Intense Brand Competition in the Hospitality Industry & How to Deal with it

Sustaining and restarting a hotel business after the coronavirus lockdown can be a major challenge, especially for smaller, family-owned businesses. More and more time and money is being invested in the hope of finding solutions that can help these businesses face the intense competition posed by larger brands or digital sharing-economy platforms. As businesses in the hospitality industry prepare to face an arduous, yet hopeful road to recovery, it is now even more important for them to stand out and make sure the customers choose them over others.

The past weeks have seen a collective uncertainty surrounding the global tourism industry – sometimes because of the unclear communication by official bodies and sometimes caused by the continuously extended days of the lockdown, with fluctuating ideas of when businesses resume next. However, there certainly are ways where businesses in the hospitality industry can do better, especially after this crisis.

So, what are the critical indicators those businesses need to focus on now?

1. A Shift in Focus

Usually, what happens in a crisis is a shift in the businesses focus. It is normal to strongly concentrate on numbers and put the main emphasis on financial metrics and working capital. Fair enough, because this way they can make it through difficult times and be able to pay their bills. However, after the crisis, it is crucial that this focus goes back to improving the internal processes and investing in learning, growth, and, most important, employees. Although these metrics will not lead to immediate gains, they will help establish a solid backbone for the business while ensuring it sustains in the future.

2. The Culture of Surprise

Using experiences to attract more customers is nothing new in the hospitality industry. Surprises activate our brains; guests are no longer satisfied by just getting what they signed up for. They are seeking to experience something unexpected, which can be as little as a receptionist remembering their name, a welcome or thank you gift or practically any act of service they received without knowing they will. This time gives a perfect opportunity to reconsider old concepts and focus on delivering great experiences and implementing surprise culture. It has been studied that guests are more likely to return to a place or recommend a hotel to a friend if they were somehow positively surprised during their stay. Those surprises can be little things – even no-budget surprises for the guests have this effect – as most effective surprises accrue due to personal interaction.

3. The Emphasis on Authentic Experiences

The sharing economy is driven by the trend of sharing rather than owning. Places and goods do not necessarily belong to one owner anymore. Especially several online platforms and apps now make it easier than ever to offer services and good. Sellers get paid when someone needs what they offer, and buyers save money and time. But, how to compete against authentic experiences provided by Sharing Economy platforms? This issue has been widely discussed within the industry. Opinions differ from offering more personalized stays and “do it as Airbnb does” to an even sharper focus on the strengths and advantages hotels and resorts provide over other platforms’ experiences to make clear how those places differ.

4. Building a Strong Brand Personality

The most crucial point is building a strong brand personality. Creating attributes that (potential) customers may connect with the brand and standing out will be more important than ever when the pandemic is over, as traveling will not be as “normal” as it was before. People are now more conscious of choosing where they spend, and their winning choices will only prefer those brands who invest in their authentic voice and personality that the consumer can relate.

The trend in personalizing a brand is clearly going toward localized and customized experiences. Questions brands must ask when devising their brand positioning could start with:

What makes the property unique?
What is special in the surroundings?
How can that be communicated to the guests?

In the US, approximately 70% of hotels are chain affiliated, while the majority of hotels in all other parts of the world are still independent. However, worldwide the trend to affiliate with larger brands is going up due to the many benefits coming with that – like brand loyalty programs, economies of scale in terms of purchasing, marketing and social media support as well as data mining technologies.

In Fuerteventura, many properties are owned and run by individuals and not brand-affiliated yet. But the primary distribution channels tourists used to book their Fuerteventura-vacation in 2017 were TUI (46%), Thomas Cook (23,3%), Jet2 (12%), and FTI (10,6%). Building a strong brand personality may also prevent losing commission payments to channels that take on the distribution and communication.

Being unique and targetting guests with what authentic values that makes the brand special sells better than being just one more ordinary property with one more ordinary listing on one more online channel with almost zero impact.

Concerning brand affiliation, there is one significant disadvantage that comes with affiliating: the loss of independence and individual decision making. And that is very controversial from the latest trends we see in the hospitality industry of offering personalized and unique experiences. And actually, this is why people initially wanted to travel, am I right?

What can you do now?

It can be a testing period to perceive positives when business is on hold with a clueless scenario of what is to come next. However, the global advantage one has is that all hotels, big or small, all brands, strong or weak, now have an opportunity to think and reflect on the shortcomings of the past, as now when businesses start, everyone will start from the same ground zero. The question is who will win? Win not just the competition but also the hearts of the new post COVID19 guests.

 

Editor´s Note: Fuerteventura Times Business is an insightful manual for entrepreneurs, tourism experts, and local government officials to keep up with the latest trends in Sustainable Tourism, Social Innovation, Experiential Economy and Digital Technology. Subscribe to our newsletter to receive powerful advice, opinions, and methods to run a company, community, or country. Subscribe Here.

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