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Hotel value proposition: Factors of success
September 27 2011

Your hotel’s value proposition is not just the rates you set and the flag you fly. It is a combination of many important factors.

Highlights
  • As fluid as the marketplace is, it is essential for hoteliers to regularly assess their competition.
  • Whatever your hotel’s value proposition, you must address the customer’s expectations—both pre-arrival and onsite.
  • Your offering needs to be carefully crafted to create a call to action for the consumer.
By Paul Wood
HNN columnist

Hotel owners are requiring their properties to do everything possible to provide for a healthy return on their investments. Hoteliers are left grappling each day with how to create value for owners, while at the same time creating value for guests—two very different things.

A strong value proposition can help bridge the two, making it clear why a traveler should stay at your hotel while delivering “value” as defined by owners (in terms of):
• increased revenues;
• decreased operating costs;
• improved efficiencies;
• increased market share;
• lower employee turnover; and
• improved guest satisfaction.

Your hotel’s value proposition is not just the rates you set and the flag you fly. It is a combination of many important factors.

Factor 1: The competition
The hospitality marketplace is diverse and subject to change at any moment. As fluid as the marketplace is, it is essential for hoteliers to regularly assess their competition. One way to do this is through a semi-annual SWOT analysis that examines your property’s strengths and weaknesses as well as the opportunities and threats posed by external factors. 

In addition to a qualitative review, challenge yourself to utilize quantifiable metrics and dynamic information during this kind of analysis. Review of the data (such as online travel agency positioning, packaged sales and rate structuring) can give your team a clearer picture of who the competitors are per segment.

Factor 2: Customer expectations
Customers’ expectations vary by segment and by guest. For example, an experienced frequent traveler might look for a loyalty program benefit, standard quality and amenities that they see at other properties of the same brand. Or, a leisure traveler might be seeking a unique location and guestroom options that will give him a great vacation experience.

What experience is the consumer looking for when booking a stay with you? Whatever your hotel’s value proposition, you must address the customer’s expectations—both pre-arrival and onsite.

In your marketing and external selling, be specific and direct. For example, don’t rely on the existence of a coffee maker to sell your rooms. Think instead about how the room description can define the advantages of key features, such as lush gardens or complimentary Wi-Fi.

Once the customer is onsite, the hotel team must continue to fulfill the value proposition for the guest, reinforcing the value and benefits of your property. A hotel culture focused on service, accountability and growth for each associate can lay the groundwork for the best guest experiences.

Since all segments and consumers are not the same, you’ll want to align your marketing and value delivery efforts to the largest percentage of bandwidth to maximize the potential revenue gain. 

SalesMktg Ad Will Appear Here

Factor 3: Your offering
Your offering needs to be carefully crafted to create a call to action for the consumer. To differentiate your property, the offering must be unique—something different than your competitive set has deployed. Creating a unique and distinctive offering from your competitive set will both set your hotel apart and broaden the consumer channel percentage. Gain a keen understanding of what your competitors are promoting and strive to be more innovative. A dime-a-dozen “dinner for two with champagne” package in today’s market will not drive a value proposition or additional bookings.

 

Paul Wood

Depending on your property’s style, market, location and clientele, the basic “Romance Package” may not be the best weekend getaway promotion.  Think creatively to develop weekend packages of one to three nights with different tiers that might include dinner, champagne, spa, tours, wine tastings, etc.

 

Once your offer is in place, determine what channels best present your hotel and enhance your reach: the website, return guests, snail mail post cards or something else. Align your offerings by target audience and channel to increase your penetration.

Measure the results
You can use quantitative data to measure your value proposition. That data might come in different forms, such as profit or bookings specific to a targeted marketing program. Increased online reputation and positioning are as important as guest satisfaction levels. Every property must use reliable data in an effort to establish value propositions and promote definable results.

All hoteliers need to be cognizant of their value propositions. Take a step back from where your hotel has been and focus on your current and future goals. Solicit thoughts from your team and consumers alike regarding what your hotel best offers and what it can better provide.

Want to Learn More?
This topic will be addressed as part of the 10-part 2011 Revenue Management Webinar Series produced by the HSMAI University in partnership with HotelNewsNow and STR, and sponsored by IDeaS. Each month a webinar covers one aspect of cutting edge revenue management in today's economy in conjunction with articles written by members of the HSMAI Revenue Management Advisory Board. If you’re not able to attend a live program, archives are available. Also, some of these and other timely revenue management topics were the focus of the HSMAI Revenue Optimization Conference on June 20, 2011.  Presentation recordings are now available in the ROC 365 Conference Archive.

About the author
Paul Wood, CRME, CHBA, is Vice President of Revenue Management for Greenwood Hospitality Group where he has responsibility for growing profits for Greenwood’s portfolio of hotels via planning and implementing revenue and profit optimization strategies at each hotel. In his role, he directs all revenue management policy and procedure activities, enhances brand standards and practices, and oversees pre-opening and repositioning strategies and implementation of e-commerce programs.  An industry veteran, Paul has more than 17 years of hospitality experience in revenue management and hotel operations. During his career, Paul has overseen a number of major initiatives including development of mixed-use profit optimization programs, oversight of e-commerce/GDS and revenue management disciplines in the hospitality arena.

The opinions expressed in this column do not necessarily reflect the opinions of HotelNewsNow.com or its parent company, Smith Travel Research and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

About the HSMAI Revenue Management Advisory Board
The Revenue Management Advisory Board leverages insights, emerging trends, and industry innovations to guide the development of products and programs that optimize revenue for hotels.
www.revmanagement.org

Members include:
•    Chris K. Anderson, Ph.D., Professor, Cornell University
•    Christopher Crenshaw, CRME, Vice President, Marketing Intelligence, Loews Hotels
•    Kathleen Cullen, CRME, Corporate Director of Revenue Strategies, Heritage Hotels and Resorts
•    Sloan Dean, CRME, Vice President of Sales & Marketing, Interstate Hotels & Resorts
•    Jon Eliot, CRME, CHA
•    Tammy Farley, Principal, The Rainmaker Group
•    Fred Heintz, CRME, Director of Group Strategy, Marriott & Renaissance Hotels of New York City
•    Jay Hubbs, Director Hotel Supplier Relations, Expedia Partner Services Group / Hotwire
•    Burl Hutchison, CRME, Manager of Revenue Optimization, Sabre Hospitality Solutions
•    Warren T. Jahn, Jr., Ph.D., Manager, Revenue Systems Training AMER, IHG
•    Klaus Kohlmayr, Senior Director, Consulting, IDeaS Revenue Optimization
•    Orly Ripmaster, CRME, Senior Analyst, STR Analytics
•    Scott Roby, CRME, Vice President, Revenue Management, Evolution Hospitality
•    Chinmai Sharma, Vice President, Revenue Management, Wyndham Hotel Group
•    Susan Spencer, Market Director - N. America, ChannelRUSH
•    Trevor Stuart-Hill, CRME, President, Revenue Matters
•    Rob Sudakow, Director of Revenue, Destination Hotels and Resorts
•    Paul Wood, CRME, CHBA, Vice President of Revenue Management, Greenwood Hospitality Group 

COMMENTS   Show All
Unique Value Proposition
8/29/2012 6:33:00 AM
A really usefull post - Thank you very much I wish you will not mind me writting about this post on my website I will also leave a linkback Thanks
Germain
9/27/2011 6:13:00 PM
Dear Paul, Great article, enjoyed and wanted to let you know I appreciate your efforts to promote sound best practices. Warm regards GG
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