, commoditization, is a critical hurdle hotels want to overcome. Addressing it can also make strides toward improving low ADR and rising expenses. A concerted effort toward differentiating your product from the competition can be very beneficial for business-not that you need me to tell you this. According to the Harvard Business Review article "Wyndham International: Fostering High-Touch with High-Tech," brand erosion is a challenge. Hotel brands have been increasingly mimicking each other thus diluting their value. "If the [lodging] industry continues to see itself primarily as a provider of hotel accommodations-competing on price-the move to commoditization will be unstoppable. To avoid the threat of commoditization, firms must develop inimitable and sustainable differentiators and know their customers intimately." How exactly is that done in a long term sustainable way though? Consider the concepts of Core Competency and Competitive Advantage to help you define your strategy.
Core Competency is the "unique ability that a company…develops that cannot be easily imitated." A core competency gives an organization its competitive advantage(s).
Competitive Advantage is "the strategic advantage one business entity has over its rival entities within its competitive industry. Achieving competitive advantage strengthens and positions a business better within the business environment."
Having a Competitive Strategy allows your hotel to stand out from the crowd. You are "deliberately choosing a different set of activities to deliver a unique mix of value."
It is important to note that your hotel's core competency is not the end product/service it delivers but the unique way in which it is delivered-which, in theory, none of your competitor's can easily duplicate. A successful example of this concept is Honda who manufactures cars, lawn mowers and generators. On the periphery, those products look unrelated. However, if you understand that their core competency is "engines and power trains"  then we understand the method to their madness.