Ten hotel chains have come together to build a consortium of hotels namely StayTogether to counter the opposition being faced by online booking websites. These websites are namely hotels.com, booking.com etc. They have done this to combat the pressure from the market in terms of hotel accommodation being provided at low prices. This merged entity has more than a thousand hotels in almost all categories of hotels within itself. The categories includes the luxurious suites, bed and breakfast arrangements, backpacker, romantic honeymoon suites etc. The presence of these hotels are around the world. The image of the hotels are going down due to high cost being kept by them. Since, there are many options available at these online sites at low prices, people’s thinking about these hotel chains have gone down. Similarly, their profit has taken nosedive. Aa will be taking several steps to combat these issues (Ivanov, 2015). They will be creating a one stop website for bookings, queries, customer care etc. Also, mobile apps will be developed to offer similar facilities through smartphones. Along with these, several marketing plans and promotions will be in line to promote the facilities offered by aa throughout all parts of the world.
Internet has taken everything by storm. The revolution came to all the industry in the world. All the players in the industries have changes their way of operations. In the following sections, we will see the issues being faced by traditional hotel chains upon the advent of modern online booking websites. We will also try to figure out solutions that the companies can use to combat with these online websites. The promotions that they can carry out in mass media to attract new and existing customers and the strategies that can be formulated and implemented to ensure revival of the tourism sector’s traditional players (Haynes, 2015).
Issues faced by the Hotels
The hotels today have lot of things to cater to provide customer satisfaction. The customer satisfaction is the most important thing in today’s world. The satisfaction will be achieved only when the customers will get all the facilities in a competitive price segment. The customers have reached a stage where they compare everything online and then select the one which is providing all the required facilities at the minimum cost. The hotels are ramping up the facilities that they are providing to the customers. These will enable them to cope up with the competition. The competition has become fierce and the hotels are trying their best to compete with others (Hsu, 2015).
The main issue at hand is the presence of online booking mediums which are draining the profit margins of the hotel chains. As discussed in the previous section, a group of 10 hotel chains have come together and formed a merged entity aa which will compete with the online counterparts. The online booking websites have tied up with the local low budget hotels and are offering all booking cum customer services to the consumers. The booking websites are making use of technology and are becoming the mediator in between the hotels and the customers (Ladhari, 2015). The customers are getting a platform to check all the facilities offered by the different segments of hotels along with the charges for booking the room. This has left no scope for the traditional chain of hotels whose online presence is negligible.
The online websites can offer lot of discounts since they are startups and some venture capitalists must have funded them. The funding by VCs is generally high which help the startups to do lot of marketing activities and provide lots of offers and discounts to them (Lee, 2013). The way of doing business is important for startups and these startups play a huge role in offsetting the business in the industry. The industry can be shaken up with the discounts offered by the startups. For example, a new entrant in Indian Telecom Industry named Jio infocomm. Has disrupted the telecom industry in India by offering free Voice and Data services to the users at a very nominal charge. The other players had to lower down the prices and got impacted a lot in terms of revenues and profits. The same is happening in this case with online booking services are providing huge discounts and ease of booking to the customers (Beritelli, 2016).
The customers are getting attracted towards the new entrant thereby shying away from the old traditional hotel chains. The hotel chains had a good brand image before. They still have it. But, the price at which they are providing the bookings is a bit high. Due to this, the customers are going for low budget hotels (Cantallops, 2014). These low budget hotels provide all the services (may be a bit less quality service) and are charging less for the bookings. The main issue of the traditional hotel chains is to combat against these low-cost hotels via the online booking sites.
The spending of the traditional hotel chain on the infrastructure and the cost of having good quality staffs is also high. Their spending has choked them to give further discounts. Lot of other infrastructure work is also in the pipeline. This work has been thought of adding to the luxury that the hotel chains provide to their customers (Ling, 2014). However, all the new spending has been put on hold now by the hotels. The hotel managers have now come together to fight with these online counterparts so that a balance can be achieved in online and retail segments. The aa has been formed taking the same into consideration. The new entity has been thought to provide a seamless service to its customers. The customers need to be made aware of the new developments (Ozturk, 2016). These will be covered in the below sections. The upcoming sections will cover the ways and strategies in which the company can change its ways of operations which will be focused towards countering the online booking sites. The marketing and promotions strategies which will be implemented to attract customers will also be focused upon in the below sections.
Strategies to counter the issues
The hotels need to take a lot of steps to counter the issues that they are facing. One of the primary step has already been taken by them by forming aa. The aa is aimed to provide customer good services across the world at reasonable prices. The network of the hotel chain when combined is very wide. They must make use of this wide network (Liu, 2014). There are some 1000 hotels under these 10 hotel chains spread across all geographical areas. The people will be amazed to become a part of this consortium and avail the benefits for lifetime, if they are provided with options. The options need to be formulated by the management of all the hotel chains and a unanimous decision will help in going ahead.
The market share of these hotel chains is decreasing now. The decrease in the market share is a result of the decrease in the number of bookings by the customers. The lesser bookings are leading to lesser revenues while the fixed costs are same. This is creating havoc for the hotel chains and many of them already started to panic. The market share can be increased with the brand awareness of aa among the customers. This will be covered in the coming section. The new investments which were discussed in the previous section will be put on hold and the investments will be directed towards the discounts and promotions which need to be provided to the customers (Ozturk, 2017). The people have a lot of expectations for the new entity aa and they will love to hear good packages and plans from aa.
The quality of the services being provided by aa will be of top quality. There would be no compromise in terms of quality. This will become a differentiating factor for the business and customers who require good quality to be loyal to aa. The aa will also like to target the customers who likes top quality hotels because through them, the revenue will also be good since people can pay extra for that quality factor (Standing, 2014). The quality of the aa will determine the increase in the market share for the entity. It will help in retaining the old customers and will also make way for new customers to try the luxurious offerings by aa. The offerings of aa will be discussed in the upcoming section.
The people want good quality services at reasonable prices. The term good quality differs from person to person. A person can think the low budget hotel also provides good quality whereas a rich individual who has the capacity to afford big hotels will choose big hotels to get good quality services. Everything is a game of perception. The individual perception makes a hotel good or bad. The money charged for the room bookings try to make the person biased about the quality. This happens a lot of time. People with a neutral midframe will act differently when subjected to certain terms and conditions (Richard, 2017).
In the next section, we will see certain marketing strategic and promotional plans which will take the aa to new heights.
Marketing Plans and Strategies
A company does marketing to make the people aware about its new launch or about the services that it provides. The cost associated with marketing is huge and hence proper plan needs to be made before executing the strategies. The marketing team will work closely with the operations manager of the hotels so that they can create a full proof marketing plan. The plans need to be created, evaluated by subject matter experts and then it should be implemented in the reality (Wang, 2016).
The marketing activities will primarily include the creation of well-defined marketing scope. This scope will lead to a plan. The scope of the aa will be to offer good quality services and good discounts. The companies will be able to plan a draft strategy to cover all the requirements. The promotions will include discounts in packages provided by aa. Aa can come up with certain packages like lifetime membership package or periodic package like summer package or winter package etc. These packages will be provided with less discounts to the customers. The customers will be attracted by the aa with these new offers provided to them.
The discounts in the package will be calculated after the costing of all parameters are done. The aa will not go into losses just to offer good discounts. It needs to maintain its quality services and for that revenues and profits are equally important. The profits should increase with time. The advantages of taking long length bundle to the clients will be the hazard free reserving whenever in the year at any inn inside the gathering they need. This is a decent choice (Yang, 2014). Alongside this, the STAYTOGETHER has thought of STAYTOGETHER Loyalty services which will offer prizes to the returning clients as airplane terminal exchanges of stopping offices or additional night appointments. Additionally, visitors can take benefit of feasts if any standard eatery/kitchen is accessible inside the lodging. The selective eateries will be charged additional. Tie ups have been made with specific aircrafts and discount will be given in room cost to the clients who are getting through those carriers. Free suppers can be gotten with the utilization of certain charge cards. Every one of these advantages will encourage the STAYTOGETHER to recover its lost piece of the pie and pull in numerous new clients.
Aside from the above offers, the STAYTOGETHER will have some in-application rebates for the individuals who are reserving the rooms through their cell phones. These will be far beyond the current rebates. The lodging networks can put resources into these advertising plans for a timeframe to recover their lost name and afterward they can change the advancements to suit at future point in time. In this manner, promoting viably and with appropriate arrangements will help STAYTOGETHER to rise as a victor among the kindred online partners.
The hotel chains must take into consideration the above steps to cater to the customers. The satisfaction of the customers will determine the future of aa. In the above sections, we saw the issues being faced by traditional hotel chains upon the advent of modern online booking websites. We also tried to figure out solutions that the companies can use to combat with these online websites. The promotions that they can carry out in mass media to attract new and existing customers and the strategies that can be formulated and implemented to ensure revival of the tourism sector’s traditional players were also figured out.
The hotel chains formed the merged entity aa. This merged entity has more than a thousand hotels in almost all categories of hotels within itself. The categories include the luxurious suites, bed and breakfast arrangements, backpacker, romantic honeymoon suites etc. The presence of these hotels is around the world. The image of the hotels is going down due to high cost being kept by them. Since, there are many options available at these online sites at low prices, people’s thinking about these hotel chains have gone down. Similarly, their profit has taken nosedive. Aa will be taking several steps as discussed in the above sections to combat these issues.
Ivanov, S., Stoilova, E., & Illum, S. F. (2015). Conflicts between accommodation establishments and travel agencies. Tourism and Hospitality Research, 15(1), 54-70.
Haynes, N., & Egan, D. (2015). The future impact of changes in rate parity agreements on hotel chains: the long-term implications of the removal of rate parity agreements between hotels and online travel agents using closed consumer group booking models. Journal of Travel & Tourism Marketing, 32(7), 923-933.
Hsu, C. H., Liu, Z., & Huang, S. (2015). Acquiring intangible resources through entrepreneurs’ network ties: a study of Chinese economy hotel chains. Cornell Hospitality Quarterly, 56(3), 273-284.
Ladhari, R., & Michaud, M. (2015). eWOM effects on hotel booking intentions, attitudes, trust, and website perceptions. International Journal of Hospitality Management, 46, 36-45.
Lee, H. A., Denizci Guillet, B., & Law, R. (2013). An examination of the relationship between online travel agents and hotels: A case study of Choice Hotels International and Expedia. com. Cornell Hospitality Quarterly, 54(1), 95-107.
Beritelli, P., Beritelli, P., Schegg, R., & Schegg, R. (2016). Maximizing online bookings through a multi-channel-strategy: Effects of interdependencies and networks. International Journal of Contemporary Hospitality Management, 28(1), 68-88.
Cantallops, A. S., & Salvi, F. (2014). New consumer behavior: A review of research on eWOM and hotels. International Journal of Hospitality Management, 36, 41-51.
Ling, L., Guo, X., & Yang, C. (2014). Opening the online marketplace: An examination of hotel pricing and travel agency on-line distribution of rooms. Tourism Management, 45, 234-243.
Liu, J. N., & Zhang, E. Y. (2014). An investigation of factors affecting customer selection of online hotel booking channels. International Journal of Hospitality Management, 39, 71-83.
Ozturk, A. B., Nusair, K., Okumus, F., & Singh, D. (2017). Understanding mobile hotel booking loyalty: an integration of privacy calculus theory and trust-risk framework. Information Systems Frontiers, 1-15.
Ozturk, A. B., Bilgihan, A., Nusair, K., & Okumus, F. (2016). What keeps the mobile hotel booking users loyal? Investigating the roles of self-efficacy, compatibility, perceived ease of use, and perceived convenience. International Journal of Information Management, 36(6), 1350-1359.
Richard, B., & Richard, B. (2017). Hotel chains: survival strategies for a dynamic future. Journal of Tourism Futures, 3(1), 56-65.
Standing, C., Tang-Taye, J. P., & Boyer, M. (2014). The impact of the Internet in travel and tourism: A research review 2001–2010. Journal of Travel & Tourism Marketing, 31(1), 82-113.
Wang, D., Xiang, Z., Law, R., & Ki, T. P. (2016). Assessing hotel-related smartphone apps using online reviews. Journal of Hospitality Marketing & Management, 25(3), 291-313.
Yang, J., Flynn, J., & Anderson, K. (2014). E-Business application in the hospitality industry: A case study. Communications of the IIMA, 3(1), 1.