Competition problems in the hotel industry, their cause and solution

The main problem that hotels and restaurants face is a constant and costly battle with their competitors. This problem – which is in fact caused by the hotels and restaurants themselves – and its solution will be addressed in a brief and easily understandable way within the framework of this article.

Blaming tough market conditions due to stiff competition for disappointing revenue and profits is easy and may sound good. However, looking at this more closely and putting it bluntly, it is actually a clear sign of incompetence on the part of those executives who should contribute to solving the problem of not being better than their competitors.

In other words, saying ‘We are not making higher profits (if any) because we are facing strong competition’ means ‘We are not good enough to be better than our competitors’. Why else would they continually complain about their competitors and spend a lot of time and money on competitive analysis in the hope (mostly in vain) of finding something that could give them a decisive competitive advantage over their competitors? This leaves us with the question why these companies are, despite all efforts, no better than their competition. Why don’t they see your true strengths, weaknesses, opportunities and threats even though everyone does one SWOT analysis after another? The answer is “because they are like their competitors who think incorrectly”. So what does it take to get it right?

Both the identification and the resolution of the real problems of the companies in the hotel industry require first of all a good knowledge (and the skills to expertly turn this knowledge into powerful competitive advantages) in an area that is (although it is the most important for success in the hospitality industry) in for example, hotel management schools are practically not found at all or, at best, only marginally touched; psychology. This fact is reflected in the result of a recent survey conducted by a major global portal that provides the latest hospitality industry news and knowledge for hospitality professionals, according to which: “GM’s number one approach is NOT the guest “. Hotels whose CEOs don’t put their guests at the center of what they do? That says it all and requires no further elaboration!

Lack of knowing how humans function is the main source of most hotel and restaurant problems. Not knowing why humans are acting and reacting the way they do, without knowing the main driving forces of their guests (actual and potential), and subsequently not knowing what they really need, makes it impossible to plan, properly implement and manage a successful hospitality industry. business. After all, hospitality is about people and, as mentioned above, hotel general managers not only don’t know enough (if they know anything at all) about human beings (yes, guests are human beings), they are not focused on them either. Actually, this shouldn’t be a surprise. In hotel management schools, etc. You are taught how to run and manage the administrative parts of a hotel or restaurant once it is up and running, requiring mostly non-hospitality related skills. Regarding the operational areas in training centers and in hotels or restaurants, it is taught how to serve (deliver) food and beverages, how to cook, clean, etc. This leads to the problems detailed below.

The main root cause of competition in the industry is expressed simply ‘by not knowing how to do better like the competitors’, something for which the hospitality industry serves as a prime example. Looking at hotels and restaurants, it is immediately apparent that they are suffering from a serious identity crisis called “equality”; they are ‘business-me too’.

As long as humanity exists, there have been ‘hotels’ and since then, regardless of the superficial changes during the development process from the first resting place to the hotel as it is known today, nothing much has changed. Now, as always, hotels mainly offer their guests something very simple; the opportunity to rest / stay, eat and drink, that is, rooms, food and drinks (restaurants only food and drinks). Even if you add event facilities, swimming pools, saunas and gyms to this, this does not change anything at all. To make a long story short, at the heart of this traditional understanding of “hospitality” was and still is the satisfaction of bodily needs, which are lower-order human needs. Since hotels and / or restaurants still operate within the narrow limits of meeting material needs, their chances of becoming truly unique are slim, to say the least. The result: too many hospitality companies are struggling to share too little with the same inappropriate weapons on the same wrong battlefield.

Thinking and acting in the same way as others leads to exactly the same mistakes they make and uniformity as opposed to distinction. That said, the big question is why would a potential guest prefer one stereotype to another stereotype of the hotel or restaurant category? Where is the distinctive mark? All hotels and restaurants claim to be the best but in reality none of them is because they say the same thing, show the same thing and offer the same thing in the same way. Just take a look at their advertising. Yes, there are fairly superficial category-specific differences (reflected in pricing !!!) but it’s basically all the same within and across categories. Each category is filled with companies fighting for better equality with neither of them having a competitive advantage over the other. In this context, it is clear that entering the set of prospect considerations for reasons of being better than others is practically impossible. It follows that the remaining selection criteria are price and location, because the potential customer does not expect to get anything better than what hotels offer: a place to sleep and something to eat and drink, that is, ordinary things that they can be found in almost every corner. good quality and reasonable prices. Here’s what Bruce Henderson, founder of Boston Consulting, said: “Unless a company has a unique advantage over its rivals, it has no reason to exist.”

How can a hotel or restaurant obtain and maintain a unique advantage over its rivals? Here’s the short and sweet answer: in the sense that they learn about the human being (their guests !!), they change their philosophy and put, ideally at the beginning of planning, the end of being a hotel or restaurant and begin to be an exciting place. experience with the guest as an integral part of it. It is the guests and the satisfaction of their general needs (with an emphasis on intangible values ‚Äč‚Äčthat are much more valuable than material values) that have to be front and center and not what hotels usually offer, namely rooms , food and drinks and rather basic services. Once this is understood by owners and managers and translated into action, the respective ‘hotels’ and / or ‘restaurants’ will be outstanding; until then, they are just ordinary at best, and, to borrow Bruce Henderson’s words, “there is no reason to exist.”

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top