The hotel industry is under threat of commoditization. The industry is going through an interesting, and, I would say, dangerous, phase.
Today’s travelers demand and seek out unique experiences. It is why the boutique hotel segment is the fastest growing segment in the industry and, in part, why IHG just bought Kimpton for US$430 million. Based on a number of factors, marketing and hotels unfortunately are being turned into commodities by new and old players masking technology as marketing. It feels as if we are all on a race to the bottom, rather than trying to rise to the top.
Big and well-funded technology companies, like Google and Amazon, are entering our industry and turning hotel rooms into commodities where price is the main feature. New and well-funded technology companies also are joining the fray, which provide template-based websites to hotels that are sold over and over to independent hotels, robbing them of their unique attributes. CRS providers originally gobbled up boutique digital marketing agencies and small agencies grew quickly into giants and now are designing cheap marketing services built to serve their thousands of hotels through one-size-fits-all approaches.
So where does this leave the independent, boutique hotelier whose owner spent millions of dollars to design a unique and one-of-a-kind experience to stand out from the crowd of competitors? Arguably, looking just like their competitor they tried so hard to differentiate from and ultimately competing on price.
Effective marketing is built around differentiation and smart people trying to outsmart smart people to gain market visibility and capture premium market share. In example, it must be understood what makes up your property’s Long Term Sustainable Competitive Advantages (LTSCA’s). Typically it is one, two or three at the most, attributes that are meaningful to each of your target market segments, not easily duplicated by your competitors and sustainable.
Price can’t be an LTSCA as the competition can easily lower their pricing to compete. Location or size of your rooms can be, as your competitors can’t pick up and move their hotel nor would it be easy to expand the size of their rooms. Once these LTSCA’s are understood they should be embraced in all marketing messaging, customized by market segment, exemplified through your website, intertwined in your packaging and offers, and ultimately the tone and personality of your branding and positioning.
Independent hoteliers have to demand more from their marketing provider and their management teams. Demand customized, strategic approaches centered-around differentiation. Celebrate your unique qualities and add experience to your pricing, rather than cutting your pricing to compete. Commoditization of marketing will ultimately rob us all of profitability if we let it.
Contributed by Chris Jackson, GCommerce, Park City, Utah