Marketing Accommodation
Objective: Introducing the meaning and applications in the
practice of marketing accommodations.
The nature of the marketing task for
accommodation businesses
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One of the former presidents of Holiday Inn
summarizes the marketing task as follows;
“All segments of our travel and tourism business have become
more competitive. A growing number of competitors offer their
products to the same customer groups. Travelers have a wider
range of choices than ever before for matching a hotel to their
particular travel needs. Those needs change according to the travel
purpose. If a company can understand those changing needs and
deliver a quality product and services appropriately targeted to
specific customers needs, wants, and expectations, that business
can survive”.
Strategic Marketing Tasks

There are six main elements in the strategic
marketing response that accommodation
suppliers make to their external business
environment and the operational characteristics.
These are:
Evaluating strategic opportunities for growth.
 Planning the most profitable business mix of
segments and products/price ranges, that aim profit
rather than volume.

Deciding the position, brand or image each
accommodation unit (or chain of units) should
occupy.
 Internet marketing
 Encouraging and rewarding frequent users
(relationship marketing).
 Developing marketing integration between units in
common ownership (chains) or units in individual
ownership.

Evaluating strategic opportunities
for growth

Strategic growth through globalization,
developments in information and
communications technologies, through mergers,
alliances and acquisitions are among
opportunities that should be evaluated.
Planning the business mix

Because of the demand potential of each
location, one of the basic strategic decisions for
accommodation businesses is to determine the
most profitable target market for their product.
For example, a city center hotel will target clients
traveling for business purposes. On the other
hand, a resort will target leisure visitors and so
on.
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The optimum (most profitable) customer mix
for most businesses will usually include several
segments (e.g. a resort hotel may have both
business and leisure travelers in their target
market) in order to maximize revenue and
minimize the effects of seasonality and other
normal business fluctuations.
Designing the optimum mix for any
accommodation business requires marketing
research or at least an analysis of guestregistration records to analyze the volume and
revenue potential of current and prospective
(future) customers in each location.
Deciding the position or image

After determining the target market, the
accommodation suppliers should decide about
the image that the product is going to create in
the minds of the customers. In today’s
competitive environment, it is necessary for
operators to differentiate and brand their
products.

Branding is important in order to create and
increase the repeat business which is valuable for
the profitability of the operation. For example,
statistics indicate that people who stay at least 21
nights a year in hotels are estimated to
contribute two-thirds of all nights stayed in
British hotels.
Internet marketing
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Recent trends including Web 2.0, paid search
marketing, eCRM (online customer relationship
marketing, web analytics and ROI tracking will
impact future hotel marketing.
Today electronic tools and management
information systems are important tools for
marketing managers to collect information on
who their customers are. This is important to
retain them.
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Consumer Generated Media (CGM) such as
blogs, discussion boards, review and social
networking sites can help to retain customers.
Therefore, dealing with CGM is becoming a
necessity.
In addition, most accommodation businesses is
shifting to direct marketing on-line.
Internet has become the most preferred channel
to plan and book accommodation. It is also the
cheapest form of distribution.
Encouraging and rewarding frequent
customers

The third element in strategic marketing
responses for accommodation suppliers is to
find ways to encourage and reward regular
customers. Like airline companies, most hotel
groups created membership clubs since 1980s in
order to attract their regular customers. Some of
these programs offer credit facilities in addition
to the normal range of benefits, such as rapid
check in and check out.
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Some also offer awards through which frequent
travelers can earn points for each stay, leading to
attractive prizes according to the number of
points collected over a given period.
In most cases, the frequent customer programs
require building up of name and address lists
into databases suitable for direct mail. With the
help of direct mail, it is not only possible to
reach the regular customers, but also possible to
reach the friends and relatives of those
customers.

However, not all the programs currently in use
are fully successful, because they are difficult
and expensive to administer. In addition, they
may also serve unintentionally to reduce the
average room rate to some customers who were
prepared to pay a higher price.
Integrating marketing across several
units
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The fourth strategic consideration focuses on
coordination between the individual units in
marketing the products. The strategic
advantages of marketing coordination can be
summarized as:

Distribution referrals of business between units
central reservation service better access to
distribution networks
Promotion corporate branding joint advertising
opportunities, use of promotional marketing teams,
access to group brochures and leaflets, group
representation at trade fairs and shows
 Product and harmonization in group quality
 Price guarantee programs designed to build up
customer satisfaction
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Coordination is most easily obtained with the
help of ownership. That is why, large
accommodation chains have come out over the
last 20 years. Large chains are now found in all
over the world, and many of them are
international in their scope.
Tactical Marketing

Strategic decisions are expected to generate a
profitable mix of bookings and room occupancy
as the result of the production and distribution
of appropriately priced, distinctive products
which satisfy the needs of identified customer
segments. In other words, for accommodation
operators, three of the four Ps of marketing mix
are strategic decisions, and even the fourth,
promotion.

The main contribution of tactical marketing is to
secure additional sales from targeted buyers at
times when room occupancy is less than the
optimum level. Its other contribution is to cope
with sudden losses of business which often
happen as a result of unpredictable economic or
political events.

In certain destinations at certain times, room
occupancies in hotels may exceed 80 percent on
an annual basis. This results in a rise in prices
and profitability. Such circumstances are
exceptional and usually are not achieved by
marketing alone but by a combination of
favorable circumstances in the external
environment. It is more common for
accommodation businesses to operate
somewhere between 55 and 65 percent of room
occupancy.

Because of the high perishable nature of
services, marketing managers are required to
manage demand by encouraging additional
bookings on a daily and weekly basis. In
addition, the high fixed costs and low variable
costs of operating accommodation gives
importance in providing short term incentives to
buyers. That is why, tactical marketing for
accommodation businesses require choosing
from the range of sales promotion tools.

Specifically, sales promotion tactics for
accommodation businesses include:
Short-term price discounting which is used especially
to sell unsold capacity in anticipated situations
 Sales promotions which add temporary value to
products in order to attract targeted customer
segments, basically used to increase business in low
season.
 Commission incentives which is designed to
motivate a retail distribution system and achieve
added influence at points of sale, including
improved display for brochures.

Deep price discounts designed to motivate and
conclude deals with e.g. tour operators or other
agents making bulk contracts for accommodation.
(This form of selling may also be strategic)
 Use of sales force to generate additional sales.
 Tactical use of advertising in order to achieve better
communication of promotional offers.
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The use of these tactical techniques is sales
orientated, but their efficient use depends on the
detailed knowledge marketing managers have
about their target markets. The accommodation
sector is often subject to unpredictable external
factors. That is why, it is always necessary for
operators to allocate contingency funds to be
held in reserve for use in influencing short-run
demand.
Sources
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Kotler, P.; Bowen, J. and Makens, J. (1999). Marketing for
Hospitality and Tourism (2nd ed.). Prentice Hall: NJ.
Kotler, P. and Armstrong, G. (2006) Principles of
Marketing (11th ed.). Prentice Hall: NJ.
Middleton, V. T. C. (2004) Marketing in Travel and
Tourism (3rd ed). Elsevier: Oxford.
Middleton, V. T. C.; Fyall, A.; Morgan, M. And
Ranchhod A. (2009). Marketing in Travel and Tourism
(4th ed). Butterworth-Heinemann: Oxford.