Key Success Factors in the Hotel Industry

Hotels achieve success through customer service, advertising and cost control.

Despite its cutthroat aspects, the hotel industry is filled with success stories. A small niche boutique hotel may gain recognition from a prominent travel guide and be booked for months. Or, a large hotel could gain recognition by partnering with a neighboring attraction. In today's Internet environment, when consumers can be their own booking agent by evaluating reviews and prices online, the success of a hotel often depends on how it utilizes key factors like customer service, advertising, cost control and product differentiation.

1. Customer Service
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Customer service is an integral part of the hotel experience. Clayton Barrows, author of "Introduction to Management in the Hospitality Industry," explains how the front-desk worker serves as the gatekeeper of the hotel. This employee provides the customer's first and last impression. Thus, hotels achieve a critical success factor by ensuring the staff is knowledgeable, courteous and capable of resolving any conflicts that arise. Providing quality service also entails remembering the names and preferences of repeat visitors and giving advice about attractions and surroundings.

Advertising
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Successful hotels target specific consumers and will cater their prices, amenities and advertising strategies to this group. For example, some hotels advertise as an ideal location for business travelers by giving corporate discounts. This type of hotel also promotes itself as a venue for business meetings, displaying its on-site conference rooms in magazines aimed at executives. Robert D. Reid, author of "Hospitality and Marketing Management," advises hotels to veer away from generic descriptions such as "luxurious rooms" and "bargain price." Instead, Reid recommends commenting on the specifics of the dcor or customer service. For example, an ad for a hotel in Hawaii may show an image of its best-selling tropical drink.

Cost Control
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Managing costs is a critical factor in a hotel's success. Most hotels vary their rates according to high and low seasons. Additionally, the establishment of a loyalty program enables hotels to lower rates for repeat guests while charging different rates for others. One of the ways hotels plan is through reservations programs that forecast demand beyond 90 days. Michael J. O'Fallon, author of "Hotel Management and Operations," explains how computer programs also enable managers to identify the customers most willing to spend money and on which items. From this knowledge, the manager can advertise directly to the person before arrival by offering packages, upgrades and other incentives. Successful hotels also balance the cost of workers' wages, food and beverages, and electricity and maintenance with profits deriving from booked rooms, amenities, gift shops and food and beverages.

Product Differentiation
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Hotels thrive by offering guests a unique experience. This uniqueness may stem from the location: A rural hotel in the heart of the Tuscan countryside may offer Italian cooking classes, whereas a boutique hotel in Morocco might offer a hookah lounge. Other times, the differentiation is within the hotel itself. Hotels in Las Vegas, for instance, thrive by providing specific services that cater to the theme of the hotel, such as a Camelot theme or a Grecian dcor.

Airline Industry Key Success Factors

In the service industry, particularly the volatile, capital-intensive airline industry, success factors cover a wide spectrum--people, service product, route system, revenue/cost control and financial management.

1. People
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High-caliber staff is critical in this service-oriented business. Training programs focusing on front-line communicative skills with customers and internal employee-management problem solving with customer-focused continuous-improvement objectives are essential ingredients.

Service Product/Promotions
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The actual product--aircraft seating space, aircraft type, class of service offerings and booking ease-must be at least industry-competitive for success. Promotions, particularly those targeted to frequent high-revenue travelers, create loyalty and repeat business.

Route System
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An airline's route system is perhaps the most consistent success factor. Where to fly and how often are factors that must be matched to customer demand, and at the same time, scheduled to maximize aircraft utilization.

Revenue/Cost Control
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Maximizing revenue through competitive and innovative pricing schemes to attract and maintain a customer base is critical for success. Just as important is cost management, notably fuel procurement and price hedging during volatile periods.

Financial Management
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Net-unit revenue is the measure of profitability, representing all revenues minus all costs divided by the total seats flown. Successful management of this key indicator enables airlines to tap investment