“Everything you need, nothing you don’t.”
Such was the motto of one hotel brand highlighted by Jennifer Davey, Advisory Director at hospitality and real-estate consulting group AHS at the Reimagining Hospitality event hosted by design studio Buchan in Melbourne last month.
Whilst this appears to make sense, Davey says such a statement could describe anything up to ten, twenty or thirty different hotels and failed to distinguish the venue in question from others on the market.
This hotel, she says, is not alone in struggling with its mission statement and brand definition. Indeed, she says many accommodation providers throughout Australia face challenges in defining their place in the market.
She gives further examples.
‘Smaller means concentration not reduction – design is youthful and uncompromising voice with a design that is crisp, furphy and fun’.
Apparently, Davy says, we are all being ‘crisp, furphy and fun’. That is not actually defining an experience and is in fact talking about something which almost everybody wants – hardly a clear definition of a target market.
‘Crossroad for people from ages, cultures and background’.
Another which Davey says is extremely broad and fails to define anything specific.
‘Millennials travel market is huge. They are looking for value for money, experience centres and a cool and affordable hangout.’
This, Davey says, is comical.
“I’m not a millennial,” she explains. “I’m looking for a cool and affordable hangout.”
Australia’s hotel and accommodation sector is currently undergoing significant expansion. In the year to March, the dollar value of work done on construction of new hotels and accommodation facilities came in at $3.440 billion. That’s more than three times the $1.062 billion spent over the same period five years earlier in the year to March 2014.
Whilst this is happening, however, Davey says many operators are struggling to define their place in the market and to build a strong brand which promotes customer loyalty and maximises return on investment.
For one thing, there are now so many brands from which to choose that individual brand identity is often unclear.
More important, however, Davey describes a breakdown in traditional market segmentation and difficulty for many hotels in understanding the purposes for which their guests are visiting.
Traditionally, hotel guests have been broken down into clear market segments. These included business, leisure, air-crew, groups, inbound travellers and MICE (meetings, incentives, conferences and exhibitions).
Hotels were able to profile guests through means such as the news and television programs they watched and the magazines they read.
Nowadays, this is becoming more difficult as people book through online travel agencies, hotel choices are influenced by social media and travellers combine business and leisure.
For design and planning, this creates challenges in adapting strategies to accommodate the purposes for which hotel guests are visiting and the experiences they are after.
In some cases, this has led to a mismatch of experiences which fails to cater for any client segment. Davey recalls one hotel in Europe which had a family sitting next to a couple who were sitting next to children playing football who were next to a large group waiting for evening drinks. The experience was dreadful and did not satisfy anyone.
In response, several strategies are emerging.
Some hotels are targeting customers by age.
This Davey says, is problematic. Say you target Millennials and decide that they want their stay to be ‘fun’. In fact, the desire to have fun is common across many age groups. Designs which are based around this may therefore lead to confusion in branding and failure to deliver a facility which occupies a clear market position.
Moreover, such an approach fails to account for why guests are coming. Are they there for business? For leisure? This, Davey says, will impact design strategies which are suitable.
A second and more useful approach involves tools such as the Roy Morgan Helix Persona framework, which uses deep psychological insights that incorporate not only income levels but also values, beliefs and attitudes which affect consumer behaviour. This can be used to divide potential customers into six targetable groups. These groups range from the ‘leading lifestyles’ (100 group) who are focused on success, careers and family and are big spenders who are lavish in pumping out money on cultured living down to the ‘fair go’ community (600 group) who are lower income Australians and who prefer straightforward living on a modest budget, basic lifestyles and a quiet home life.
A number of hotels, Davey says, use frameworks such as this to target specific market segments. A common one is the 100 group and the 200 groups (Metrotechs – socially aware, successful, culturally diverse, thrive on being out in the world and will spend big to maximise city life). Between these two groups, you tend to have people on higher incomes.
Davey says such an analysis can be useful and can form the start of a basis around which hotels can be designed. Nevertheless, she cautions that there are other factors about which hotel owners need to be aware when designing and planning their facilities.
- The need to be operational, functional and efficient with guests able to access hot showers and beds which are comfortable.
- The investment environment and their goals and objectives from an investment viewpoint.
- Practical construction issues such as building codes, legislation and construction costs.
- Visitation trends and who is coming into the market.
- Market fundamentals such as location, operational risk, human capital and staffing.
- Skill sets needed to deliver on brands,
- Other marketplace and marketing issues such as regional development trends, competitive supply, revenue management, economic forecasts and projections and customer relationship management systems.
Davey says these issues are important.
Whilst design creativity is welcome, this must not come at the cost of operational function.
On visitation, Davey says many brands mistakenly believe they are catering for the international market. In fact, data presented at the Buchan event by Davey’s fellow advisory director at AHS Damien Little shows that Australia-wide, almost three quarters of all hotel guests are domestic travellers.
On staffing and skills, Davey says these are critical. She says many international brands experience problems by trying to replicate their operating models overseas in Australia without having the local skills sets which are needed to deliver on these approaches.
Finally, she stresses the importance of financial sustainability – even where brand owners wish to deliver social or environmental benefits through their projects. On when brands are financially sustainable can they reach out into the community or deliver upon cultural objectives in a manner which is viable over the longer term.
In terms of strategies, Davey talks of several steps:
1) Get back to basics/understand who is coming.
At the moment, Davey says too many operators have too many brands. One operator has around thirty brands. Another has 25. This does not help anyone to understand who goes there and why.
As mentioned above, hotels also need to move away from basing brands around age.
Instead, they need to look at how their space is being used and how this can be maximised to accommodate the purpose of visit for their guests.
2) Understand that you are catering for Aussies.
Often, Davey says, there is a misconception that you can pick up brands from Europe or the US and transpose these into Australia.
This, she says, is foolhardy. As mentioned above, most hotel visitors are in fact domestic customers. Hotels need to understand this and to cater for the demands and expectations of Australian consumers.
3. Refocus on the hot shower and comfy bed
As mentioned above, hotels need to cater for functional needs of their guests as much as trying to be hip or cool.
Many times, she says, guests have experienced being checked in by ‘fun’ people only to find that there is no hot shower, no comfortable bed or that poorly trained staff are delivering substandard service.
These functional aspects must be met before any hotel can deliver any other form of positive experience.
4) Rooms are Secondary
Whilst rooms remain important, Davey says guests nowadays expect more than simply a bed. This includes workspaces, great food and beverage offerings and health spaces.
To accommodate this without compromising on room revenue, spaces must be used well. This includes small room design strategies such as being flexible on bed sizes and thinking carefully about furniture, fixture and equipment items before including these.
5. Accommodate new living trends.
As people move toward healthier lifestyles, hotels need to be flexible and to personalise features such as tea and coffee bars in their design inclusions.
6. Deliver the Human Touch.
Notwithstanding technological advancements, Davey says many hotel guests still value the ‘human touch’. General managers should be involved with the day-to-day operations and decisions. Many visitors still want a human concierge who can provide clear answers about where you want to go.
As mentioned above, staff must be well trained and confident in delivering professional service.
7. Embrace Technology and Data Driven Insights
Notwithstanding the need for human interaction, Davey says hotels can use technology to deliver data driven insights about their guests and their choices. This includes aspects of their guests’ stay including accommodation decisions, check in-check out decisions and lighting preferences.
8. Reconnect with the broader tourism sector
Finally, Davey says hotels need to reconnect with the broader tourism sector.
Hotels, she says, do not exist for their own sake. People do not travel simply to go to a hotel. Rather, they travel to have leisure experiences, to do business, to attend conferences or for many other reasons. Hotels represent only part of the travel experience.
Because of this, she says hotel operators need to engage with others in the broader travel market such as airlines or tourism operators to gain insights about why people are coming and the purpose of their stay.