I was in a meeting yesterday discussing about one of our hotels. The team told me that this hotel which is situated in a CBD area has a corporate business as a main target market. However, the hotel performance has not be good. And, I was explained that one of the reasons is because the corporate business in this area has dropped significantly in the past few years. It could be the case, or not.
This hotel was built and branded under an art theme. Originally, its rates were set higher than other hotels in the area because of its artistic differentiation. It didn’t work well so the rates had declined and the team took whatever markets they could find. The hotel lost its positioning.
Corporate marketing could be important. However, would they pay extra to stay at this hotel to have an artistic experience? I don’t think so. The problem is when the product positioning and the target market do not match, you struggle. The team need to figure out first on how to fix this mismatch. If not, they will struggle forever.
Have you ever ask yourself this very question? Why would people buy from you, not from your competitors, or from the shops next door? I find this question very useful. This is because it’s sometimes difficult to find a good answer.
In my industry, the question I often ask is ‘why would guests choose to stay at our hotel, not the hotel next door?’. We have a hotel in a place called “Gold Coast” in Australia. There are more than 1,000 hotels in this tourist city. In the city’s tourist spot, there are more than 100 similar hotels to ours. Hence, the question I ask – why?
The response I got is frustrating. We don’t have a good answer. Could it be our service? Or, could it be our room standard quality? Our beds? Kitchen? All of the above, or none of the above? As far as I can see, the hotels next door offer the exact same things that we do. That’s why all of us go to the price war. We offer discounts. We focus more on the revenue management function.
Some changes in the way we think need to happen. We have to find the right answer. Some woks are in progress. We started by giving a unique positioning to each hotel. We will separate them all with different positioning.
Wish me luck.