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SME hoteliers the case for co-operative marketing

SME hoteliers face profound marketing challenges. Alison Morrison, 1996 defined SME hotels as … financed by one individual or small group, directly managed by its owner (s) in a personalised manner and not through the medium of a formalised management structure.

It may or may not be affiliated to an external agency on a continual basis for at least one management function.

In comparison to the largest unit of operation within the hotel industry it is perceived as small, in terms of physical facilities, product/service terms of physical facilities, product/service capacity and number of employees.

Wanhill, 1997 indicated that certain weaknesses are associated with small and medium-sized tourism enterprises

(1). supply dominated by family businesses:

(2). a lack of entrepreneurial drive owing to noneconomic motives of business operation;

(3). limited skills of marketing, quality assuring policy, cost control and readjustment and a shortage of financial resources.

In order to better understand SME hoteliers Morrison sort data from Department of Employment, Enterprise, Small Business Research Trust, Hospitality Training foundation, Kleinwort Benson Securities and Keynote Publications.

Small hotel firm sector policy and strategy issues

  • Assets are under-utilised by approximately 55 per cent annually.
  • Average number of bedrooms per small firm is nine.
  • Average number of employees is 50 per cent less than the small firm sector norm.
  • Continuing growth in the number of liquidations affecting the small firm.
  • Losing market share to large firms and corporate groups.
  • Majority operate at the low budget market level in secondary/tertiary locations.
  • More sensitive to occupancy and seasonal fluctuations than large firms.
  • Profit margins 40 per cent less than corporate-owned budget-style accommodation.
  • Self-employment is 57 per cent higher than the small firm sector norm.
  • VAT registration peak (1990) was 22.3 per cent less than the small firm sector norm.
  • Volume of UK hotel accommodation is shrinking at the expense of the small firm.

The above challenges are accentuated if the property is geographically located in peripheral tourist destination area. Such properties are dependent upon heritage, festivals, sporting activities, returning expatriates consequently these establishments experience strong seasonal fluctuations, expatiated by high transport and time costs.

How to survive and proposer.

SME hoteliers the case for co-operative marketing

 Join a consortium. Why?

Benefits production of marketing materials and distribution of printed materials joint marketing ventures and special promotions, overseas representation, computerised central reservations, representation at travel fairs, domestic and overseas marketing initiatives and member referral business. Plus spin offs such as informal professional advice and general peer support, and relief from the feeling “you’re isolated”

Consortium strategy should seek to

(1) explicitly differentiate member hotel characteristic branding by defining and selling benefits of the individual members products and the destination as a whole. If the consortium is to deliver hotel customers the consumer must be assured of the consortium distinctiveness, quality, individuality which means members must adhere to quality standards.

(2) Data mining – the objective being to increase off season occupancy through bursts of press advertising.

(3) Innovative product extension for example two night romantic breaks, competition events, education courses promoted by press. online advertising, direct mail and promotional offers.

(4) Market diversification golf, shooting, fishing campaigns publicised through specialist magazines, reader offers, direct mail postcard campaign.

References

International Journal of International Journal of Management

Open University Business Library

Christopher Bird Author

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