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Introduction
This paper explores the customer Traveler trends and performs a need-based analysis of customers’ expectations. In January 2008, Signature Hotels is planning to open its location in the heart of downtown Toronto. The Toronto Signature Hotel is an 850-room hotel, which will be opening its doors on Jan 2008 at the corner of King and Bay Street in Toronto. The hotel has brand new rooms with amenities like a complimentary shuttle to and from the airport, business center, whirlpool, sauna, outdoor sundeck, bathrobe, hairdryer, coffee/tea for the morning, same-day dry cleaning, and much more. Their banquets and meeting rooms are available at great prices with a total meeting space of 22,445 sq. ft.
Target Customer needs and preferences when traveling
Kevin (et all, 2006) has researched the innovative practices used by hotels to satisfy customer needs and preferences, specifically business travelers and also women business travelers who have increased needs of safety and privacy. The research shows that the professionalism of front-line staff was rated as a top individual item with the highest level of agreement among managers in achieving and maintaining competitiveness. As the nature of the hospitality industry is to provide service through people, front-line staffs, who have direct contact with customers, play an essential role in delivering quality service. Choi (16 April 2007) has suggested that business travelers try to fit in some pleasure along with the business trip. The author has given details from the National Business Travel Association, which suggests that 62 percent of U.S. business travelers add a leisure component to at least one business trip every year and two-thirds said that they also bring along a family member of a friend to the trip.
Current expectations
CNN (Chan, 14 August 2007) has reported that there is a change in the profile of the business traveler and this segment includes women, single parents, double-income families, people who would like to take their families, spouse or kids along and those who look forward to combining a vacation along with the business trip. When people come with their kids or other family members, they expect some type of entertainment, sightseeing facilities, and those with young kids expect a small playpen, a decent swimming pool, and other such facilities. The article also claims that nearly half of all business travelers are women who travel alone and have special needs for security in their rooms, in the car parking area, the lobby, lift, restaurant, bar, and other areas. Women need special care to ward off unwanted attention as they enter the hotel, have food or a drink, and hotel staff is trained to provide them better services. Some hotels have created women-friendly services with special floors exclusively for women and monitor all approach and exit points in the hotel.
Florio (30 May 2007) has reported that Generation X or the new young business travelers expect “luxuries of home in exchange for their hard-earned travel dollar. Among other facilities, this group expects, Designer beds, Flat-screen TVs, Gaming consoles, Free high-speed wireless internet, In-room sofas and desks for working on laptops, Excellent task lighting for reading and working, DVD players, 24-hour fitness and business centers, Fresh gourmet coffee at all hours, Healthier breakfast options, Pub-style social areas, In-room coffeepot, microwave and mini-fridge, Showers with luxury shower heads and plenty of water pressure, High-end toilet kits, High thread count sheets and pillowcases, luxury pillows, Satellite radio alarm clocks, and a concierge to add value to their hotel investment of time and money
Degree of brand loyalty
Skogland (August 2007) has conducted into the relationship between brand loyalty and repeat customers. The firmly held doctrine that guest satisfaction means repeat business is called into question by the results of the research in which 364 guests of two similar big-city hotels were conducted. Analysis showed only a weak connection between satisfaction and loyalty, which is a precursor to repeat purchases. Examining such factors as the purpose of travel and demographics, the study revealed another finding that may give hoteliers pause – especially considering the industry’s huge expenditures on frequent-guest programs. Business travelers were among the least loyal of the guests responding to the survey. The chief factors that engaged guests’ loyalty were hotel design and amenities. Moreover, the factor that caused guests to be most involved in the purchase decision and therefore more interested in the hotel was its employees. The study suggests that hotels should redirect so some of their frequent-guest expenditures toward strengthening human resources and toward improving the guests’ experience through design and amenities. The report argues that Customer-defection rates are high for businesses today. U.S. corporations routinely lose half their customers over five years resulting in a 25 to 50 percent reduction in corporate performance. At the same time, researchers have noted the importance of customer retention, citing evidence to indicate that over time, a returning customer becomes decreasingly costly to serve because of learning effects and reduced service costs, while that customer simultaneously purchases more, pays higher prices, and willingly offers word-of-mouth recommendations to others. To capture the benefits of having loyal customers, many companies-particularly hospitality firms-have invested millions of dollars in customer retention programs. Marriott spent $54 million in 2005 on its Honored Guest program, while Hyatt invested $25 million in its loyalty program. Nevertheless, customer-loyalty programs are now being heavily scrutinized to determine whether they are doing what they were intended to do: increase customer loyalty and build profits.
Problems travelers face (business and leisure)
Harris (March 2006) has reported about certain factors and issues and problems that travelers face and while some of them are beyond the control of hotels, certain issues need to be looked into. While factors such as weather, delayed flights, traffic congestion is some of the factors that hotels cannot control, factors such as hotel service, food, restaurant, conferences, luxuries in the room, amenities in the hotel, etc. can be controlled. Business travelers may sometimes miss flights due to an overcrowded itinerary and may have to spend quite a few hours in the airport waiting for the next flight out and this leads to a chain of delays. The author has also reported that foreign travelers, especially from Asian countries such as China face severe problems since some of them may speak only a few words of English. Hotel employees who speak Chinese and other foreign languages are great assets to a hotel. Customers of different ethnic origins may also face problems with food since some religions such as Hinduism and Buddhism do not allow nonvegetarian foods to be consumed and they eat only vegetarian food. Harris has also reported about the health and medical problems that travelers face and while facilities are always available for emergencies and accidents, small ailments such as colds, sore throat, stomach upset, and other ailments cause problems.
Perceptions/Attitudes of hotels in Toronto (or 4-star hotels generally)
There are different categories of hotels in Toronto and they can be categorized as 5 Star Luxury Hotels, Boutique Hotels, Luxury hotels in Toronto, and cheaper hotels. Room types vary from simple bed and breakfast types that offer rooms costing about 100 $ per night (Cheap Hotels, 2007) to luxury suites that cost a few thousand dollars per night (LHW, 2007). The choice of the hotel will depend on the budget and the money that the guest can spend. Many of the hotels regularly also hold food festivals where cosine from different areas are presented and guests can enjoy fine dining from the hands of master chefs. The Signature hotel has to develop a good portfolio on its menu items considering the cross-ethnic profiles of customers in the city. Many customers who attend late-night theatre shows prefer to have a quick drink and eat something light before they visit the shows and Signature hotel can think of providing such quick drink and smacks services. Such customers may not sit down for a long time but may prefer to finish off their eating in a few minutes.
Key influencers of purchase
Tourism Exchange (Prices, 2007) has reported that 61% of travelers turn to the Internet to find a good deal, locations, and features. User-generated content (UGC) or feedback and reviews from users and customers help to make a decision and 72% have said that consumer reviews have influenced their travel choice, 15.3% state they always use UGC for travel, and a lower 12% for non-travel products such as music. The report also states that 63.8% of people occasionally use UGC in their buying cycle and this means 79.1% of people have used consumer reviews for travel before. UGCs need to be authentic and not made up of false posts and good UGC can be obtained only by providing better services.
Charlwood (2007) has written that all-work and no-play business travelers are now disappearing and 68 percent of travelers want to incorporate life-enriching experiences into their business trips. People prefer to enjoy theater performances, fine dining, sightseeing, recreational activities, cultural experiences, etc. People who exercise regularly prefer a hotel that has a swimming pool, a jogging track, and other such facilities, as they do not want to skip their regimen even when they are traveling. Hotels and travel agents also offer services such as weekend travel plans, car rentals, private sightseeing trips, spa treatments, wine tasting, in-room fitness programs, and other such services. The author has suggested that such services often help to serve as key influences of purchase.
Emotional drivers (what do they love and hate about travel)
Verma (2007) has written about customer’s preferences and dislikes and he argues that to a great extent, the likes and dislikes depend on the customer’s profile, age, culture, and ethnic background. The author has stressed that what one group may find very enjoyable will ‘turn off’ another group. According to the author, the younger generation of travelers likes to have an attached discotheque with loud music and if there is any live music in the restaurant, they would prefer fast current music. On the other hand, senior customers would prefer very little noise and would like to have soft classical music running in the background. Some travelers like to come to the room and rest after a busy day and they prefer to have access to high-speed broadband Internet so that they can access mails, access company websites, post reports, etc. and many of them prefer to remain closeted in the room while other like to have a quick rest and sample the leisure spots in the city. Verma has also reported that among some of the things that visitors like are sampling different cultures and visiting different people, the chance to develop new contacts, and increasing one’s knowledge.
Verma (2007) also speaks of factors that people do not like such as not getting their money’s worth when they visit hotels and restaurants and feel that the price for the food is very high and the portions served are too small. Among other things that visitors hated the most were impolite and offensive hotel staff that were not ready to comply with basic requests. Excessive delay in room service was also cited as one of the most hated reasons.
The average frequency of travel
Accenture (Accenture, 2006) has suggested that the frequency of travel is expected to rise by 1/3 rd shortly and this figure includes leisure and as well as business travelers. The report suggests that with the increase in business activities and global outsourcing processes, more and more people would take up international travel and international visitors would also be coming in ever-larger numbers to Toronto.
Top hotel choices when visiting Toronto
More than 50% of travelers these days to Toronto are business travelers. Toronto is a great city with vibrant, colorful nightlife, multiculturalism, and peace and prosperity this city displays towards the world but it is nothing compared to Hawaii or Walt Disneyland Land. The reason there are more business travelers here in Toronto than at leisure is that there is no scenic view that tourists come for. There are no great sunrise or sunsets like Hawaii; it’s a corporate-based city. Most of the major companies have their base here which draws in a lot of corporate clientele. So keeping this in mind hotels are careful about their business travelers. They try to go above and beyond to cover their business travelers’ needs and wants.
Table 1. Competitive Analysis gives a breakup of different hotels that are present in Toronto. The leading hotels are Toronto Signature Hotel, Fairmont Royal York, Sheraton Center Hotel, Cambridge Suites Hotel, Novotel Toronto Center, and Hilton Hotel. The table also gives the points that each hotel has obtained in terms of services it offers and it can be seen that Toronto Signature Hotel has a 26 point basis score for the facilities that are provided. The score suggests that the hotel has very good potential to attract the right kind of customers and would have a good base of loyal customers.
Table 1. Competitive Analysis
Trends, un-met needs
Signature Hotels should develop a robust IT system that would help in identifying repeat customers, optimizing its resources, and increasing information sharing across all its branches. Hallowell Roger. (2000) speaks of the Four Seasons hotels and resorts that form the epitome of luxury hotels and states that in such hotels, the management takes active interests in anticipating the needs of its customers. The hotel maintains a database of its customers and the software technology uses advanced algorithms to detect to identify the customers even if they use different variations of their names such as Helen S, Smith H, Smith Helen, etc. In such cases, the repeat customers are quickly identified, their past preferences for the room, beverage, room linen, and other factors are quickly retrieved and the customer is treated like an old friend. Anticipating the unmet needs of customers and repeat customers is one of the greatest challenges. For example, if the hotel management can know in advance that the guest is coming with a baby, then they can keep suitable toys, cribs, and other gear in the room so that the baby can play. Such practices provide for very high customer satisfaction and generate good publicity.
Preferred Booking methods
A majority of the hotels in Toronto have websites and you can view the accommodation and other facilities and even book reservations as needed. Reservations can be done either online or by calling up the hotel and about 70 percent of the reservations are done online. As a matter of policy, the credit card number has to be provided to verify the credentials but charges are levied only at check out (Five Star Alliance, 2007)
Top experience or dissatisfaction issues
According to the research by Eric (et all, 2006), some of the top dissatisfaction issues create a bad experience for customers. Top among the reasons are bad service in the form of impolite and belligerent behavior of the staff, the discrimination they show towards perception of wealth of the customers, late or delayed room service, bad food, room not being made up as required and incidences of theft and misappropriation of cash or jewelry. The author suggests that regular customers expect to be allotted a room when they drop in without booking a room and when they are turned down, they move to a new hotel and become regular customers of the new place.
Price tolerance levels
A study by Accenture suggests that Price and location are the main two criteria that people consider when selecting a hotel for either business or leisure. When the priorities are reversed, then the proximity to the business s meeting places assumed more priority. The study suggests that while customers like to keep an eye on the price factor, they would not like to stay in a hotel that was far off simply because it was cheaper. Another report suggests that price makes a difference for the budget customer who may be working for smaller companies. Such customers prefer to stay in hotels that fit their budget requirements and where they can stay by the travel allowance that is given to them (Accenture, 2006).
Eric (et all, 2006) have researched the relation between room occupancy and room rates and they surveyed 513 frequent individual travelers about their perception of price and hotel preferences. The study suggests that to maintain desired room occupancy rates, one of the common strategies a hotel will normally adopt is cutting prices. This trend greatly affects a hotel’s profits and may result in the deterioration of a hotel’s status. Many hotels consequently discover new competitors and fail to retain guests in the long run as the guests tend to be skeptical about the level of the advertised price reduction. This implies that hoteliers need to have a better understanding of how such factors beyond price, such as the quality of their services and their facilities, influence the booking behavior of customers. The study found that beyond ‘price’, ‘convenient hotel location’ and ‘good service’ were the key factors influencing FITs in their final selection of the hotel. Business travelers tend to place more emphasis on their previous hotel experience; good service; convenience and company recommendation; whereas leisure travelers and those with a lower level of education valued travel agents’ recommendation. Repeat visitors valued good hotel reputation, while the impact of subjective norms on big spenders was high. Many regular customers to reputed hotels get turned off when they see a shabby crowd, ill-dressed and boorish customers who are attracted by lower prices and who indulge in loud and obnoxious behavior.
Recommendations
Based on the discussion done in the previous sections, certain recommendations are suggested.
Branding and Promotion: To invite business travelers, a thorough survey of medium to large businesses has to be conducted and the advertisement and promotion have to be done through online, print, and TV spots. Budgeting and priority for the selection of appropriate media need to be done. The promotion and advertisement have to be very aggressive and designed to catch the required eyeballs.
Relations with Travel Agents: Travel agents have to be approached and sufficient commission has to be given to ensure that they recommend the Signature hotels to the customers.
Tariff: Since this is a start-up hotel, a small introductory discount can be given on the tariff but the excessive discount can be counterproductive. The hotel can make up by offering free services, beverages, complimentary use of the gym, etc.
IT Systems: The key to success is developing robust IT systems and a company website that provides the required information for customers. All the branches of the hotels need to be connected in a LAN/ WAN configuration, which allows data and information to be shared. Such systems help in recognizing repeat customers and welcoming them properly. The website should give pictures of the rooms and the possible views from the balcony along with tariffs, taxes and should have the facility for online booking and reservation.
References
Accenture. 2006. US Travel Survey: Fall 2006: Accenture Reports. Web.
Choi Candice. 2007. Taking the kids on business. Web.
Chan Michelle Jana. 2007. High-flying women of the world.
Charlwood U. Gary. 2007. Business Travelers Seek Enrichment. Web.
Cheap Hotels. 2007. Cheap Hotels in Toronto. Web.
Eric S W Chan. Simon C K Wong. 2006. Hotel selection: When price is not the issue. Journal of Vacation Marketing. Volume 12. Issue 2. pp: 142-160.
Hallowell Roger. (2000). Case Study: Four Seasons Hotels and Resorts. Harvard Business School Publishing, Boston MA. Document ID: 9-800-385.
Harris Shane. 2006. The future of the European branded budget hotel sector. Journal of Leisure Property. Volume 6. Issue 22. pp: 113-119.
Florio Dan. 2007. Generation X Business Travelers Want More from Their Hotels. Web.
Five Star Alliance. 2007. Benefits of Reserving with Five Star Alliance. Web.
Kevin K F Wong. Cindy Kwan. (2006). An analysis of the competitive strategies of hotels and travel agents. International Journal of Contemporary Hospitality Management. Bradford. Volume 18. Issue 6. pp: 293-304
LHW. 2007. Leading Hotels of the World. Web.
Prices. 2007. Consumer reviews influence travel choices. Web.
Skogland Iselin. Siguaw Judy A. 2007. Are Your Satisfied Customers Loyal? Cornell Hotel and Restaurant Administration Quarterly. Volume 45. Issue 3. pp: 221-235.
Verma Rohit. 2007. Unlocking the Secrets of Customers: Cornell University. Volume 7. Issue 2. Web.
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