hptel and restaurant industry marketing

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Chapter 12

International Hospitality Marketing

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STRATEGIC MARKETING PLANNING

  • Strategic marketing takes a global and long-term view in setting objectives for overseas operations.

  • The strategic marketing planning starts with the company’s mission statement, which defines the purpose and scope of the company’s business: why it exists, what markets it serves, and how it serves the markets.

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STRATEGIC MARKETING PLANNING (Cont’d)

  • The following mission statement of Marriott International clearly emphasizes the global perspective and defines the objectives for global development:

We are committed to being the best lodging and management services company in the world by treating employees in ways that create extraordinary customer service and sharehold value.

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INTERNATIONAL MANAGEMENT INFORMATION SYSTEM

  • To conduct an effective environmental scanning to identify market gaps and opportunities, international hospitality firms use International Management Information System (IMIS), an organized process of gathering, storing, processing, and disseminating information to global mangers to assist them in making management decisions.

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INTERNATIONAL MANAGEMENT INFORMATION SYSTEM (Cont’d)

  • Information sources for decision making are generally gathered from two major sources: internal and external.

  • Internal sources encompass data from company sales, financial, and accounting records as reported by overseas properties and foreign franchisees.

  • External sources include government reports, market research studies conducted by trade associations, hospitality consulting and accounting firms, and universities.

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THE HOSPITALITY MARKETING MIX

  • The traditional marketing mix consists of a set of strategic decisions made in the areas of product and service, promotion, pricing, and distribution for the purpose of satisfying the customers in a target market.

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Product-Service Attributes

  • The hospitality business involves both tangible product and intangible services. Both product and service have many attributes. For instance, the attributes of a hamburger product include size, taste, and texture.

  • The attributes of service rendered in a hamburger restaurant encompass speed, cleanliness, and friendly employees.

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Product-Service Attributes (Cont’d)

  • Cultural differences have therefore important implications for marketing products and services globally.

  • The food service business generally requires greater modification to meet local market requirements.

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DISTRIBUTION STRATEGY

  • This refers to the channels hospitality firms choose for making products and services available for purchase and consumption.

  • Most hotels and restaurants attempt to sell products and services directly to the end user, the consumer.

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DISTRIBUTION STRATEGY (Cont’d)

  • Another common strategy for product and service distribution is to develop loyalty marketing by forming alliances with many other travel and hospitality providers.

  • Hotel and restaurant chains join telephone companies, rental car companies, major airlines, and other hospitality providers to jointly promote their products and services.

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Global Distribution System

  • Used for marketing hotels internationally, the Global Distribution System (GDS) is the central reservation system used by travel agents to book airline seats, rental cars, hotel rooms, and other travel reservations and services.

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Global Distribution System (Cont’d)

  • GDS allows each hotel to list all of its different room types, descriptions, rate categories, policies, and special packages.

  • The information is then available to hundreds of thousands of travel agents worldwide.

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Pegasus Commission Processing
(formerly the Hotel Clearing Corporation)

  • As travel agents worldwide make hotel reservations for their clients, commission payments from hotels to travel agents become complicated because of geographic distance and foreign exchanges.

  • This has created a business opportunity for providing commission collection and processing among hotels, travel agents, and GDSs worldwide.

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Pegasus Commission Processing (formerly the Hotel Clearing Corporation) (Cont’d)

  • Pegasus Commission Processing, a leading provider of global hotel distribution technology solutions based in Dallas, Texas, serves more than 78,000 travel agencies in 206 countries (including over 65 of the top 100 U.S. travel agencies) for collection, processing, and consolidation of commission payments due them from hotels.

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Barriers to International Communications

  • International communication occurs whenever a hospitality company uses a marketing message to sell its products and services in a foreign country.

  • The effectiveness of international communication is greatly influenced by three major barriers: cultural barriers, source effects, and noise levels.

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Cultural Barriers

  • The needs and wants of individual consumers are often culturally determined.

  • Due to cultural differences, people in different countries may interpret the same message very differently. The same word may be perfectly apt in one country while meaning something significantly different or even vulgar in another.

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Source Effects

  • In certain countries, people prefer certain products from particular other countries because of former colonial influence, close cultural ties (using the same language), or the quality of the products and services.

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Noise Levels

  • Noise refers to the volume of marketing messages sent to potential consumers for attention in a particular market.

  • In highly commercialized Western countries, individuals are bombarded with marketing messages daily, and the noise level is very high.

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Communication Channels

  • There are many ways to gain the attention of potential consumers. The tools for communicating marketing messages include advertising, online promotion, personal selling, sales promotion, and public relations.

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PRICING STRATEGY

  • International pricing for hospitality products and services is an important and complex component of formulating the marketing strategy.

  • Pricing decisions affect consumers’ buying decisions, affect the operation’s gross revenue, and are a major determinant of profits.

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Price Elasticity of Demand

  • The price elasticity of demand is a measure of the responsiveness of demand for a product to changes in price.

  • The elasticity of demand for a product in a particular country is influenced by many factors. But the three most important factors are income level, target market, and competition.

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TARGET MARKET

  • Target market refers to the primary market the hotel wishes to entice. Many hotel companies expand operations into foreign countries with the purpose of serving visitors from their own countries, such as American hotels in India serving American tourists visiting India.

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COMPETITION

  • The more competitors there are, the greater consumers’ bargaining power will be, and the more likely it is that consumers will buy from the firm that charges the lowest price.

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COMPETITION (Cont’d)

  • Cancun was originally developed as a small and exclusive resort destination. However, hotel supply has outpaced demand in the past.

  • As a result, competition intensified and prices were cut substantially. Consequently, wealthy visitors did not return, and Cancun now attracts mostly middle-class tourists with less disposable income, which means less revenue for the resorts.

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