COLLEGE OF BUSINESS AND ACCOUNTANCY

The Marketing Strategy & The Role of Marketing in Hospitality Industry

At the end of this chapter, the student must be able to:

 Understand the marketing strategies in the hotel industry;
 Identify the role of marketing in the hospitality industry;
 Recognize the importance of an effective marketing campaign; and
 Explain how marketing elements affect, marketing strategies.

I. MARKET STRATEGY IN HOTEL INDUSTRY

Marketing started as a result of economic and business pressure due to a need that arises
to focus on embracing a set of managerial measures to satisfy customers' needs. The evolution of
marketing in the hotel industry is similar to every other industry. The main reason for the
marketing in the hotel business is because of the growth in the number of guests who need
accommodation and the increase in competition by the accommodation service providers.
Moreover, the hotel industry is becoming a more and more mature market whereby the
competition is increasing globally, and winning customers becomes a problem. Therefore, there
is a huge shift to marketing.

The hotel industry is so competitive that it requires the hotel to formulate a dynamic
mechanism that can adapt to the changes in the market environment, the competitiveness of the
market as well as the economic climate. The ultimate goal of having a marketing strategy is
usually to identify opportunities to serve the market in a way that is profitable and effective
enough to the extent that it becomes difficult if not impossible for another company to take up
the venture without running into losses.

Some authors believe that at the initial stage a hotel business, the hotel will not make a
profit, even in the second year the hotel will only break even and the hotel may start to make a
little profit from the year. On the other hand, other marketers in the hotel industry think that the
hotel can start to make a profit immediately from the first year of entering into the industry if
the right marketing strategies were used.

A hotelier that wants to achieve success needs to have a deep understanding of

marketing and hot to combine various marketing elements such as price, product promotion,
and distribution.

II. ROLE OF MARKETING IN HOSPITALITY INDUSTRY

Marketing plays a vital role in the success of any business organization. Since all aspects
of the business depend on successful marketing, it is difficult to highlight all the roles which
marketing plays in a company. However, some of the major impacts of marketing will be
highlighted in the following paragraphs.

Marketing helps in building a company's brand name and placing the company's product
or service in the heart of prospective customers. In the hotel industry, the success of any hotel
often depends on a good reputation. As the reputation of a hotel grows bigger within society,
more customers will lodge in the hotel, thereby making the hotel's room occupancy rate increase
and generate more income for the hotel. Additionally, it is fair to say that marketing really helps
in the aspect of branding as it creates and supports effective communication within and outside
the hotel unit.
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Effective marketing campaign gives a company an edge over its competitors. A business
may offer the best product in the market, but without a good marketing campaign, it will not
generate the desired returns on investment because it is marketing that makes the product or
service known to prospective customers.

A good marketing campaign helps a company to efficiently manage its resources. When
an effective and efficient marketing strategy is adopted in a company, resource wastage is
reduced if not eliminated. The hotel industry is an industry with perishable products, in other
words, if a room is not occupied during a particular period, the income that is supposed to be
realized on that particular room is lost forever and it cannot be regained.

THE ROLE OF MARKETING

IDENTIFY Customers  Understand customer wants and need

 Identify whom to target and how to reach them
SATISFY Customers  Make the right product or service available to the
right people at the right time
 Make everyone feel better off from the exchange
RETAIN Customers  Give customers a reason to keep coming back
 Find new opportunities to win their business

Efficient marketing helps in ensuring thar hotel has a high occupancy rate at all times
Marketing helps to ensure that a company’s income increases. As more people get to know
about a company’s product or services, the company’s share of the market increases as well as
its sales revenue.

Since marketing creates a platform for bringing the gap between a hotel and its
customers, a hotel as company must ensure that the right messages are passed across the
customers, a hotel as a company must ensure that the right messages are passed across to the
customers with its marketing campaign. Furthermore, the ultimate goal of marketing should be
facilitation of a win-win situation between the hotel and the customers. The hotel management
should adopt the most effective and efficient marketing strategies that serve the interest of the
company without jeopardizing the interest of the customers.

THE HOTEL MARKETING MIX

Defining a proper marketing mix of the hotel industry is crucial for the success of hotel
marketing efforts. A marketing mix is used to indicate the several marketing variables used by
the sales team to target specific guests or target market segments (E.g.: Corporate, Transient,
Groups, Conference, Leisure, etc.).

The marketing mix is normally prepared by the Director of sales and marketing/sales
managers. The hotel should have the right facilities/service define good promotional strategies
(both online and offline), and finally with the right pricing.

1. Service/ Facilities:

This is considered as the first because without this hotel marketing team will have
nothing to deliver to the potential guests/ customers.

Hotel industry offer products like:

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 Guest rooms
 Food and beverages
 Banqueting rooms
 Conference facilitates
 Recreational facilities
 Health and wellness facilities
 Executive check-in checkout services
 Travel desk
 Business center
 Parking facilities etc.

Hotels generally cater to different market segments and each of these market segments
has different requirements. E.g.: A leisure guest on a family trip looks for creational and
wellness facilities of the hotel whereas a business traveler gives importance to the hotel’s
business facilities like the business center, video conferencing, good-in-room internet
connectivity, etc.

This analysis done by the sales and marketing department can help the top management
to identify these specific requirements and work along with the management to either
develop such facilities or make the required improvements.

2. Place and Distribution

This refers to the accessibility of the products to consumers. When comparing to other
products normally hotels products doesn’t travel to customers but the customers come to
the product.

Place or Location of the hotel e.g.; choices like in the city, outskirt if the city, resort area,
hill station. Or a chain of hotels with presence in multiple locations. The hotel uses either
direct or indirect distribution methods to reach out to its potential customers, below are a
few methods or channels used by hotels.

Direct methods

 Sales through the hotel’s sales team

 Personal telephone calls
 Online pay per click or Banner Advertisement (Google ads, Facebook ads, etc.)
 Printed media Advertisements
 Other Media Advertisements
 Hotel Website Booking System (WBS)
 Global distribution system (GDS)

Indirect methods

 Travel Agents
 Independent Travel agents
 Event Planners
 Online Travel Agents (Expeida, booking.com, Agoda, etc.)
 Online Travel portals (Trip Advisor, HotellQ, etc.)
 Independent hotel representative

3. Promotions and communications

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The director of Sales & Marketing should work out the most effective promotion and
communication mix for the hotel. Promotion is the way hotels communicate to target
customers.

Below are few promotions and communication channels used by hotels:

 Brochures
 Television commercials
 Hotel websites
 Twitter channel
 Facebook page
 Google + Page
 Hotel pens & pencils
 Scratchpads with the hotel logo
 Billboards
 T V Commercials

4. Room Rate or Pricing:

Defining the correct pricing strategy is one of the most important aspects of the
marketing mix. If the hotel products like Guest rooms, Food and beverage menu, etc. are not
priced competitively then the potential guest may reject the use of hotel services.

In this very competitive market guest are strongly influenced by the pricing and packages.
The hotel rate codes and packages are defined keeping in mind to attract or impress guests.

Generally, the hotel rooms are defined as per the below season:

 Peak Season
This is the period when demand for a hotel and its services is highest and the
hotel can charge the highest prices to the guest. There is no defined peak period for all
hotels is varies from hotel to hotel.

 Valley Season/ Off-Season

This is time of the year with the lowest demand for rooms. Hotels generally offer the
reduces rates and packages e.g.: Stay for 3 and pay for 2 nights, Discounted Package
rates, etc.

 Shoulder Season
This period falls between peak season and off-season, And this time is considered as
the best time to attract new business as the rooms are available and medium or highest
rates can be charged. Also, the sales and marketing activities should be the highest during
the period.