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Low-Budget Hotels HM.02 Anne Bastiaansen Amke Eskes Richard Kortooms…
Low-Budget Hotels
HM.02
Anne Bastiaansen
Amke Eskes
Richard Kortooms
Noortje Tiebosch
Frédérique Post
Customer Market Segmentation
Demographic Variables
Generation Y, Echo Boomers or Millenniums, (25-42 years)
WJ Schroer, 2019
These age groups visited the UK the most in 2018
Visitbritain, 2019
Psychographic Variables
Tailored experience, free WIFI working in the entire hotel.
Manet, 2018
Geographic Variables
Origin airport annual seat capacity in Germany, based on research to analyze where most German travelers are traveling from/region they probably live: Frankfurt, Munich, Dusseldorf, Berlin, Hamburg.
Visitbritain, 2019
Research based on the leisure traveler visiting a budget hotel in London
Behavioural Variables
Number one activity is dining in restaurants. Shopping and going to a pub also score high on the list.
Visitbritain, 2019
Service Life Cycle
Prime performance (4 to 6 years)
As a hotel, you need to focus now on short-term strategies and you are building long-term strategies
Opening & Stabilization (0 to 3 years)
Opening and post opening, this means that there is a lack of experience and solve operating problems.
Peak Performance (7 to 9 years)
There will be a stable demand for your hotel. At this point, the hotel has a strong profitability
Negative growth (10+ years)
New hotels are coming up now, you will lose market share. Besides, the property will need renovation
Market Structures
Imperfect competition
During low season imperfect competition becomes more present. Smaller cities tend to face these difficulties all year round. This is because products are not homogeneous and many sellers are present in the market. Making that companies need to distinguish themselves.
Perfect competition
Present in large cities and high season mostly present in low budget referring to the hostel sector of low budget. As there is a high demand and there is no direct competition between hostels because of the homogeneous product there selling.
Order Winners
Cost
Little Hotelier
Manufacturing costs
Selling price
Penetrate the market, Price match your competitors and psychological pricing
Value added
Speed
High-end technology usage
Self/ online check-in
Quality
Core product
Location
Hygiene
Customer services
Flexibility
Offering different types of rooms. (Standard, suite)
Characteristics of a product or service which is directly contribute to winning business from customers
Organisational Design
Centralisation
When looking at the Ibis hotel, which is part of the Accor hotel group we see that several back-office functions are centralized in a headquarters. We are talking about functions as reservations, conferences and events & finance.
Citizen M
Formalisation
Formalization is low, we believe that this is a characteristic for many low budgets hotels as this is not a means to achieve their order winners or order qualifiers. High formalization is also not a requirement for the target group of budget hotels.
Hierachy
Hierarchy levels in Budget Hotels are generally not distances as there is a lower expectancy than for example at a luxury hotel.
Completely connected community
Complexity
There is limited to no subunits making complexity low. Low budget hotels, rarely offer a or multiple restaurants, or other facilities like a gym or spa.
Berlin
Order Qualifiers
Bedroom comfort
(Hua, 2009)
Different ways to book a hotel
Clean/Hygiene
(Hua, 2009)
WIFI (Free WIFI in Hotels, 20 years ago this was qualified as an order winner, nowadays it is an order qualifier.)
Safety & Security
(Hua, 2009)
Well-trained staff
Workspace for business guests
Core Processes
Customer Relation Process
Hua, et al, 2018
Loyalty programs - repeated guests - special deals / price breaks
No tracking of preferences
Schedule adherence - focus on stay
Order fulfillment process
Richards, G. and Grinsted, S. , 2016
Flexible to changing customer's needs and wants
Trends
Accuracy
Quick implementation
Low maintenance / low service fee
assembly line ( restaurants), automatization (reception)
Guests have low expectations
Product and service development process
Grotte, 2013
Development focussed on technology
Computerized Reservation System ( CRS)
Grotte, 2013
Price performance
Focus on product quality
Minimum and maximum stay
Trained staff
Supplier Relation Process
Grönroos, 2004
Quick delivery performance
Low price performance - mass production
Process types
Mass production
Line operations
Organisational Form
Functional
Every major brand has its own budget hotel line which tends to make use of a functional organizational form. This has to do with centralization that often takes place in chains.
Divisional
Backpackers/hostels which are organized around accommodation as a single product
Hostel world
Types of operation
Information Processing Operations (IPO's)
Different types of technology used to store guest information in the system. (Check-Inn system Opera for example) & nowadays hotels give guests the possibility to check-in themselves upfront, so before the given arrival time. Hotel chains receive the necessary information online.
Hotelsmart, 2019
Materials Processing Operations (MPO's)
Material offered in the hotel rooms (bed, desk, closet, shower, sink, etc..) Budget hotels do not always offer diner options within the hotel but they often offer breakfast service to guests (e.g. food is the material prepared in the production kitchen)
Accor, 2019
Customer Processing Operations (CPO's)
A budget hotel clearly has very little customization, if any and there are circumstances where contact personnel may require a high degree of judgement, such as customer complaints or emergencies. Budget hotels often do not offer 24 hours reception service.
Hope and Muhlemann, 1997
4 V's
Variety
low
We compared the services offered from a low budget hotel with the services offered at a high-end hotel. (IBIS & The Savoy website).
Volume
high
If we compare a low budget hotel with for example a boutique hotel than we can absolutely say that the Volume of a low budget hotel is high. The revenue per room is still growing with 9% and especially in China, low budget hotels are growing very fast.
uniassignment
Variaton
medium
The Business traveler also travels during low season. In comparison to a resort hotel, We would say the variation is medium and not high. (hospitality-net.com)
Variability
low
Customizing its products is more difficult because first of all the product range is not that big. Secondly, their volume is high, which makes customising its services and products more difficult. Thirdly customers do not expect high customisation otherwise they would not have chosen a budget hotel.
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