Key success factors in the hotel industry

Written by catherine capozzi
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Key success factors in the hotel industry
Hotels achieve success through customer service, advertising and cost control. (Thomas Northcut/Photodisc/Getty Images)

Despite its cutthroat aspects, the hotel industry is filled with success stories. A small niche boutique hotel may gain recognition from a prominent travel guide and be booked for months. Or, a large hotel could gain recognition by partnering with a neighbouring attraction. In today's Internet environment, when consumers can be their own booking agent by evaluating reviews and prices online, the success of a hotel often depends on how it utilises key factors like customer service, advertising, cost control and product differentiation.

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Customer Service

Customer service is an integral part of the hotel experience. Clayton Barrows, author of "Introduction to Management in the Hospitality Industry," explains how the front-desk worker serves as the gatekeeper of the hotel. This employee provides the customer's first and last impression. Thus, hotels achieve a critical success factor by ensuring the staff is knowledgeable, courteous and capable of resolving any conflicts that arise. Providing quality service also entails remembering the names and preferences of repeat visitors and giving advice about attractions and surroundings.

Advertising

Successful hotels target specific consumers and will cater their prices, amenities and advertising strategies to this group. For example, some hotels advertise as an ideal location for business travellers by giving corporate discounts. This type of hotel also promotes itself as a venue for business meetings, displaying its on-site conference rooms in magazines aimed at executives. Robert D. Reid, author of "Hospitality and Marketing Management," advises hotels to veer away from generic descriptions such as "luxurious rooms" and "bargain price." Instead, Reid recommends commenting on the specifics of the decor or customer service. For example, an ad for a hotel in Hawaii may show an image of its best-selling tropical drink.

Cost Control

Managing costs is a critical factor in a hotel's success. Most hotels vary their rates according to high and low seasons. Additionally, the establishment of a loyalty program enables hotels to lower rates for repeat guests while charging different rates for others. One of the ways hotels plan is through reservations programs that forecast demand beyond 90 days. Michael J. O'Fallon, author of "Hotel Management and Operations," explains how computer programs also enable managers to identify the customers most willing to spend money and on which items. From this knowledge, the manager can advertise directly to the person before arrival by offering packages, upgrades and other incentives. Successful hotels also balance the cost of workers' wages, food and beverages, and electricity and maintenance with profits deriving from booked rooms, amenities, gift shops and food and beverages.

Product Differentiation

Hotels thrive by offering guests a unique experience. This uniqueness may stem from the location: A rural hotel in the heart of the Tuscan countryside may offer Italian cooking classes, whereas a boutique hotel in Morocco might offer a hookah lounge. Other times, the differentiation is within the hotel itself. Hotels in Las Vegas, for instance, thrive by providing specific services that cater to the theme of the hotel, such as a Camelot theme or a Grecian decor

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