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Pushing Value In The Hotel Industry

3065 words - 13 pages

Introduction
Hospitality industry is a fluctuating industry. One of the reasons is that because it is an industry that depends highly in seasonality period (Font, Penalva & Sampol, 2011). Seasonality according to Butler cited in Weidner (2006) is “the temporal imbalance in the phenomenon in tourism”. In hospitality industry, seasonality can be illustrated as in a period of time, hotels will be facing its peak season where there will be high occupancy and in another period of time, it will face low season where there will be lower occupancy. The hospitality industry also fluctuates as the result of global economic crisis (Kapiki, 2012). The financial crisis in 2008 could be one of the examples that can serve as a significant reason why hotels manager should always be ready and able to find a way to maintain the hotel business during tough economy times. After the economic slowdown in 2008, it was recorded that the average hotel room rate around the world was 14% cheaper in 2009 than the room rate in 2008 (Kapiki, 2012). This has later caused a decrease in the revenue earned by many hotels. Although lowering the price of the rooms can attract guests to book the room during the tough economic times, it is not an efficient strategy to be implemented in long term. Many strategies can be implemented for hotels to sustain its business and there are seven strategies proposed in the case study for hoteliers to apply during the economic crisis. “Pushing value instead of lowering price” is selected to be evaluated further in this study.
Price
Price, according to Oxford Dictionaries (2014), is the amount of money paid or given to obtain certain products. Products, in this case, include both goods and services (). In hospitality industry, price may refer to the rate of the room that guests pay when they book the hotels’ rooms. During economic crisis, people usually do not spend much money and also do not travel much which has caused the occupancy rate of hotels during this period to be low (Kapiki, 2012). Many hotels have practiced lowering room rate during this time to attract more guest to stay in the hotels. However, it may be a poor strategy to be executed as it means there will be less revenue earned by the hotels which lead to the less profit earned by hotels. Furthermore, in a survey done by Tuttle (2012), it had shown that some guests may perceive low price as having poor quality in the products offered. Therefore, instead of lowering the price during the tough economy times, it is better for the hospitality industry to push up or add in more value into its product.
Value
Value, as defined by Zeithaml cited in Kashyap & Bojanic (2000), is the consumers’ evaluation on the benefits given by a product based on the perceptions of what they obtain and what they give. In other word, value can also be referred to the quality of the product that customer received in return for the money exchanged (Raza, et al., 2012).
Pushing up value, according to the...

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