According to the American Hotel & Lodging Association (AH&LA), the U.S. lodging industry recorded its best year ever in 2005. Smith Travel Research reports that in 2005, the U.S. lodging industry posted pretax profits of $22.6 billion from 1 billion room nights. The good news continues for 2006, as demand is predicted to increase 3.1% for the year.
Regarding construction, Lodging Econometrics reports there were 3,436 new hotels with 463,629 guest rooms under development in the second quarter of 2006; it is predicting that the building peak set in 1998 could be surpassed in 2007.
"After a few years of quiet but solid growth, the hospitality sector is buoyant again," said Peter Gerstle, marketing director for global electronic reservation and distribution services provider Pegasus Solutions. "Fuelled by low air fares, guests are traveling more, and they're spending some of the money saved on transportation for hotels."
Two big trends
Gerstle sees two clear, yet opposing, industry trends. "On one hand, there is constant consolidation of a still fragmented market, with the big brands and franchises trying to extend their reach across the entire spectrum," Gerstle said. "On the other hand, niche operators are emerging everywhere, offering new twists on existing concepts or new concepts altogether. A particularly prominent trend is toward budget design hotels—merging style and affordability."
The surge in these boutique hotels has put the pressure on major hospitality chains and facilities to innovate, said Jack Fordi, VP-advertising sales and operations atSmartBrief Inc., publisher of the AH&LA "SmartBrief" e-newsletter. That pressure has created plenty of opportunities for vendors to capitalize on the growing demand for new and unusual offerings. "Design and technology vendors that market unique, out-of-the-box products and services will draw a high volume of prospects," Fordi said.
However, the trend toward rapid innovation means new ideas are popping up daily, and the competition is fierce, Fordi said. "These days, industry marketers are as dependent on product development as they are on their marketing plan," he said. "Vendors must continually present new product offerings by way of stellar campaign strategies [that break through the clutter]."
Giftcorp Inc., a provider of customized gifts such as nonperishable gourmet foodstuffs, is one company that has found a nontraditional way to break through to hotel executives. "We don't advertise, and we don't e-mail for access to any hotel executives; we send gifts," said Giftcorp President Sheila Shechtman.
"Depending on who we are targeting, we will send gourmet gifts bundled to our prospects to show exactly what we can do. The gifts are designed for each potential customer; and we also try and add a personal touch with our messaging."
One of the challenges in marketing to hotels is being able to identify the right decision-maker, Shechtman said. "Many times, hotel executives are responsible for overarching marketing/sales initiatives but are not necessarily involved in the purchasing process or the day-to-day operations."
In all the company's marketing and sales efforts, creating a "wow factor" for Giftcorp's products and service is critical, but not everything, Shechtman said. Cost, quality and process are also important factors in making a sale.
Of course, most marketers can't present themselves in the same way Giftcorp does. "In terms of traditional marketing tactics, solution-based product advertising trumps brand marketing and thought leadership in the hotel industry," Fordi said. "All three play a role in the sales process, of course, but successful marketers should focus on outlining the problem, presenting the answer and conveying the end benefits for the buyers. With that accomplished, a strategy and mechanism to capture leads—followed by timely, personal sales follow-up—often deliver the best results."
But the hotel industry is a people business, and marketers can also do well capitalizing on that fact, Pegasus Solutions' Gerstle said. "The best way to engage hoteliers is through face-to-face contact, printed collateral and a high level of presence in trade media and industry events," he said. "[Increasingly], an interactive, engaging Web presence—with free trials of services, support tools and business tools such as checklists, calculators and research—is a useful part of the marketing mix. Especially for technology providers, it's a sine qua non of business."