Creating New Niches to Boost Profitability

One thing that’s certain about having a successful hotel brand is the threat of copycats. Having a large number of copycats commoditize the market and make the price competition even more intense. A marketer’s initial response to copycats is intensive advertising and promotion. Among the favorite strategies of marketers include loyalty programs and branding campaigns. However, these tactics will still have a negative impact on the bottom line. If your current market strategies can’t win the war, then it is time to explore new concepts that can be profitable for business.

Most hotels, similar to majority of companies in general, fall into the trap of trying to outsmart the competition. In some cases, this works but in others, it won’t because it can’t. Success in the hotel industry sometimes don’t come from being “better”, it comes from being different. There is something to be learned from the auto industry. For example, automobiles used to be just “sedans” until jeeps, trucks, SUVs, hatchbacks, and solar-powered cars became popular. Just when people thought innovation was dead, new variations are introduced. And profitability is boosted because of new markets.

Identifying a new niche in the hospitality industry is not difficult. With some willingness to think outside the box, revenue managers can generate demand and grow revenue. There are basically five possibilities that a hotel revenue managers can focus on. These include someone, something, sometime, somewhere, and somehow.

• Someone – focusing on a unique segment of the market can help the hotel increase revenue. For example, when Marriot Courtyard focused on business travelers with their tagline “business travelers for business travelers” their hotel rate strategy was replicated countless times in many different countries.

• Something – offering something special or unique to your hotel can equally be successful. This “something” can either be unbeatable prices, special room features, or even the presence of priceless art pieces in the hotel.

• Sometime – hotels should be especially flexible to the needs of the traveler. Offering discounts for guests on an extended stay can be a good strategy.

• Somewhere – a strategy for revenue optimization is to identify places that have a huge potential but low competition. By looking at emerging markets or even by surveying certain areas in the country side, hotels can boost profitability.

• Somehow – coming up with a unique way to sell is important to a hotel. Look at the Girl Scouts, when sweet little girls sell cookies, customers buy. This is not because the products are particularly delicious; the cookies sell because the target customers can’t say no to the kids. If hotel revenue managers are able to think of strategy using a similar concept, an improvement in overall revenue is inevitable.

For more information on how to boost profitability, visit RevPAR Guru