US Hospitality Industry Landscape

Part
01
of three
Part
01

Factors that are Crucial to Operating a Successful Hotel Property

Some of the factors that hoteliers consider crucial in operating a successful hotel property include location, capital, management team, pricing, customer service, product differentiation, and advertising.

1. Site/Location

  • Location is considered crucial by hoteliers in operating a successful hotel property as customers prefer a hotel that is situated in a place where they can easily access for the purpose of convenience and ease of travel to the hotel property itself.
  • Hoteliers also consider it crucial that the location of the hotel is not closer to the rivals to fully maximize the proximity of any potential demand generators in the vicinity of the hotel property in order to increase the chances of success.
  • The factor was not the result of the softening of the hospitality industry due to a steady growth in key performance metrics over the last 8+ years, and then suddenly plateauing slightly in 2019.

2. Capital

  • Adequate capital helps keep the business finances steady in catering to the expenditure as well as other expenses that might arise in the day-to-day running of a hotel.
  • Sustainable capital is also considered important to success as it helps balance the historical, current, and projected leverage of the hotel property as well as debts in relation to equity and management of liabilities.
  • The capital factor was a result of the effects of the slight decline in the hospitality industry that occurred this year after an otherwise previous steady growth in key performance metrics in the last 8+ years.

3. Management Team

  • Hoteliers consider having a competent and effective leadership and management team to be crucial in operating a successful hotel property to help formulate a strong vision with specific success measures for the future.
  • A competent and creative management team helps provide the scope and direction to help drive success by effectively managing continuous change through improvements to both people and processes.
  • Having a strong management team was an important factor in operating a successful hotel property as a result of the slight decline in the hospitality industry that occurred this year after an otherwise previous steady growth in key performance metrics in the last 8+ years.

4. Pricing

  • Good pricing strategy helps incorporate dynamism and flexibility in the price plan such as recognizing the low season and high season.
  • It is considered crucial to be able to adjust the price plan based on market changes, happenings in the city/country or even happenings at the hotel property itself, as this helps establish a closer customer connection.
  • The slight decline in the hospitality industry that occurred this year after an otherwise previous steady growth in key performance metrics over the last 8+ years was the result of this factor.

5. Customer Service

  • Customer service is an integral part of hotel experience and critical to operating a successful hotel property as the front-desk workers serve as the gatekeepers of the hotel by providing the customer’s first impression to the hotel property.
  • Therefore, it is considered crucial to ensure that the hotel property achieves a critical success factor by ensuring the staff is knowledgeable, courteous, and capable of resolving any conflicts that arise.
  • Providing quality service also entails remembering the names and preferences of repeat visitors and giving advice about attractions and surroundings.
  • The factor was the result of the softening of the hospitality industry due to a steady growth in key performance metrics over the last 8+ years, and then suddenly plateauing slightly in 2019.

6. Product Differentiation

  • Product differentiation and uniqueness makes the business stand out from its competitors and attracts more customers.
  • Other times, the differentiation can be instigated within the hotel itself where the hotel property may thrive by providing specific services that cater to the theme of the hotel.
  • The factor was a result of the slight decline in the hospitality industry that occurred this year after an otherwise previous steady growth in key performance metrics over the last 8+ years.

7. Advertising

  • Marketing and advertising helps leverage the marketing aspect to increase the revenue and brand awareness of the hotel.
  • Advertising is also considered crucial as it helps hotels to target specific consumers and cater to their needs. For example, hotels can advertise about ideal locations for business travelers by giving corporate discounts.
  • The factor was a result of the slight decline in the hospitality industry that occurred this year after an otherwise previous steady growth in key performance metrics over the last 8+ years.

Research Strategy

In addressing the question, the research team leveraged information from experienced hotel industry experts as well as contributions from hoteliers in publications such as but not limited to HVS, Bizfluent, BusinessPartnerMagazine, and the like. In compiling the views of experienced hotel industry experts on what they believe to be some of the most important factors that are crucial in operating a successful Hotel Property, we came up with a list of factors.
Part
02
of three
Part
02

Metrics/Key Performance Indicators - Hoteliers Success

RevPAR, Average Daily Rate and Average Occupancy Rate are some key performance indicators surrounding what hoteliers consider key drivers to their success.

1. Revenue per Available Room (RevPAR)

2. Average Daily Rate

3. Average Occupancy Rate

  • This metric is expressed as a percentage of the available rooms occupied for a specific period and calculated by dividing the number of paid, occupied rooms with the number of total available rooms.
  • Hotel owners strive to increase the occupancy rate because higher occupancy rate equals higher revenue and profits. They attempt to do this by cutting room rates as little as possible, so they avoid losing profits.

4. Acquisition costs

5. GOPPAR

  • GOPPAR, or gross operating profit per available room, is considered important because it measures performance across all revenue streams, instead of just rooms. It is derived at by dividing the hotel's gross operating profit with the number of rooms that were available during the time period.
  • Hotels aim at higher GOPPAR because this indicates the hotel's performance is satisfactory. Similarly to RevPAR, increased occupancy rates and optimized room rates result in higher GOPPAR and consequently, better hotel performance.

6. Website Conversion Rates

7. Guest Satisfaction

Part
03
of three
Part
03

Marketing Messaging - Effectiveness Among Hoteliers

There were no direct examples of marketing messaging that are effective when it comes to positive responses from hoteliers. However, through the aid of triangulation based on two psychological biases, six examples of the messaging that could elicit positive reactions from hoteliers are provided below. Also, the effectiveness of the examples is demonstrated in the findings based on the multivariate analysis of variance (MANOVA).

Product Messages

  • Product messages introduced various products that are considered needed or essential to hotel services. This form of messages can be used across different messaging platforms such as social media, emails, and so on.

Promotion Messages

Reward Messages

Brand Messages

Information Messages

  • Information messages talk about the news that is not associated with the brand, such as consumer trends, holiday greetings, and so on.

Involvement Messages

  • Involvement messages engage fans or customers on social media platforms on "replies and actions such as experience sharing, comments, picture captions, ll in the blank, humor, and so on."

Message Effectiveness

  • Facebook is seen as a viral marketing tool and the message effectiveness on this platform is "largely decided by the amount of consumers’ WOM associated with a message." When a message is liked, commented on, or shared by an individual on a brand's Facebook page, the message also appears on the individual's Facebook page, and it becomes visible to his or her friends.
  • Based on five months collation survey of 12 hotels' messages on Facebook, a study indicates that involvement message was most prevalent among message content types with 25.4%, followed by information message with 19.9%, and product message with 19.5%. Reward message has 16.2%, while the brand message has 12.2%, and promotion message is the least with 6.9%.
  • The exciting thing about the above statistics reveals that hotels share information and announce "new products with existing and potential customers on Facebook more than people’s common perception that the platform is used to deliver promotions."
  • The study used the multivariate analysis of variance (MANOVA) to determine the marketing effectiveness of message content, using the "correlation of dependent variables such as numbers of likes, comments, and shares."
  • The outcome of the MANOVA results indicated that "product (M=92.5) and brand (M= 89.9) messages generated the biggest number of likes, followed by information (M= 65.4) and involvement (M= 62.6) messages." Reward messages (M=48.9) still came out better than promotion messages (M= 30.8).
  • For comments, the MANOVA result indicated that involvement messages (M=43.9) came out top, while reward (M=11.4) and brand (M=8.3) messages were second and third, respectively. While product messages (M=6.8) came fourth, it was followed closely by information messages (M= 6.0), and promotion messages (M= 3.5) still came last.
  • The outcome of the MANOVA result for shares indicated that product messages (M=7.8) led the way, followed closely by brand messages (M=7.7). Information messages (M=4.4) came a distant third, followed by involvement messages (M=3.5) and promotion messages (M=1.7) still came last after reward messages (M=2.0).
  • In summary, it is seen that when it comes to generating likes and shares, product and brand messages are more productive, but involvement messages are better for evoking comments. These three examples of marketing messaging types are more effective in the hotel market space than the other three.
  • Whereas information messaging was suitable for generating likes, it was terrible with comments, and while reward messaging was encouraging on comments, it was awful at creating likes and shares. Promotion messaging had the "worst marketing effectiveness in terms of the numbers of likes, comments, and shares."

Research Strategy

We started our findings by going through marketing messaging databases such as Text Magic with the view to find examples of the messaging in the hotel market that are effective when it comes to positive responses from hoteliers. What we found there were examples of messaging that could improve the hospitality business.

We tried the holistic hospitality marketing platforms such as Hospitality Syndicate and Revfine to find possible preferences of hoteliers to messaging in the hotel market. What we found instead was how hoteliers use marketing messaging to improve hotel sales. Where we found a direct source of suppliers marketing to hotels, there was nothing that suggested the use of marketing messaging.

Lastly, we examined research and proprietary platforms such as Research Gate and Report Linker to understand how hoteliers relate with other brands that try to sell to them. While the latter is behind a paywall, we uncovered a 2017 study on the former. Although the study was based on the types and effectiveness of messaging used by hoteliers to engage their fans and customers, we decided to use these findings to triangulate answers for our research.

The application of this triangulation is based on the psychological biases of in-group favoritism and confirmation bias. While the former focuses on relating with your prospects by creating things relevant to them, the latter focuses on emotionally-charged issues by sticking to the deeply-established beliefs of your prospects instead of trying to introduce something new to them.

Therefore, since hoteliers are typically in tune with the types of marketing messaging highlighted in the above findings for hotel sales, hoteliers are likely to respond positively to these types and examples of marketing messaging since they relate with them. These types and examples of marketing messaging will also likely appeal to their emotions and connect with their deeply-established beliefs.
Sources
Sources

From Part 03
Quotes
  • "deals, promotions, special offers, discounts, sales, packages, double/extra points, and so on."
  • "replies and actions such as experience sharing, comments, picture captions, fill in the blank, humor and so on"
  • "new products with existing and potential customers on Facebook more than people’s common perception that the platform is used to deliver promotions"
  • "largely decided by the amount of consumers’WOM associated with a message"
  • "correlation of dependent variables such as numbers of likes, comments, and shares."
  • "product and brand messages generated the biggest number of likes, followed by information and involvement messages."
  • "worst marketing effectiveness in terms of the numbers of likes, comments, and shares."