According to the Macmillan Dictionary the definition of hospitality is: “friendly and generous behaviour towards visitors and guests, intended to make them feel welcome.” Consequently, any company in the hospitality industry has a consumer base that exist of almost anyone on this planet. At any given moment a person can be a traveler or stranger in need of food or shelter, and at that moment a hospitality based company wants to be the company that comes to mind. As a result, a happy and constantly expanding consumer base is the main force that motivates companies, like McDonald’s and Holiday Inn, to continually find ways to increase their revenue.
The larger your consumer base the greater your opportunity to increase revenue. The owners of Mint Hotel Group, a U.K. hotel chain, understand this; “Blackstone, which owns the Hilton Worldwide chain of hotels, will take over Mint's eight four-star hotels” in a deal that is said to cost $950 million. As a result, Mint will now join a international company and expand their customer base. Mr. Orr, one of the owners and founders of Mint Hotels, said. "In Blackstone, the business now has a global investor with a strong and expansive track record in the hospitality sector.” The next time Mr.Orr looks at his company’s spread sheet, he will most likely smile at the increased revenue he sees all do to the benefits of going global and increasing his consumer base.
However, greater revenue is not just about getting more customers, it’s also about keeping those customers. In order to do that a company must make their product as affordable and ‘hospitable’ to the masses as possible- this ever so important in the hospitality industry. To do this a company must find a fairly low cost way to manufacture a satisfactory good/service. Take H. J. Heinz Co as an example, they are ditching their out dated and difficult to manage, small ketchup packages for their new and improved “Dip and Squeeze” packets. It took them three years to arrive at their finished product. Their prior attempts, “could [not] be made cheaply or solve customers' main complaints”, this goes to prove how important it is to please customers while also keeping costs to a minimum. One must also realize the risk Heinz took; their opportunity cost of three years and countless amount of dollars for a product that is not guaranteed to work.
When your success depends on consumers’ tastes and happiness its hard to be100% sure you will succeed. As Science Daily reports, “Global population is expected to hit 7 billion later this year”; when all of these people are potential customers, pleasing them all is not an easy task.
Laura Iaffaldano
This is very interesting. It is incredibly difficult for anyone in the hospitality industry to maintain high revenues when they have to please so many people. I think it is extremely difficult for those in the hotel business because there are a limited amount of ways one hotel can separate themselves from another. I wouldn't be surprised to a large portion of a hotel business's money went towards marketing strategies.
ReplyDeleteSorry that comment above was from me (Nia McCarthy).
ReplyDeleteIt is interesting to figure out the what motivates revenue in the hospitality industry simply because there is so much to the industry itself! Be it fast food, hotels or entertainment, each has its own respective revenue sources and thus each has its own motivation. You did an excellent job explaining how everyone is tied into this industry though!!
ReplyDelete-Domenick Cocchiara