Everyone talked about "The new normal," but the pandemic has only shaken the hotel industry, and now everything is back to pre-pandemic thinking. Not much has changed. Hotels need to solve the same problems as before the pandemic. New problems, such as finding staff members and managing inflation, make any other changes even more difficult. In addition, hotels are busy taking care of guests to make some money to cover all the losses incurred during the pandemic. There is even less time to take a forward-looking perspective and adapt to changing consumer needs and behaviors to prevent future problems. The starting point should be to revisit the guest experience.
Understand changing consumer needs
To create a remarkable guest experience, a hotel needs to understand more than the generic guest needs. Overnight accommodation is necessary since the reason to travel to the destination requires presence for multiple days. Hotels provide generic hotel room that fits anyone. Most hotels do not know or care why the guest is coming to the destination. At least they never ask, and they never store the travel reason in their guest databases. In a high-demand market, all hotels are successful since there are more guests than available hotel rooms. Anyone can succeed with a hotel in high demand. The trick is to be more successful when demand is lower than the competition. The most straightforward strategy is differentiation, in other words, to stand out from the competition in the eyes of one or several distinct target groups.
Differentiation means that the difference in the offering should be meaningful to the target group. Meaningless products and services for the target group will not impact revenue but drive costs and decrease revenue. It is easy to identify a meaningless product or service. Just look at the revenue and how the revenue has developed over time. The change in revenue is a clear sign of changing guest behavior, but when the hotel discovers the revenue loss, it is too late, and worst case, the guest has moved to another hotel with a better understanding of guest needs. By researching and following trends, hotels can take action due to changing guest behavior before it is too late.
Hotels that do not understand guest needs will have difficulty becoming successful. As a result, these hotels will be the last ones booked or attracting guests with low rates.
Creating a remarkable guest experience
All hotels deliver a guest experience. Most of them have a generic hotel experience. The guests book, check in, stay, pay, and check out as a guest. All guests receive the same standardized experience based on what they have booked at a similar rate. The generic guest experience does not encourage the guest to spend more than necessary.
Hotels that want to increase their revenue must focus on a few specific target groups where the hotel has an advantage or a meaningful differentiation compared to the competition. If the hotel can better satisfy the individual guest's needs, the guest will choose to stay at this hotel. Many guests happily pay a premium since the hotel meets their needs better than the competition. These guests are also willing to spend more on other products and services since these also focus on the selected target group's needs. By being meaningfully different, the hotel can capture a higher share of the guest's wallet, increase revenue, and create happier guests. In addition, of course, these guests will write positive reviews and recommend the hotel to a friend or a colleague.
Selling the guest experience
Selling a generic product or service is always about price. The lowest price wins the business. However, products and services with distinctive features meaningful to the buyer will attract buyers without discounting the price.
Hotels with generic products and services should hire a revenue manager that can monitor demand, on-the-books, and pick-up and adjust the rate to capture more guests than the competition. This method is called the "heads in beds" approach. As a result, the lack of differentiation means that the hotel revenue will be volatile and depend and demand fluctuations.
Hotels with unique products and services meaningful to the target audience should hire a salesperson who can find the right guests who appreciate the uniqueness, willingly pay a premium and spend more on additional products and services. This method is the "high value and maximizing guest spend" approach. As a result, the hotel revenue will be less volatile and continue to attract its targeted guests during general demand fluctuations.