Business models hospitality industry
Hotel Revolution and the Hospitality Industry's Business Model Evolution: Steam, Diesel or revPAR?
Hospitality is one of the world's largest and oldest industries, with lodging as the most prominent segment. The product, i.e., the service delivered by hotels, motels and resorts, is very easily defined: shelter, a clean room and bed and perhaps a meal. This core concept and basic market demands haven't really changed since the medieval days of roadside inns, and it is this age-old simplicity which has been the hotel industry's greatest asset.
Paradoxically, it is also its greatest barrier to innovation and especially when it comes to pricing, sales and marketing. For years, hotels have employed traditional methods in these operational categories, even as the marketplace changed around them. Historical pricing, excessive reliance on competitive set analysis, 'push' marketing tactics and a reluctance to embrace new media, are all part of the outdated business model still being clung to by many hoteliers across the globe. However, if anything positive has come out of the current state of the economy, it has been to show the lodging industry how ineffective these strategies are compared to newer, more forward-thinking, efficient models being used by leading properties worldwide.
For the rest of us, there is more good news - these initiatives are available and ready for your hotel to implement - all that's needed is a willingness print("code sample")to look beyond the tried and easy methods and to embrace the newest tools available. Are you ready?
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As you'd expect, these tools are found primarily online. It's been said that the prevailing business models for the hotel and hospitality industry have been evolving over the last decade ONLY because of the rise in internet bookings. So just how important is the online channel?
In 2008, about 44% of the hotel market was online - a substantial jump from 21% in 2002. Experts predict that by 2012, 57% of the hotel market will be online, representing a $65 billion online hotel market. Clearly, such rapid growth over such a short period demands a different way of doing business - and progressive revenue management firms are there to help you.
Most hotels have a web strategy though they generally don't go far enough. They make their inventory available to online travel agencies (Expedia, Orbitz, Hotels.com, etc.) and integrate their reservations systems with their own web portal (the hotel website). Some may even go as far has having an online marketing strategy or developing email databases of repeat guests.