Luxury Wars: Hospitality Competitiveness and Globalization in the Luxury Segment

By Mario Candeias General Manager, Espinas Hotels | September 28, 2014

As we all know, there's intense competitiveness in every segment of the hotel market and one way to assess that is the increased segmentation brand conglomerates are implementing, rolling out new brands at specific price points to communicate with better identified "slices" of the market (note for example the "re-slicing" of the Ibis brand into 3 brands, now including Ibis Styles and Ibis Budget, in a segment that the market thought as very well segmented already. Or look at Aloft, as a sub-form of W Hotels). Supply goes hand in hand with demand and new supply tends to adapt to and even generate new demand.

There is a bottom to competitiveness in the lower budget and economy segments, and the end of the road there would be ADR zero (don't try it, please…). Convenience, location, cleanliness and limited service seem to cut it for this side of the spectrum. Oh yes, and standardization of product, hard negotiation skills with suppliers and permanently aggressive cost-cutting.

Rolling out new brands, wether as extensions of previous brands or isolated, is also a way to fight against obsolescence, keeping vibrancy in the portfolios, visibility in the marketplace and connectivity to an ever more dynamic demand profile and an ever sharper competition. And to keep investors and stock markets happier, of course.

In the top end of the market, the struggle is even fiercer. In terms of rates, the sky no longer seems to be the limit, the warfare is intense and the weapons used to raise them are ever more potent. News on ever higher rates are abundant (a recent famous example is Miami, where local hoteliers publicly stated that there seemed to be no ceiling to rates there… well, let's see for how long…) and even rankings of the most expensive hotel rooms and suites are now somewhat frequent and newsworthy. Higher rates are also a means to a higher positioning and market command and dominance .

In the Luxury Segment, Striving for Supremacy is No Easy Fight

Positioning Battles

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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.