Key Success Factors of Hotel Industry

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 utilizes key factors like:

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 décor 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 décor.

Location
The hotel industry has traditionally focused on location as the most important critical
success factor. Despite the changes in the industry, location is still important. A hotel
located on a little-used highway is not likely to do very well, even if it offers superior service
and amenities. However, although location remains highly important, other factors matter.
Travelers used to take it for granted that hotel service would vary significantly depending on
location, but this is no longer the case.
Global Outlook
Even small, locally owned hotels need to be able to compete on an international basis to be
successful. Tourists deciding where to take their next vacation can choose from destinations
all over the world and can easily research the quality of local hotels when making their
selection. If a hotel tries to compete solely on price and location while a nearby competitor
also emphasizes creating a quality experience for the customer, then visitors will go to the
latter. Hotel owners need to be aware of what hotels all over the world are doing to attract
new customers and earn their loyalty.
Flexibility
Flexibility is a key factor in quality management as well as being a critical success factor for
the hotel industry. Customers can have completely different expectations of a hotel, so
managers need to be given the authority to make decisions to accommodate them when
possible. A manager hampered by an inflexible set of policies may be unable to fix a
customer problem and earn that customer's loyalty and good word of mouth in the future.
A manager with the authority to make exceptions when appropriate is in a much better
position to turn a situation around and earn a good reputation for customer service and
high quality.