MARKETING THE INDUSTRY SEGMENTS

1. MARKETING THE INDUSTRY SEGMENTS 4.02 Explain the lodging industry.

2. Lodging: A place to sleep for one or more nights • Front of the house: Any area of the lodging property which may be used by the guest such as restaurants, meeting rooms, and workout facilities • Back of the house: Departments/areas not usually seen by the guest such as human resources and accounting

3. Lodging properties are classified by… • Price • Level of service • Type of guest • Amenities • Location*

4. Lodging properties • Resort hotels • Airport hotels • Convention hotels • Extended stay hotels • Motels • Casino hotels • Luxury hotels • Vacation ownership/timeshare • All-suite hotels • Bed and Breakfast

5. Lodging properties • Commercial or Transient • Boutique hotels • Economy hotels

6. Resort hotels • Located in areas known for desirable weather, scenery, recreational activities • May be located near natural attractions • Many add recreational facilities • Some are only open during high season • Many offer package deals • A remote location is often part of the attraction • Originally catered to leisure travelers, but have expanded to include conferences/meetings • Average length of stay 4-7 days

7. Resort hotels (cont.) • Guests are “captured clients”; resort provides full complement of services • Staff has more direct contact with guests, thus must be well-trained staff • Promote repeat business and detailed knowledge of a guest’s preferences

8. Airport hotels • Room service and restaurant hours may be extended to accommodate travelers’ schedules • Convenience is major factor • Properties offer free shuttles to and from airport • Located in and around airports • Provide convenient lodging for guests with early flights or for those between connections • Most guests are business travelers; some leisure travelers (70:30 ratio)

9. Airport hotels • “Distressed” rooms are for passengers who are sent to a hotel for the night because their flight cannot get off the ground. • Busiest time of week is Monday-Friday • More availability on weekends; packages may be offered to attract guests during this time • Crew rooms are contracted to airlines for their pilots, flight attendants, etc.; airlines pay for rooms whether they are used or not.

10. Convention hotels • Public areas large enough to accommodate crowds • Attendees usually dine at the hotel • Facilities designed to meet needs of groups holding meetings, trade shows, or large conferences • Attendees can come from a single state or from around the world • Large number of guest rooms, multiple meeting rooms, and banquet facilities

11. Convention hotels • Services offered include: • Airport shuttle • Room service • Business center • In-house laundry

12. Extended stay hotels • Full kitchen facilities • Designed for guests staying for a long period of time • Guests may be business people staying in a city for an extended period of time or families or individuals who are relocating • Reduced rates offered based on length of stay • May provide stores, business centers, and recreational facilities

13. Motels • Often several are grouped together off a highway exit • Parking located close to room • Entrance to room is from outside • Décor is casual • Rooms small but adequate • Facilities may be limited to pool and vending machines • Location convenient for highway traffic • Ratio of employees to guests is low

14. Casino hotels • Adult and family entertainment provided • Trying to expand market segments to include families and conventions • Gaming areas for adults only • Programmed activities provided for children • Rooms have work space for conference attendees

15. Luxury hotels • Services include: • Concierge, valet, bellhops • Food & beverage outlets • Laundry service • Beauty salons • Health spas • Secretarial services • Ballroom • Charges highest prices • Guests expect a high level of service • Appeal to business and leisure guests

16. Vacation ownership/timeshare • Guests buy a unit for a set period of time each year • Time period usually broken down in terms of weeks • Vacationers contract at a certain rate for their property so they don’t worry about fluctuating prices • Accommodations are high quality • Owners may be able to swap vacation destinations with other timeshare owners so they can visit different destinations

17. All-suite hotels • Public areas are minimal to provide extra suite space • Suites approximately 1½-2 times size of average hotel room • More space than typical hotel room • Additional space is lounge/living area and kitchen • More space at a lower cost than the high price of a suite in a full-service hotel

18. Bed and Breakfast • Prices and dwellings vary and reflect the distinctiveness of the region • “Homey” • Friendly atmosphere • Guests primarily leisure travelers • Rate usually includes lodging and breakfast • Alternative to traditional lodging facilities • Private homes offering a limited number of guest rooms • Owner lives in the home and is host/hostess to guests • Owner often only employee

19. Commercial or Transient • Average stay 2-3 nights • Business guests during the week and leisure guests on the weekends • Examples: Marriott, Sheraton, Doubletree

20. Boutique hotels • Appeal to both leisure and business travelers • Properties of 150-200 rooms • Usually located in major metropolitan areas • Highly personalized and high on technology

21. Economy hotels • No meeting space or restaurant • May serve a continental breakfast • Usually very limited service • Appeal to travelers with budget constraints

22. Amenities: Gratis features that enhance a guest’s comfort or convenience; the higher the level of service, the more amenities that a guest expects. • Double sinks • Bathrobes • Coffee pots • Whirlpool tubs • Data ports • Iron/Board • Pools • Microwaves • Shampoo/conditioner • Lotion • Wifi • Mini-Bar

23. Factors that affect lodging rates • Perishability of rooms • Peak prices vs. off-peak prices

24. Perishability of rooms • Rooms are perishable products. • When rooms are not occupied on a particular night, there is no opportunity to make up for lost revenue. • After considering competition, costs, and profit goals, properties may offer special rates/packages to offset the chance of empty rooms.

25. Peak prices vs. off-peak prices • Demand for rooms affects prices. • During peak periods, guests are willing to pay more for rooms. • During off-peak periods, guests expect to pay less. • The process of varying rates to maximize profit is “yield management.”

26. Guest rates • Rack rates • Corporate rates • Group rates • Government rates • Senior citizen rates

27. Rack rates • Standard rates quoted to walk-in guests and general inquiries • Usually the highest rates charged for a specific room

28. Corporate rates • Rates given to business people that frequently stay at the property • Usually 10-15% lower than rack rates

29. Group rates • Available to large groups that book a minimum number of rooms • Group bookings are efficient for the hotel, and group sales tend to encourage repeat business

30. Government rates • Offered to state or federal government employees • Based on the current daily allowance known as a “per diem” • Encourage repeat business with those qualified guests

31. Senior citizen rates • Discount rates are designed to match seniors’ limited income. • Senior citizens represent a sizeable market of travelers. • AARP: A nonprofit membership organization dedicated to focusing on the needs and interests of persons 50 years of age and older; many lodging properties offer special discounts to members.

32. Trends in the lodging industry • Senior market will continue to grow. • Security is an important issue. • Families are traveling together, creating a demand for a variety of amenities for different ages. • More travelers are using internet to make reservations. • Travelers are taking shorter trips more frequently, rather than extended trips, due to demands of work. • Business people expect rooms to be equipped for technology. • More women are traveling for business.

33. Marketing strategies in the lodging industry • Advertising • Personal selling • Sales promotion • Public relations/publicity

34. Advertising in the lodging industry • Specific advertising media can enhance the image and trustworthiness of a business. • Many national companies utilize television advertising to reach large audiences. • Properties are able to target specific groups through publications.

35. Personal selling in the lodging industry • Takes place on many levels (front desk, restaurants, housekeeping) • Personal contact provides immediate feedback and gives customers satisfaction from being able to talk directly to someone. • Knowledgeable sales people have the opportunity to build profitable relationships by greeting returning guests in a personal manner and by remembering guests’ specific preferences.

36. Sales promotion in the lodging industry • Coupons • Contests • Premiums • Added extras • Frequent-guest award programs

37. Frequent-guest award programs: A technique that awards free accommodations, upgrades, and other prizes to guests after they spend certain numbers of room nights with the lodging chain. This promotes a long-term relationship with the guest. • Membership is usually free. • Guests receive priority check-in. • Points may be applied to other travel and tourism services; these partnerships enhance the benefits of membership.

38. Public relations/publicity • Requires planning and coordination in order to be effective • Examples: announcing openings of new properties; Marriott receiving the top hotel chain ranking in Business Week’s survey in 2003; “Conserving for Tomorrow” initiative at Holiday Inn