I have lost count of how many hotels and conference centers I’ve encountered over the years who define their strategy as ”delivering great customer experiences” or being ”among the top 5 in their category or region”.

But that’s not a strategy. At best it’s a vision and and worst-case it’s just wishful thinking

Strategy is distinctly different from visions missions and goals. Strategy crystallizes the very hard choices that we all need to make. Strategy defines how we create value. Value emerges when we have the skills to produce something that costs us less to produce than somebody else is willing to pay for it. Period.

Value = ( Sales Price – Cots to produce/deliver)

At first, that sounds simple – but it quickly gets trickier, what I may be happy to pay € 100 for is probably quite different from what you are happy to pay €100 for. Value is deeply subjective, each of us computes it in our own way depending on the circumstances and the situation.

It therefore makes no sense to talk about creating value without at the same time answering the question value for whom?

Because if I try to be everything to everybody I risk ending up being nothing to anybody and there’s not much value in that.

Where to Play
Developing an effective strategy therefore boils down to defining target market segments and clearly understanding what it is they need. (But but when targeting certain segments we also need to understand that that means there are other segments that we are willing to forgo)

How to Win
The better we understand the specifics of a segment the better we can tailor our service delivery in such a way that we produce value for exactly that segment.

So the 3 hard questions we need to ask our selves are:
1. Who is the target customer?
2. What is the value proposition to that customer?
3. What are the essential capabilities needed to deliver that value proposition?

Obviously, if we are running a hospitality business that is open 365 days a year we will need to identify several target segments ( time of year, day of the week – day part etc). Remembering, that what differentiates segments is not the demographics but the situation.
I have very different needs when I’m traveling in connection with a weekend break, compared to when I am traveling to conduct a workshop – same fellow very different needs ( and price points).

So we need to break down our value propositions into situations.

In my book Best! . No need to be cheap if you are … I have a chapter on how to work on you value proposition using the value equation.

Also here is a great article from S+B on the same subject – and finally the best tool to visualize and brainstorm some more on this is the Business Model Canvas as explained in the video here.

This is the core idea of my new book.

So why write another book you might ask – it’s not as if the world is craving for more books on service, customer focus or management?
Surely there is also an abundance of books?

Well – Yes… But on the other hand… No!

Let me explain.

My work in the service industry has been based on the principles outlined in a book that caught my attention in 1990 called The Service Profit Chain – shortly after the book was published I became the CEO of a large hospitality group and the principles outlined in the book became the basic foundation for the approach that we took. It worked like a dream for us.
In fact it worked so well that in 2001 I decided to form a consulting and training company that would help others implement the principles of the Service Profit Chain.
So for the past 10 years or so I have been delivering workshops, training, and keynote speaking to companies in the service industry from consulting engineers to managers in large hospitality groups.

I nearly always get asked at some point: ”Where can we read more about this? ”

And I refer people back to the original work published by Harvard in 1989.
But when I then check back later and ask if they enjoyed the book I very often get slightly sheepish looks and some mumbled excuses about not really getting past the first chapter.

I suspect this has to do with the fact that a lot of the people working in the service industry prefer a very practical hands-on approach to their learning. The original service profit chain book is a fabulous piece of work but it is in parts quite theoretical and with more than 360 pages to get through it is also quite a mouthful when you have a lot of other stuff on your plate.

Invariably the discussion therefore leads the obvious question from my client: Why don’t you write an easy to read, simple to understand hands-on guide to implementing the service profit chain – we really need that!

And funnily enough when I then researched what’s already published I can’t find anything that integrates all seven steps of The Service Profit Chain into one coherent system that is easily understandable at all levels of the organisation.

So there was nothing els for it but do it my self – and here is is:
Best! No need to be cheap if you are…

Discounting is clearly increasingly popular. Customers love it and more and more companies are piling in to catch a bit of the action. Nonetheless Groupon and LivingSocial are still by far the 2 largest players.

But is it good business in the hospitality sector?

I think that question is the most frequently debated subject amongst industry players wherever they gather at the moment.

On the surface there are 2 fronts.

Those that are doing it and therefore have all sorts of sophisticated arguments why they consider it good business. On the other side those that are not doing it because they consider it the worst form of business ever.

What until now has been really hard to evaluate is who is right and who is wrong.

But now the Centre for Hospitality Research at Cornell University has just released a study that tries to answer exactly that question and a few more – this most useful report can be downloaded here

Key findings are:

Generally participating hotels surveyed report moderate success.

The deals do bring in new business. But as to producing repeat business this is too much less extent the case than what hoteliers hope for when arguing for using these promotions.

“One factor often cited to justify offering a flash sale pro- motion, repeat business, did not seem to operate for these respondents.”

Hoteliers who are happiest with the outcome of their deals are also the ones who have managed the total cost of the deal most assertively.

Overall the conclusion seems to be that flash deals can work for you if you are very astute in negotiating the deal with the coupon provider and you find a way to either upsell to these customers when they are there or have a surefire way to convert them into repeat customers.

This is very neatly illustrated by the authors like this

“Evaluating your property on these two dimensions allows you to better frame the value proposition offered by flash deals. If you don’t expect to be able to convert customers from flash sales deals into returning guests, you must carefully manage the margins of any deal you develop and creatively identify opportunities for cross-selling and up-selling once guests are on property. When you expect high conversions from flash sales customers to returning guests, you could justify the deal as a marketing expense. You should carefully avoid structuring any flash sales that will land you in the lower left quadrant.”

Emerging Marketing Channels in Hospitality:
A Global Study of Internet-Enabled Flash Sales and Private Sales
by Gabriele Piccoli and Chekitan S. Dev – you will find it here

Question:
What are your experiences with Flash sales – are they working/not working for you?

Inspired by the principles developed in the “Service Profit Chain”, Mike Hohnen takes you through each of the steps needed to create an outstanding service business.

You will find it here on Amazon

Best!

We live in a world of abundance – there is plenty of choice everywhere. And since 2008 we have experienced significant drops in demand as consumers became more careful. The result is a widening gap between supply and demand in virtually any category you can imagine.
When that happens, many companies have a knee-jerk reaction, and the recipe is more or less always the same: initiate rigorous cost-cutting programs, reduce staff and/or services, offer discounts in many forms, and increase advertising aggressively.
This, however, is the equivalent of trying to steer and brake as your car begins to skid on black ice while going through a sharp curve.
As you hit that declining demand curve, you need to perform what at first seems like a counterintuitive move: hold your price, increase your services, improve your quality, and narrow your focus in the market.
In this book, you will not only understand why but also see how you can do that.

Almost any surface or fabric in the 2030 hotel room will be capable of electronic enhancement, whether it is scent production, acting as a visual display or speaker, or as a source of ambient sound.

Read the full article her

Interesting because for years and years the traditional banquet room has been a ‘set piece’ and precisely for that reason something one tried to avoid for anything remotely creative..

Read more trends from the article: Hotel Trends Driven by China’s Next Generation of Travellers

Ensure your property can be reached in the fastest growing sales channel, with a revenue-driving mobile website. With more than 15 million people projected to book hotel rooms on their mobile devices in 2012, the time is now.

Read the full article on Hospitalitynet

While the fundamentals of hospitality remain steadfast, the
context wrapping around the offer of hospitality services has
changed tremendously, and it will continue to change. In looking
to the year ahead, there are any number of possible, and even
a few probable, futures that we should consider. As we do this,
it is vital that we do not ignore the forces of change around us
that are constantly molding our story of tomorrow as we write it.

In the article Chris Luebkeman asks some poignant questions that are suitable for your next future scenarios planning session :

• What if energy were free ? What if it were rationed ? Or each
individual had a personal resource account ?
• What would happen if oil hit US$ 200 per barrel ? What will
happen when carbon is taxed ?
• What if wealth continues to flow East and South ? What if
disposable income continues to disappear in the US
and Europe ?
• What will the new wave of tourists bring ? What will the
growing middle-class Indians or Chinese expect in a hotel ?
• What does a property look like that is fit for Korean
teenagers ?
• What if the « staycation » replaces the global grand tour ?

As you answer each of these questions, consider how our industry will not just survive, but thrive

About The Hotel Yearbook: The Hotel Yearbook is a uniquely forward-looking annual publication. Each year, dozens of CEOs and other senior executives from the hotel industry worldwide, as well as leading analysts and observers, use this platform to share their expectations for the coming twelve months. Each of the 70+ contributors looks specifically at his or her area of expertise, describing the likely developments for the year ahead. As a whole, The Hotel Yearbook thus offers readers a comprehensive overview of the trends and factors that will have an impact on the performance of the hotel business in the year to come – as perceived by the industry’s leaders themselves. For more information visit www.hotel-yearbook.com.

In today’s world of networked individuals, new behaviors are emerging. Some are creating new rules and systems of behavior, even within face-to-face experiences. Some are defying old patterns of beliefs.

Here are some of the questions you should be asking our house anthropologist to consider:

* What patterns of attendee behavior are you observing?
* Where are attendees congregating?
* Where are they not congregating?
* What venue and environmental pressures are shaping the attendee experience?
* What parts of your venue are attendees avoiding?
* What are attendees carrying with them to sessions?
* How are attendees communicating with each other?
* How are attendees reacting to the flow of the conference experience?
* What are attendees feeling about this experience?
* How are attendees behaving in education sessions?

This idea is further elaborated in a great post from Velvet Chainsaw Consulting here

However – you don’t need to be a giant like Accor to have your own corporate University!

If you belong to a smaller chain or association of independent hotels you can partner with us. We deliver custom made service management training at university level. This is what the association of Danish Conference Centers has done with result of now having educated more than 150 managers since 2004

Courses can be designed according to student levels on bachelor or masters level and with or without official accreditation. Also students can get certificates at both levels or go for full degrees. Programmes are accredited by the University of Chester(UK).

All GROW programmes are based on action learning. This means that students stay on their job while studying and have as their main focus to add value to their organisation and work towards solutions to real worklife challenges.

For more information drop me a note.