To compete in a crowded world, a hotel brand needs to stand out. But beyond that, what are the qualities that consistently breed success? In this guest post, PACE Dimensions Managing Director Tim Davis examines the key factors for differentiation in today’s hotel market.
Success doesn’t depend on just checking off these boxes, but on identifying the areas where you can best compete and focusing your efforts there. With that in mind, here are the seven areas where hotels can set themselves apart from the crowd.
1. Brand preference and power
There are a huge number of brands and suppliers out there and customers have ready access through search engines and comparison sites. Digital markets have increased the level of competition by lowering the barrier to entry and increasing the availability of suppliers. For any brand to be effective, they must invest in generating brand awareness in order to be liked and recognized by consumers.
For hotels, brand awareness is influenced by:
Footprint (the number and location of hotels)
Quality of product
Value for consumers
Preference (the extent to which consumers like your brand)
Recognition (whether customers know what you stand for)
2. Customer engagement and loyalty
This depends largely on how well you understand your best customers: who they are, how they behave, their attitudes and needs. Responding to customer needs ensures you remain relevant and improves the quality of your customer relationships, ultimately driving engagement and loyalty.
The best loyalty programmes either target and respond to a specific niche (e.g. Four Seasons), or offer a breadth of choice and availability enabling frequency-driven loyalty (e.g. Hilton, Marriott).
3. Customer segment and market focus
Both brand power and loyalty programmes tend to play to the strengths of large-scale hotel companies, but it is possible to do equally well where you are highly focused on particular customer segments or markets. Identifying and tailoring to a specific niche enables greater returns on investment, as all efforts serve to focus on pleasing a particular customer segment. With digital marketing there are opportunities to be highly focused in your approach, using precise targeting to spend efficiently.
4. Market penetration
At Uluru in Australia, one hotel company owns a large percentage of the total rooms available - thus securing market penetration for that destination. Having good coverage of one particular area is one means to succeed. By appearing more frequently in one – or more – particular location you increase visibility, and with it, the chance of customer recognition. Rotana Hotels in the UAE is a good example of this strategy in action: the hotel company has 33 properties in the region.
5. Hotel segment coverage and scale
This is the opposite of a segment and market focus, going for mass coverage and reach across multiple locations and customer segments. Marriott, Hilton, IHG and Accor are all good examples. Scale provides large amounts of choice, along with the consistency of a brand recognised in multiple destinations. It also provides the size of investment to secure greater reach and reap returns on marketing investment.
6. Availability of marketing and distribution channels
Competition between distribution channels gives brands and suppliers more options for reaching potential customers. Where a few key players tightly control distribution, this limits the number of competing channels available. This occurs where fewer players have a lot of market power (e.g. Booking.com, Hotels.com, Expedia), or where one company owns several dominating brands (e.g. Marriott, Hilton).
The good news with digital marketing is that the counter-strategy to improve the number of channels available is based on the company’s ability to be more focused and more segmented in approach. If a company has a great deal of customer insight into the segments they reach and serve (e.g. which customers, which characteristics, where and when), they will have more options for distribution with a niche focus. Niche customer insight means knowing which publications, brands, websites and influencers your ideal consumers follow, opening new routes to reach and engage.
Without specific customer intelligence, companies have no other choice than to go to the big hotel supermarkets. Ideally, you have both a broad number of ways to reach your customers along with good customer intelligence about how to engage with them.
7. Management culture
One challenge in the hotel industry is that many companies are organised into silos that don’t work collaboratively around a common set of objectives. For example, sales departments driving volume and revenue through distribution channels and marketing teams driving direct demand through brand websites can be perceived as being in competition. If the objectives are not aligned, efforts could work against each other. This scenario often occurs because of different expertise in each function and a lack of shared understanding.
Often there are functional measures and objectives within each silo and no management oversight to align these. Successful management culture is about galvanising the expertise of different functions around shared measures and objectives for greater collective results.
The responsibility of a digital marketing leader these days is not just to optimize the results they get for the activities they undertake, but also to promote understanding across the company of the factors that impact the performance of digital marketing. Understanding the factors influencing a clear and differentiated brand is the first step to success in today’s crowded travel and hospitality market.
Download PACE Dimensions’ free report for travel and hospitality professionals: Strategies to successfully compete.