1. Assume that you need a single room at an independent (non-branded) hotel such as the Roger Smith Hotel in New York for the ﬁrst Friday and Saturday night of next month. You will be staying in New York to attend the wedding of a friend. Price the two-night room rates (including all taxes and fees) for your stay by searching the following travel seller’s Web sites: i. www.orbitz.com ii. www.expedia.com iii. www.rogersmith.com iv. www.priceline.com Which site offered the lowest rate for the two nights? Which offered the highest? Calculate the percentage difference between the lowest and highest price you found. Why do you think the prices varied?
While in New York, a number of hotels can offer lodging services at any time of the day. Different sites also offer these services, at different rates for each. This however depends on different factors depending on the size of the hotel room, days of the week, location of the lodge and duration of stay. To compare the best rates for a hotel on a Friday and Saturday, I compared three different destination hotels to spend as I waited for my friend’s wedding. The three sites were www.orbitz.com, www.expedia.com www.rogersmith.com and www.priceline.com. Roger Smith Hotel was the highest with rates between one hundred and eighty nine dollars and three hundred and thirty nine dollars. They were spacious and state of the art. They were located at a strategic location in the middle of town. Orbitz.com has the cheapest rooms that ranged from one hundred and thirty dollars to two hundred and five dollars per night. This implied that I had to double these amounts to know how much I was expected to pay for the two nights. Taking an average of both rates gives two hundred dollars for Smith Hotel and one hundred and fifty for Orbitz.com. The differences are calculated as follows.
A number of factors could have been the cause of the price differentiation for both hotels. One of them could be security of the area surrounding the hotel. Everyone would want to be in a safe place at all times. A hotel located in a secure place attracts more customers than one located in a chaotic town. People who like travelling will get a hotel that is now the highways of the main road. If it is located in the town those that want to travel more will book there. If located in the outskirts of town, those that want serene and quite locations will book such. Another factor that leads to different pricing of hotels could be services offered such as food, gym and spa. Again, if a hotel is located new a tourist site, it will have to rate its prices a bit higher. It generally depends on the demand of the hotels from customers. If customers prefer a certain hotel to another, the management could choose a rate higher than the rest of the hotels around, as long as it does not put away customers.
2. The marketing mix and its 4 P’s have been likened to a recipe in which each of these four “ingredients” must be combined with a skilled hand if an acceptable end- product is to be produced. The proper use of any one of the ingredients will not, on its own, ensure success. Each of the P’s is an important ingredient and extremely poor execution in any one of these areas can, in many cases, mean failure of the business. If asked, however, which one of the 4 P’s do you feel would be the most important ingredient for success in the lodging industry? Why? Which would be the most important ingredient in the foodservice industry? Why?
The marketing mix is an important consideration for any type of business. in the lodging industry, price is of the essence. The prices should not be too high to limit its rate of affordability to customers, neither too low for the hotel to operate on a loss. The price should not leave the customer feeling conned therefore the hotel should ensure value of the services for the amounts that the customer pays for a hotel room.
In food industry, product is the aspect of the marketing mix that should always be looked into. Every customer wants a restaurant or food joint that offers the best quality foods, with varieties and compliments. When the product is satisfactory, customers will not mind about the price of the foods.
3 It is generally agreed that, in the hospitality industry, consistently outstanding service is a key factor in generating repeat business. In light of the three major components of consumer demand: (desire, ability to pay, willingness to pay) do you believe “Promotion” (one of the 4 P’s) is more or less important than service levels when seeking to increase the number of a company’s repeat customers? Give an example from your own life experience.
Promotion plays an important role is increasing repeat customers. However, in this case it is less significant than service. This implies that in the hospitality industry, service is all that counts. For example, if a customer gets the best services in a hospitality facility, their chances of going back there are high. This way the firm will increase their repeat customers since they were attracted by the spectacular service that they were offered. When I visited my friend in Denmark, I entered a quite expensive hotel. The receptionist, with a smile welcomed me and showed me a bronchure where I could select the services I wanted offered. The receptionist took time explaining andat the end took me around to choose room where I would like to spend. My friend is no longer in Denmark currently, but I frequently visit the hotel due to the great service that was offered to me that time. This shows the importance of service in the hospitality sector.
3. 1. In this chapter, you learned that both product quality and service are important in the sale of hospitality products. Consider your last hospitality purchase. Who do you believe were the key individuals within the seller’s organization whose actions most inﬂuenced whether your expectations regarding these two factors were met?
Taking the same case of the hotel in Denmark as my last hospitality purchase, the receptionist was one of the individuals who influenced the satisfaction that I received from the hospitality pay. I received quality service and the rooms were perfect for me.
3. 2. Product quality, service, and price were the three factors identiﬁed as being major determinates of a customer’s perception of value. Contrast the value formula you would use if A: You were interested in purchasing a lunch that you needed to consume in ten minutes and B: You wanted to enjoy a leisurely dinner with someone with whom you are romantically involved. Would the manner in which you evaluate value remain constant? What are the implications of your answer to RMs in the hospitality industry?
Food is served on order. If I had ten minutes to consume my lunch, then the hotel would not be the best. I would choose it to have a romantic dinner. My evaluation for value would still be constant. Hospitality industry should always focus on the quality of service they offer to customers.
3.3 In this chapter you learned that a buyer’s perception of benefits to be received can be viewed as the same as that buyer’s expectations. Consider a time when a purchase you made did not meet your expectations. At the time, did you hold yourself or the seller responsible for your dissatisfaction? What specific steps could the seller have taken if it wanted to remove the disappointment you felt as a result of your purchase?
When I bought a nice pair of shoes, they did not last long in the rainy season. The seller should have advised that it was not appropriate for the wet weather. Constant price leads to decreased value and increased price, if quality does not change, then price goes down, value goes up. Increased in price of a constant service decreases its value. getting another pair of shoes for a small fee could brush off the disappointment.
3.4. Researchers have found that normally frugal buyers are, when spending others’ money on themselves (Value Formula C), often less cost conscious when purchasing than they otherwise would be. Identify at least three speciﬁc hospitality industry-related actions you believe these buyers might undertake that would be considered an alteration of their normal buying behavior. Why is it important that RMs recognize the existence of these types of changed behavior?
Hospitality actions could include a night in a very expensive hotel, a drive through the park with a tour guide and a wedding reception. Manager sin hospitality sector should know what customers really hold most important. Training about a hotel should cover aspects of costs versus the number of unique services offered. A hotel that provides many unique services should be more expensive. Training on costs should be done by the auditors and cash officers. The buyer’s and the seller’s decisions are important for the success of any pricing policy. Two tier pricing is a policy that is applied by the seller and believes that the seller has to pay some amount in order to have some goods delivered to them. A buyer on the other hand the value for a good or service is the perceived benefit minus the actual price of the good or service.
3.5. In the lodging segment of the hospitality industry, many hoteliers allow front desk and night audit staff to use their own judgment when deciding whether to reduce room rates to ensure room sales to call-in or walk-in customers. As a RM, what speciﬁc training regarding prices and value do you believe such staff member should have to aid them in making good decisions regarding the prices they quote? Who within a lodging organization do you believe should be responsible for providing that training?
When a hospitality facility is calculating the costs of a service, the breakeven point should be considered. This is the time when the expenses or costs have the same value as the revenues of the facility. Variable cost and fixed costs should as well be put into consideration. Cost based pricing is important in the hospitality industry and a total of all expenses and desired profits are calculated. This is where the price of a service or good is determined. It should therefore not be too high neither too low. Strategic pricing is a must at this stage.