STANDARD 2 Destination Marketing and the Lodging Industry

Marketing The process of developing, promoting, and distributing products to satisfy customers’ needs and wants. It is a series of activities that hospitality and tourism businesses undertake so that customers will buy products from them instead of their competitors.

Marketing Mix Product Price Place Promotion  Travel Agencies  Commission

Target Market The specific group of people that a business is trying to reach.

Market Segmentation Identifying a group of consumers, or target market, is achieved through market segmentation, which is a way of analyzing a market by categorizing specific characteristics.

Methods of Market Segmentation Demographics: personal characteristics such as age, gender, income, ethnic background, education, religion, occupation, & lifestyle.  Ex: Psychographics: based on social & psychological characteristics such as attitudes, interests & opinions.  Ex: Geographics: statistics about where people live. Could include: region, city, county, & climate.  Ex: Behavioral Segmentation :statistics about consumers based on:  Purchase Occasion:  Ex:  Product Benefits:  Ex:  Usage level & commitment:  Ex:

Destination The final stop of a vacation, or the goal of travelers.  Destinations can be towns, cities, or regions. Destination Marketing: The process of developing, promoting, and distributing specific locations to customers in an effort to increase visitation to that location.

Types of Destinations: Cruise ships Sports, recreation and entertainment destinations Amusement parks Gaming facilities Museums and Historical Sites National Parks Resorts

What is Seasonality? Seasonality: The peaks and valleys of demand for a destination and its facilities; generally based on climate or geography.  Peak season: The time when the destination is most desirable; either for climate or weather or some type of celebration  Ex: Mardi Gras or Super Bowl  Low season: The time when the destination is least desirable.  Ex: Cancun during hurricane season Hospitality and tourism businesses look for ways to increase demand during the low seasons.  Usually done by lowering rates, or encouraging meetings and conventions.

Supply and Demand Concept Supply  The amount of GOODS or SERVICES available at a given price at a given time. Demand  The amount of goods or services that consumers want and are willing and able to buy at a given price at a given time.

Elasticity of Demand Elastic demand:  When a change in price creates a change in demand.  Ex. The price of oil is rapidly increasing, the cost of an airline ticket is also increasing and the demand for leisure travel is decreasing Inelastic demand:  When a change in price has little or no effect on demand.  Ex. Emergency Airline purchases, regardless of cost, ticket will be purchased

The Billion Dollar Lodging Industry In 2013 in the Lodging Industry there were  52,887 properties  4,926,543 guestrooms  $163 billion in sales  $68.64 revenue per available room (RevPAR)  62.2% average occupancy rate

Yield Management The goal of any hotel is to maintain a high occupancy rate. Maximize revenue through adjusting rates according to demand.

Yield Management  Revenue per available room (RevPAR)  Revenue / total rooms available = RevPAR  Average occupancy percentage (OCC%)  Number of rooms sold / # of rooms available = OCC%

Hotel Classifications Guest Type Price Location Style and Function

Business Guests – Business, conventions, meetings Leisure Guests – Vacation for pleasure Guest Type

Price BUDGET (or Economy):  Inexpensive, limited services  Comfort Inn, Motel 6 MID PRICE:  More services than budget  Holiday Inn Express, Courtyard UPSCALE (luxury):  Great locations, many services and amenities  Grand America, Hyatt Regency

Room Rate Variables Property Location Location of the room (ocean view or parking lot) Room size and amenities Length of stay Season Number of people in the room Group, corporate or convention rate Cost of operation and quality of services Taxes, (each city is different), resort & service fees

Caution!! Hotel prices are quoted WITHOUT taxes, service charges or resort fees.

Location Resorts – great locations, lots of amenities/activities Airport – business or leisure AND airline employees Freeway access – usually for one night guests traveling to another destination Downtown (bigger cities) – near shopping or business Conference Centers - convention/meetings

Style and Function All Suite:  Larger rooms, separate living areas Extended Stay:  More space for guests needing to stay for longer periods of time (kitchenettes) Bed-n-Breakfasts:  Fewer rooms, lots of personal service AND cooked breakfast.

Style and Function Spas:  Health related services  Biggest Loser at Fitness Ridge Vacation Properties:  Guests can “buy” a lodging location for period of time  Time Shares Boutique Hotels:  Small hotels with unique settings usually upscale accommodations  Anniversary Inn Retreat Centers:  Business travelers who want a secluded location.

Hotel Operations All lodging accommodations, regardless of size, must create balance between generating profit and servicing the public. Areas involved in operations:  Front of the house  Area in the lodging facility that the guest views or has contact with  Back of the house  Area in the lodging facility where support services take place, usually not seen by guests

Largest revenue for a lodging facility is the rooms division:  Front of the House  Front Desk  Reservations  Uniformed Staff Concierge Bell Staff Valet Security  Back of the House  Housekeeping Laundry  Grounds keeping  Office space  Storage rooms Rooms

Most lodging facilities will have a department dedicated to food services:  Restaurant  Lounge/Bar  Banquet facilities  Room Service  Front of the House  Hostess  Waiter  Bartender  Back of the House  Kitchen  Storage rooms  Cleaning facilities Food and Beverage