HOTEL MANAGEMENT

THE EXTENDED MARKETING MIX

The Extended Marketing Mix

Marketing Mix - People

People refers to your customer service staff and the attitude
and appearance that is reflective of your organization, or
perceived by your customer.
You cannot have strong corporate image without good
people; good people that listen to your customers, and good
people that communicate those comments, concerns, and
needs to your entire organization.
Your people can determine whether
your customer will return.

Marketing Mix - People

How to develop PEOPLE into a competitive

advantage?
Recruitment

and selection choose the right people

for the right job (with good attitude)
Training product knowledge, customer service skills
and the processes
Development prepare employees to take on greater
roles and responsibilities in future
Compensation do not underpay in terms
of salaries and benefits.

Marketing Mix - People

How to develop PEOPLE into a competitive advantage?

Treatment treat employees well with dignity and
respect
Working environment - provide a safe and
comfortable working environment, foster teamwork and
cooperation
Empowerment allow employees the power to
make decisions that enables them to
serve customers better, make employees
accountable for their actions

Marketing Mix - Process

Procedure, mechanism and flow of activities by which
services are used.
Also the 'Procedure' how the product / service will reach
the end user.
Always focus on simplifying the process for your
prospective customers.
All processes can be represented by the
Value Chain.

Marketing Mix - Process

How to make PROCESS a competitive advantage?

Simplify

make processes simple for customers to

understand and perform
Convenient make processes convenient for
customers from their perspective (not the hotel or
employees)
Reduce waiting time do not let guests wait too long
for the service

Marketing Mix Physical Evidence

The elements of 'marketing mix' which customers
can actually see or experience when they use a
service.
Contribute to the perceived quality of the service

Marketing Mix Physical Evidence

Include

the following elements:

Furniture

and furnishing of the rooms and all public

areas
Faade and appearance of hotel building itself
Brochures, paperwork and stationery
Lighting and ambience
Signage
Temperature and noise
Appearance of staff
Web pages
Appearance of advertisements

Marketing Mix Physical Evidence

Physical Evidence must go in line with the
positioning of the hotel.
A luxury hotel MUST appear luxurious!
A budget hotel however does not need to look
cheap!
Physical evidence must make the customer
perceive the hotel offers value and comfort.

Marketing Mix Pricing

Three C of Pricing
Competition
Costs
Customers Comfort Zone

Competition is a dominant factor Hotel cannot

price itself out of the market / The prices must not
differ too much from other hotels of similar standards

Marketing Mix Pricing

Pricing based on Costs
1. Determine the operating costs of the hotel
2. Classify into fixed costs and variable costs
- fixed costs
do not change in relation of volume / level of activity
- examples: rent, salaries, depreciation, insurance
- variable costs
increase in relation to volume / level of activity
- examples: consumable stores, water and electricity

Marketing Mix Pricing

Pricing based on Costs
3. Determine the targeted profits and occupancy level
4. Calculate the targeted pricing using the formula:
Fixed Cost + Targeted Profit
Contribution per room night
Where Contribution = Selling Price less Variable Costs

Marketing Mix Pricing

Pricing based on Costs
3. Determine the targeted profits and occupancy level
4. Calculate the targeted pricing using the formula:
Fixed Cost + Targeted Profit
Contribution per room night
Where Contribution = Selling Price less Variable Costs

Example : Cost Plus Pricing

A hotelier runs a 50 room budget hotel.
The average room rate is $25 per room night
Budgeted monthly costs are as follows:
Depreciation
$2,000
Fixed utilities
$1,000
Salaries
$17,000
Repairs and maintenance
$1,000
Stationery and Printing $1,000
Advertising $3,000
Consumable materials and variable utilities $5 per room
night.

Example: Cost Plus Pricing

Calculate the breakeven in room nights and
sales.
If the hotelier expects at least 60%
occupancy rate, what should he do?

Other Pricing Strategies

Hit or Miss
record occupancy rate at each pricing
level
analyze the collected information
periodically to determine which level was
most profitable
set rate at the most profitable

Other Pricing Strategies

Percentage increase
list rates charged in the previous year
adjust for inflation and payroll increase
Pied Piper
set rates according to what other hotels in
the area are asking for comparable
accommodation