1. Copyright © 2010 by John Wiley & Sons, Inc. All Rights Reserved

2. DEFINITION OF MARKETING Marketing is “communicating to and giving…customers what they want, when they want it, where they want it, at a price they are willing to pay” (Lewis, 2000)

3. COMPETITION IN THE LODGING BUSINESS Based upon what you have learned so far, how would you characterize the lodging industry in terms of competitiveness? The industry can be characterized as being highly competitive as well as very fragmented There are many different ownership companies, brands and types of properties each vying for their share of the market

4. LEADING “BRANDS” 1.Wyndam Hotel Group—7,043 hotels 2.Choice Hotels International—5,827 hotels 3.InterContinental Hotels Group—4,186 hotels 4.Best Western International—4,000 hotels 5.Accor—3,982 hotels Others: Hilton, Marriott, Carlson, Starwood, and Groupe du Lourve

5. COMPETITION IN THE LODGING BUSINESS Despite the visibility of several large hotel companies, many hotels are still independently owned and operated From year to year, the number of hotels that attain chain affiliation usually equals the number of hotels that become independent 5,642 projects nationwide were planned in 2008 including renovations, new construction, and conversions of one flag to another As the industry grows, it becomes more competitive and marketing becomes more important

6. COMPETITION IN THE LODGING BUSINESS The marketing mix in lodging is much the same as we described it earlier and how it applies to the food service industry; how the 4 Ps are interpreted, however, is slightly different “Product” includes both physical goods and services; it also includes services provided at the chain level “Price” refers to what the guest actually pays – which may differ quite a bit from the “rack rate” (posted rate) Price, in the lodging industry, is much more flexible than in the food service industry

7. COMPETITION IN THE LODGING BUSINESS “Place” refers not only to the physical location of the hotel but also to the place where the hotel room is sold (which is often different) “Promotion” refers to marketing communication – advertising, sales, etc. Sales plays a much greater role in hotels because of the importance of group sales

8. THE PRODUCT The “Product” is made up of goods and services The hotel product can sometimes be more goods and sometimes more services This often depends on the type of guest being served: the “upstairs guest” or the “downstairs guest”

9. THE PRODUCT The upstairs guest is interested in the upstairs, or primarily the room They are not interested in additional services They are willing to trade off for lower prices The downstairs guest is interested in services and offerings in addition to the room. They want lounges, food service, public space, etc., and are generally willing to pay more

10. THE PRODUCT Guests may be further segmented by the extent and sophistication of services that they desire Services can include; food service, concierge (and concierge floors), spas, fitness centers, and business centers, among others There are also “systemwide” services which will include reservations, accounting, billing, and quality assurance

11. THE PRODUCT Food service was the most important service for a long time but hotels are changing the way that they manage it Some hotels are choosing to limit foodservice (breakfast only) Some are choosing to eliminate it Others are choosing to outsource it

12. FOOD SERVICE Hotels have been exploring ways to increase the profitability of various departments (including rooms) in recent years (e.g. Internet, catering, fitness facilities, retail space, etc.) The food and beverage area is one department that has posed unique challenges to hotels in recent years

13. FOOD SERVICE Reasons to outsource: Financial considerations Ability to focus on core competencies Strategic intents

14. PRICE Hotel pricing is meant to be flexible depending upon the time of year, the time of day, occupancy, the customer, the amount of business a group provides each year, etc. The “cost” of providing the hotel room generally sets the floor (the lowest) The rack rate generally establishes the ceiling (the highest)

15. PRICE Special rates will include: – Corporate – AAA – Government – Preferred – Association

16. PLACE Location is a major factor in hotel success Location is decided based upon a “feasibility study” A feasibility study considers proximity to transportation routes, a demand analysis, market characteristics, and a competitive analysis Hotel locations may change over time

17. PLACE – DISTRIBUTION CHANNELS Distribution channels refer to how and where hotel rooms are sold Whereas guests used to make reservations through the hotel (directly), travel agents, or through a central reservations system, now online booking has changed this Online booking through hotel companies lowers costs resulting in lower cost rooms to customers Finally, on-line agencies such as Expedia and Travelocity are gaining market share

18. PROMOTION Advertising – much hotel advertising still focuses on print media (newspapers and magazines) Some hotels favor television advertising such as Holiday Inn, Starwood, and Hilton Good ads “entice customers to learn more” Some advertising is a joint effort with local tourist/promotion boards Internet advertising continues to increase and is easier to track success rates than more mainstream media

19. PROMOTION Sales Promotion provides an incentive for the consumer Sales promotions often take the form of rewards programs, partnerships (generally with airlines), and special events (special rates) Rewards programs reward regular guests for continued patronage Special deals are aimed at boosting business during traditionally slow periods