1. HOTEL MANAGEMENT THE EXTENDED MARKETING MIX
Entrepreneurship- BIS 301

2. The Extended Marketing Mix

3. Marketing Mix - People
People refers to your customer service staff and the attitude and appearance that is reflective of your organization, or perceived by your customer.
You cannot have strong corporate image without good people; good people that listen to your customers, and good people that communicate those comments, concerns, and needs to your entire organization.
Your people can determine whether
your customer will return.

4. Marketing Mix - People
How to develop PEOPLE into a competitive advantage?
Recruitment and selection – choose the right people for the right job (with good attitude)
Training – product knowledge, customer service skills and the processes
Development – prepare employees to take on greater roles and responsibilities in future
Compensation – do not underpay in terms
of salaries and benefits.

5. Marketing Mix - People
How to develop PEOPLE into a competitive advantage?
Treatment– treat employees well with dignity and respect
Working environment - provide a safe and comfortable working environment, foster teamwork and cooperation
Empowerment – allow employees the power to
make decisions that enables them to
serve customers better, make employees
accountable for their actions

6. Marketing Mix - Process
Procedure, mechanism and flow of activities by which services are used.
Also the 'Procedure' how the product / service will reach the end user.
Always focus on simplifying the process for your prospective customers.
All processes can be represented by the
Value Chain.

7. Marketing Mix - Process
How to make PROCESS a competitive advantage?
Simplify – make processes simple for customers to understand and perform
Convenient – make processes convenient for customers from their perspective (not the hotel or employees)
Reduce waiting time – do not let guests wait too long for the service

8. Marketing Mix – Physical Evidence
The elements of 'marketing mix' which customers
can actually see or experience when they use a
service.
Contribute to the perceived quality of the service

9. Marketing Mix – Physical Evidence
Include the following elements:
Furniture and furnishing of the rooms and all public
areas
Façade and appearance of hotel building itself
Brochures, paperwork and stationery
Lighting and ambience
Signage
Temperature and noise
Appearance of staff
Web pages
Appearance of advertisements

10. Marketing Mix – Physical Evidence
Physical Evidence must go in line with the positioning of the hotel.
A luxury hotel MUST appear luxurious!
A budget hotel however does not need to look cheap!
Physical evidence must make the customer perceive the hotel offers value and comfort.

11. Marketing Mix – Pricing
Three C of Pricing
Competition
Costs
Customers’ Comfort Zone
Competition is a dominant factor – Hotel cannot price itself out of the market / The prices must not differ too much from other hotels of similar standards

12. Marketing Mix – Pricing
Pricing based on Costs
Determine the operating costs of the hotel
Classify into fixed costs and variable costs
- fixed costs
– do not change in relation of volume / level of activity
- examples: rent, salaries, depreciation, insurance
- variable costs
– increase in relation to volume / level of activity
- examples: consumable stores, water and electricity

13. Marketing Mix – Pricing
Pricing based on Costs
Determine the targeted profits and occupancy level
Calculate the targeted pricing using the formula:
Fixed Cost + Targeted Profit
Contribution per room night
Where Contribution = Selling Price less Variable Costs

14. Marketing Mix – Pricing
Pricing based on Costs
Determine the targeted profits and occupancy level
Calculate the targeted pricing using the formula:
Fixed Cost + Targeted Profit
Contribution per room night
Where Contribution = Selling Price less Variable Costs

15. Example : Cost Plus Pricing
A hotelier runs a 50 room budget hotel.
The average room rate is $25 per room night
Budgeted monthly costs are as follows:
Depreciation $2,000
Fixed utilities $1,000
Salaries $17,000
Repairs and maintenance $1,000
Stationery and Printing $1,000
Advertising $3,000
Consumable materials and variable utilities $5 per room night.

16. Example: Cost Plus Pricing
Calculate the breakeven in room nights and sales.
If the hotelier expects at least 60% occupancy rate, what should he do?

17. Other Pricing Strategies
Hit or Miss
record occupancy rate at each pricing level
analyze the collected information periodically to determine which level was most profitable
set rate at the most profitable

18. Other Pricing Strategies
Percentage increase
list rates charged in the previous year
adjust for inflation and payroll increase
Pied Piper
set rates according to what other hotels in the area are asking for comparable accommodation