Marketing in tourism
Task 1 - Research Planning for Decision Making
Task 2 – Questionnaire Design and Fieldforce Instructions
Task 3 - Information for Marketing Decisions
Growth in tourism globally has forced some standardization in the facilities made available to guests at the establishments. This ensures that guests can have a good feel of what to expect. An increase in business travel too has come about as businesses have gone global. A substantial amount of traffic is generated through these business travelers and the growth in this segment is directly linked to the growth in international business at the hotel location.
Global hotels and motels, not including casino hotels, generated a volume of business at the level of $ 488.6 billion in 2006. Revenue contribution of other accommodation providers who provided accommodation and food services are included in the estimate. This was a rise of 6.4% over the revenue of the earlier year. By the year 2011, the hotel and motel revenue is expected to rise by 31.2% to reach $640.9 billion. The biggest contributor is Europe, contributing 41.8 % by value. Hotels & motels industry generated revenues of $ 90 billion or 18.4 %.
Marketing researchers need a broad understanding of marketing in order to communicate and work effectively with marketing professionals. The main research objectives in marketing are to suggest that unstructured and informal research designs are likely to be used when attempting to arrive at a more clear description of an apparent problem; to indicate that exploratory research designs are typically used when researchers are trying to identify a potential marketing opportunity.
The hospitality industry is about providing hospitality to travelers. The hospitality typically includes accommodation, food, beverages and other recreational facilities.
The hotel should concentrate and keep up the good work even if the business is already strong. Each relevant factor needs to be rated according to its importance- high, medium, or low for the business as a whole. This Hotel Industry utilizes the latest marketing principles and information technology updates to get a respectable position in the world market. In the face the worldwide economic recession, the guests have become more sensitive to price which calls for effective formulation of the pricing strategy.
Task 1 - Research Planning for Decision Making
A hotel is an establishment which provides paid lodging usually for a short time. These establishments often provide additional services such as a restaurant, swimming pool, health club and even child care. Conference and meeting rooms are also provided by some for conventions and meetings for groups.
The Grande Bretagne Hotel is a 273-room hotel (Standard – 233, Executive – 30, Suites - 10). It is located on the corner of Marloes Road and Cromwell Road in West London. The hotel opened in March 2007. It is of a four star standard with rooms of approximately 29 square meters.
Each room has minibar, remote control TV with choice of satellite channels, radio, in-house movies and extension speaker in bathroom, direct dial telephone with connection points by both bed and writing desk. Individually controlled air conditioning and heating, well lit adequately sized desk area, hairdryer and dual voltage shaver outlet, toiletries in bathroom, trouser press, hospitality tray.
The executive rooms and suites additionally include a generally higher quality of furnishings and fittings selection of magazines bathrobes and a higher standard of toiletries, telephone in the bathroom.
It is part of a French national hotel group that has 45 hotels in France and last year started expanding into Europe, four hotels have already been opened in Paris, Berlin, Madrid and London and the company is actively seeking sites in other major European capitals.
The Grande Bretagne Hotel's mission is to provide quality hospitality services to its guests in a comprehensive and cost competitive manner.
«The hotel should concentrate and keep up the good work even if the business is already strong» (Hotel Front Office Management by James A. Bardi March 2006, Hardcover, 4th edition). Each relevant factor needs to be rated according to its importance- high, medium, or low for the business as a whole. The Grande Bretagne Hotel Industry utilizes the latest marketing principles and information technology updates to get a respectable position in the world market.
Every business with the global prospects in the multi dimensional, volatile atmosphere has to introspect its strategies taking into consideration the strengths, weaknesses, opportunities and threats. The hotel industry also tags along the line and has to undertake smart and innovative moves to woo its clientele who expect best possible service at competitive rates.
Though the sales and market conditions are changing rapidly, the marketing principles are not changing. Hotel owners and managements tend to be more inclined towards marketing and sales rather than cost control, constantly seeking to maximize room sales - double- bed occupancies. All this may fail and such a scenario may result in profit problem on cyclic basis, which may sometimes lead the hotel into liquidation or forced sale.
The required first step in SWOT analysis is the definition of the desired end state or objective. The definition of objective must be explicit and approved by all participants in the process. This first step must be performed carefully because failure to identify correctly the end state aimed for leads to wasted resources and possibly failure of the enterprise.
Strengths are attributes of the organization that are helpful to the achievement of the objective. Weaknesses are attributes of the organization that are harmful to the achievement of the objective. Opportunities are external conditions that are helpful to the achievement of the objective. Threats are external conditions that are harmful to the achievement of the objective.
The aim of any SWOT analysis should be to isolate the key «issues» that will be important to the future of the hotel; and that subsequent marketing planning will address.
Following diagram indicates the Strengths and Weakness Analysis of the Grande Bretagne Hotel.
- England's rich cultural heritage
- International hotel chain
- All rooms have suite facilities
- Demand far exceeds Supply
- Global economical turn-up
- New business opportunities
- Capital intensive
- Lack of adequate Man power
- Regional imbalance of hotels
- Long gestation period
- Poor infrastructure and cleanliness
- Huge labor turnover
- Less corporate ownership
- Boom in tourism
- Privatization of airlines
- Increase in disposable incomes
- Boost in tax concessions
- Sensitive to disturbances in the country
- Competition from other European countries
- High service and luxury taxes may render England as an unviable destination.
- Lack of trained entrepreneurs
SWOT analysis allows author to formulate the main objectives of the Grande Bretagne Hotel:
- Increase sales volume.
- Increase revenue.
- Achieve or increase profits.
- Increase or maintain market share.
- Eliminate competition.
Factors influencing price-determination:
- Production and distribution costs.
- Substitute goods available.
- Reaction of distributors.
- Reaction of consumers.
Profitability is driven by efficient operations mainly, as many costs are fixed in nature. Several recent changes in the industry causing profitability pressures. Growth in internet reservation channels has helped improve the industry occupancy rate of hotels. However, it has caused a cost pressure too. Increased sales through these intermediaries has allowed them to charge higher amounts of commissions and degraded the ability of the players to control pricing or the presentation of their products. Indirect competition through alternative forms of holiday accommodation, are increasing. Holiday homes, timeshare accommodation and such other shared accommodation schemes are biting into the shares of the mainstream hotel and motel industry.
The outlook for the hospitality market in England is optimistic and will continue to remain so, in my opinion. The economy’s buoyancy, initiatives to improve infrastructure, growth in the aviation and real estate sectors and easing of restrictions on foreign direct investment will fuel demand for hotels across star categories in the majority of markets. Several international chains have been established or enhanced their presence here. England is one of the world’s fastest growing tourism markets.
Positive forces include the generally prosperous economy that is currently in place, full employment, rising wages, and low inflation, leading more people to be able and willing to spend money and to get away for some time. The Grande Bretagne Hotel offers an affordable alternative to a flyaway destination. There are conference, banqueting and leisure facilities.
The Grande Bretagne Hotel has:
- The brasserie/coffee shop seating 120 people and open for all day dining and an a la carte restaurant seating 70 people opens every day for lunch and dinner only; a 50 seat bar adjoining the a la carte restaurant open in the evenings and providing light entertainment (piano music).
- A lobby/lounge bar seating 120 people open from 1.00 a.m. until midnight, seven days a week, suitable for informal business meetings and rendezvous.
- A ballroom - 400 square metres allowing for 260 people classroom style. Eight syndicate rooms between 30 and 50 square metres.
-A small swimming pool, sauna and steam rooms.
-A gym with a selection of exercise equipment and a small room for aerobics, yoga lessons.
- A business centre.
These surroundings will attract and retain guests who appreciate such refined environments.
As faced by all businesses, the proper insurance needs shall be met and all operations and policy manuals shall be reviewed by appropriate legal experts. The facility will obtain all the necessary building permits prior to construction. Present facility zoning allows for this proposed use, including bars, restaurant, and business centre.
The Grande Bretagne Hotel utilizes the existing software packages available in the hotel industry, including: room and facility management database, controlled bar and inventory measuring systems, and room key cards that allow patrons to charge directly to their room account, this technology shall assist management in controlling costs, reducing cash management, and maximizing revenue.
«Networking within business and civic groups is important; even if the business results are not immediately felt, it is an excellent public relations opportunity» (www.hotelinteractive.com). Live piano, or jazz style trio, on the weekends will add excitement to the hotel and draw community residents and guests from other properties.
Smoking Ban may have an affect on businesses in the future. The implications of an overall ban would have on the industry would be more so in the pub sector, hotels having a more family orientated and diverse market segment could relish the smoke free environments.
Buyer behavior is focused upon the needs of individuals, groups and organizations. To understand consumer buyer behavior is to understand how the person interacts with the marketing mix. As described by Cohen (1991), the marketing mix inputs (or the four P's of price, place, promotion, and product) are adapted and focused upon the consumer.
The psychology of each individual considers the product or service on offer in relation to their own culture, attitude, previous learning, and personal perception. The consumer then decides whether or not to purchase, where to purchase, the brand that he or she prefers, and other choices.
People today are looking for prevention rather than just cure. In 1994, 32% of New Zealanders took some form of supplement and in the latest study in 1997 this figure has increased to 74%. Each different product market consists of buyers, and buyers are all different in one way or another. They may differ in their wants, resources, locations, buying attitudes and buying practices. Because buyers have unique needs and wants, each buyer is potentially a separate market.
Consumer involvement is the perceived personal importance and interest consumers attach to the acquisition, consumption, and disposition of a good, service, or an idea. As their involvement increases, consumers have a greater motivation to attend to, comprehend, and elaborate on information pertaining to the purchase. (Mowen & Minor, 1998, p.64). In the case of low involvement, consumer views a purchase as unimportant and regards the outcome of his or her decision as inconsequential. Because the purchase carries a minimal degree of personal relevance or identification, the individual feels there is little or nothing to be gained from attending to the details of a purchase. (Hanna & Wozniak, 2001, p.290). High involvement purchases are those that are important to the consumer either from a financial, social, or psychological point of views. The purchase is characterized by personal relevance and identification with the outcome. (Hanna & Wozniak, 2001, p.291). An individual anticipates a potentially significant gain from expending time and effort in comparison-shopping before buying. For example, a girl purchasing an expensive ball dress has a high degree of personal identification. Therefore, a high level of felt involvement can increase an individual’s willingness to search for, process, and transmit information about a purchase.
The most important factors influencing a consumer’s involvement level are their perceived risks. The purchase of any product involves a certain amount of risk, which may include:
- Product Failure – risk that the product will not perform as expected.
- Financial – risk that the outcome will harm the consumer financially.
- Operational – risk that consists of alternative means of performing the operation or meeting the need.
- Social – risk friends or acquaintances will deride the purchase.
- Psychological – risk that the product will lower the consumer’s self-image.
- Personal – risk that the product will physically harm the buyer.
In a high degree of perceived risk, decisions in this case may require significant financial commitments, involve social or psychological implications. In the case of low degree of perceived risk, decisions in this case may require small or no financial commitments that involve social or psychological implications. Consumers may already established criteria for evaluating products, services, or brands within the choice category.
In high involvement situations consumers are usually more aroused and more attentive, which expands their short-term memory capacity to its maximal extent. In low involvement conditions, the arousal level is apt to be low, so consumers focus relatively little memory capacity on the stimulus. (Mowen & Minor, 1998, p.101). As involvement levels increases, consumers may allocate more capacity to a stimulus.
Evaluative criteria are the various features a consumer looks for in response to a particular problem. The number of evaluative criteria used by consumers depends on the product, the consumer and the situation. ((Neal, Quester & Hawkins, 2000, p.5.3-5.4 & p.5.22) Formal Clothing In the process of evaluation, a student will evaluate the characteristics of various formal clothing and choose the one that is most likely to fulfil her or her needs. The evaluative criteria of the students include tangible cost, social and psychological measures. The importance of particular evaluative criteria differs from consumer to consumer. The decision to purchase formal clothing is base on the following evaluative criteria:
The evaluative criteria regarding the purchase of formal clothing are complex due to the level of perceived risk involved with such a high involvement purchase. Typically, high involvement planned purchases (such as formal clothing) follow the more complex compensatory decision rules. A compensatory model involves students evaluating each formal wear they view across all need criteria. In this instance, one formal wear may compensate for weaknesses in one criterion.
However, often consumers will go through different stages of rules, that is, they will utilize a range of rules when evaluating alternatives with different attributes being evaluated by different rules at each stage. There are certain criteria regarding the purchase of formal clothing that the students is not willing to accept at a minimum level. Style and price are two attributes that was found from the interviews. Students are not prepared to lower their expectations; therefore the compensatory model does not always apply in this situation. These two criteria are more non-compensatory rules. Initially a disjunctive approach was adopted by respondents, where they would evaluate all formal clothing that meet their requirements concerning style. Then they would move onto an elimination-by-aspects approach. This involved them choosing formal clothing that rated highest on their next most important criteria (price), and then continuing through the other attributes (brand, quality) until only one formal wear remained. In summary, the formal clothing purchase decision involves both compensatory and non-compensatory models depending on the stages of the evaluation.
There are any numbers of factors that affect a consumer’s decision making. Travel professionals not only have to appeal to the ego of the consumer with a Hotel’s service that makes them feel important, they must also deal with outside influencers – like friends, family, colleagues, and others. Understanding consumer behavior is one of the top jobs for all marketers. To sell a service, one must understand their consumer and what motivates them.
There are a number of strategies that can be employed to obtain loyalty from consumers. As all business people know, it is cheaper to keep a customer than to get a new one. However, loyalty in today’s competitive environment is hard to come by. By studying psychological factors that play into a consumer’s loyalty and commitment to a hotel and its service, programs to garner that loyalty have a better chance of succeeding. A traveler will earn points or rewards by staying at the Grande Bretagne Hotel. Rewarding repeat travelers with discounts or a points system whereby the traveler can earn points toward extra amenities or prizes like travel books, digital cameras, etc. can be as effective as expensive mailings or other marketing campaigns designed to retain Hotel’s customers.
Advertisers often show how the benefits of their products aid consumers as they perform certain roles. Typically the underlying message of this promotional approach is to suggest that using the advertiser’s product will help raise one’s status in the eyes of others while using a competitor’s product may have a negative effect on status.
Motivation relates to human’s desire to achieve a certain outcome. Many internal factors we have already discussed can affect a customer’s desire to achieve a certain outcome but there are others. For instance, when it comes to making purchase decisions customers’ motivation could be affected by such issues as financial position, time constraints, overall value, and perceived risk.
Motivation is also closely tied to the concept of Involvement, which relates to how much effort the consumer will exert in making a decision. Highly motivated consumers will want to get mentally and physically involved in the purchase process. Not all services have a high percentage of highly involved customers but marketers who market services that may lead to high level of consumer involvement should prepare options that will be attractive to this group. For instance, marketers should make it easy for consumers to learn about hotel’s services (e.g., information on website, free video preview).
The marketing plan accurately describes the market, customers, service and the competition. Marketing plan plays an important role in the hospitality industry. It is essential for the development, growth and sustenance of a business.
For the first few years the Grande Bretagne Hotel will need to be aggressive in attracting new guests. The marketing strategy is subject to change upon guest feedback and surveys.
The hotel currently has the following business mix.
Target Markets - Consumer:
- New visitors traveling to the area;
- Middle- and upper-income bracket;
- Returning visitors to the area;
- Businesses needing to hold small overnight planning and strategy sessions;
- Area wedding parties.
The Grande Bretagne Hotel will aim to attract business guests and their partners needing to hold planning or strategy sessions away from the office in order to even out revenues throughout the week.
The Grande Bretagne Hotel will maintain a front office staff member throughout the night so guests are able to get answers to any question or service when they need it. This flexibility is especially attractive to the business traveler. Clients will be able to contact the Grande Bretagne Hotel by telephone, fax, and e-mail.
By giving careful consideration to customer responsiveness, The Grande Bretagne Hotel’s goal will be to meet and exceed every service expectation of its hotel and lounge services. Its guests can expect quality service and a total quality management (TQM) philosophy throughout all levels of the staff.
Task 2 – Questionnaire Design and Fieldforce Instructions
A valid questionnaire measures what it claims to measure. In reality, many fail to do this. For example, a self completion questionnaire that seeks to measure people's food intake may be invalid because it measures what they say they have eaten, not what they have actually eaten. Similarly, responses on questionnaires that ask general practitioners how they manage particular clinical conditions differ significantly from actual clinical practice. An instrument developed in a different time, country, or cultural context may not be a valid measure in the group you are studying.
Reliable questionnaires yield consistent results from repeated samples and different researchers over time. Differences in results come from differences between participants, not from inconsistencies in how the items are understood or how different observers interpret the responses. A standardized questionnaire is one that is written and administered so all participants are asked the precisely the same questions in an identical format and responses recorded in a uniform manner. Standardizing a measure increases its reliability.
Just because a questionnaire has been piloted on a few of your colleagues, used in previous studies, or published in a peer reviewed journal does not mean it is either valid or reliable. The detailed techniques for achieving validity, reliability, and standardization are beyond the scope of this series. If you plan to develop or modify a questionnaire yourself, you must consult a specialist text on these issues.
There are two main objectives in designing a questionnaire:
To maximize the proportion of subjects answering our questionnaire - that is, the response rate.
To obtain accurate relevant information for our survey.
To maximize our response rate, we have to consider carefully how we administer the questionnaire, establish rapport, explain the purpose of the survey, and remind those who have not responded. The length of the questionnaire should be appropriate. In order to obtain accurate relevant information, we have to give some thought to what questions we ask, how we ask them, the order we ask them in, and the general layout of the questionnaire.
As discussed in last month's issue, there are three potential types of information:
Information we are primarily interested in-that is, dependent variables.
Information which might explain the dependent variables-that is, independent variables.
Other factors related to both dependent and independent factors which may distort the results and have to be adjusted for - that is, confounding variables.
Let us take as an example a national survey to find out students' factors predicting the level of certain knowledge, skills, and attitudes at the end of their undergraduate medical course. The dependent factors include the students' level of relevant knowledge, skills, and attitudes. The independent factors might include students' learning styles, GCSE and A level grades, socioeconomic status, ethnicity, etc. Confounding variables might include the types and quality of teaching in each medical school.
Sometimes, additional questions are used to detect the consistency of the subject's responses. For example, there may be a tendency for some to tick either "agree" or "disagree" to all the questions. Additional contradictory statements may be used to detect such tendencies.
There are several ways of administering questionnaires. They may be self administered or read out by interviewers. Self administered questionnaires may be sent by post, email, or electronically online. Interview administered questionnaires may be by telephone or face to face.
Advantages of self administered questionnaires include:
- Cheap and easy to administer.
- Preserve confidentiality.
- Can be completed at respondent's convenience.
- Can be administered in a standard manner.
Advantages of interview administered questionnaires include:
- Allow participation by illiterate people.
- Allow clarification of ambiguity.
The exact method of administration also depends on who the respondents are. For example, university lecturers may be more appropriately surveyed by email; older people by telephone interviews; train passengers by face to face interviews.
Piloting and evaluation of questionnaires. Given the complexity of designing a questionnaire, it is impossible even for the experts to get it right the first time round. Questionnaires must be pretested - that is, piloted - on a small sample of people characteristic of those in the survey. In a small survey, there might be only pretesting of the drafted questionnaire. In a large survey, there may be three phases of piloting. In the first phase we might ask each respondent in great detail about a limited number of questions: effects of different wordings, what they have in mind when they give a particular answer, how they understand a particular word, etc. In the second phase the whole questionnaire is administered by interviewers. Analysis of the responses and the interviewers' comments are used to improve the questionnaire. Ideally, there should be sufficient variations in responses among respondents; each question should measure different qualities - that is, the responses between any two items should not be very strongly correlated - and the non-response rate should be low. In the third phase the pilot test is polished to improve the question order, filter questions, and layout.
Usually respondents spent an average of 33 minutes answering a variety of questions about their «backgrounds, tastes, and their shopping and media consumption habits».
The Grande Bretagne Hotel most (8,852) came from Britain, followed by the U.S. (3,747), and Norway (3,244). The fewest responses were from Venezuela (197), Portugal (175), and Austria (90). And responses was split pretty equally between genders: 51 % of survey takers were female, 49 % male. Most respondents were in the 13- to 15-year-old age group (60 %), followed by 16- to 18-year-olds (19 %). Only 12 % were 12 and under (which is odd since players are supposed to be at least 13 to play), and 10 % were 19 and older.
Task 3 - Information for Marketing Decisions
Market research consists of two primary categories: primary data and secondary data.
Primary data is made of information obtained through focus groups, surveys, and observation.
Secondary data is provided by another group, such as the Census Bureau, a professional association, or think tank. A problem with using secondary data sources is their information may not relate to your target market or geographic area.
Obtaining primary data yourself is time consuming and can be expensive; but how much money have you or your company wasted on advertising or activities that ended up not generating the business you thought they would?
There is need to have some primary data in customers’ buying patterns. If there is no a system that provides you with mechanisms to breakdown data into various groups, then there is need to begin investigating how to acquire one.
As the hotel began to study expenses, it discovered that managers were over-scheduling employees on the weekends and even paying overtime to deal with the expected increase in customers that marketing was driving in. Naturally most business would come in on the weekend and the facility would staff up on Friday afternoons and evenings. When check-in data was examined, management discovered that most visitors were checking in on Saturday morning. By making scheduling adjustments and cross-training employees, the hotel was able to use fewer employees to handle the influx of customers. More employees were given time off on Friday nights, raising employee morale which resulted in improved customer service. Soon, expenses were down, revenue was up, and most importantly, profits were up.
None of that would have happened if management didn’t take the time to look at the statistics, analyze the data, and make adjustments.
Surveys can also provide important information a business can use to improve the customer experience, the employee experience, or extend the brand through additional product offerings.
Surveys are labor intensive since they take a bit of time to create, administer, then compile and analyze the data. If spending a couple of thousand dollars can lead to tens of thousands or hundreds of thousands or more in revenue, it’s money well spent. The same can be said if that investment saves you from spending even more money to invest in something that your customers don’t want (and remember: Customers don’t buy what they need. They buy what they want.).
There are lots of ways to conduct a survey. The method used depends on what data you’re trying to obtain and what customer segment or segment of potential customers (or former customers) you’re trying to reach.
For example, if you own a bricks-and-mortar store, you can ask your customers to complete a quick comment or survey card while you package their purchases. Of course, they may not be as entirely honest as they could be since you’re standing in front of them and, assuming you read the card right after they walk away it’s not anonymous (you could have them drop it in a box for an extra level of anonymity).
You could also mail surveys to customers (with a self-addressed, stamped envelope or SASE), try phone surveys (you can just imagine how hard they are to conduct), or email surveys. All of these techniques have pros and cons and we can’t stress enough that the method you pick should be the best method to be used with the population you’re targeting. If your customers are in a certain age group who are not heavy internet users, an internet-based survey administered through email would be a mistake.
Focus groups can be a great source of information but you’ll need to consider how you recruit the participants, what characteristics (demographic and psychographic) should your participants possess or not possess, and what will you give them as an incentive to attend.
Only the rarest of the rare will participate in a focus group just because it sounds like a fun thing to do. Even surveys need some level of incentive to increase participation. Including a SASE is a bare minimum. No one is going to provide the envelope and postage to complete a survey for your business.
The peculiar nature of the hotel business may compel the management to think short term about day-to-day problems or the next-meal periods, as the room day is a perishable item. The room occupancy perishes on the expiry of the day.
Overall, the environment appears very positive for the Grande Bretagne Hotel. The forces driving market demand, mainly economic and geographical, are strong, with more people staying closer to home for shorter getaway trips and their comfort level of visiting London. On the negative side, there is competition, and it will take a while for the Grande Bretagne Hotel to get “established” in its market niche.
1. The International Hotel Industry: Sustainable Management by Timothy L.G. Lockyer, December 2007.
2. Hotel Operations Management by David K. Hayes, Ninemeier, October 2006.
3. Opportunities in Hotel and Motel Management Careers by Shepard Henkin, March 2008.
4. Hotel Front Office Management by James A. Bardi March 2006, Hardcover, 4th edition
5. Hotel Management And Operations by Denney G. Rutherford, Michael J. O'Fallon Ph.D. (Editor), February 2006, Paperback, 4th edition
6. Hotel Operations Management by David K. Hayes, Jack D. Ninemeier January 2006, Hardcover, 2nd edition
7. A Survival Guide for Hotel and Motel Professionals by Alan Gelb, Karen Levine, October 2004, Paperback