Hotel_Management_and_Operations_by_Denney_G_Rutherford,_Michael

281Section 6.5 ᭿ Strategic Alliances Between Hotels and Restaurants

Table 6.9 Key Property Performance tential, the Bristol management team recog-
Indicators nized that a new restaurant concept was
needed. After objectively evaluating their op-
1996 Projected tions, including their own F&B concepts, the
1997 team determined that a Good Eats Grill fran-
chise matched Bristol’s restaurant needs for
Hotel occupancy 72% 85% this particular property. The Bristol experi-
ADR $49 $60 ence demonstrates the importance of evaluat-
Food profit 5% 25% ing each property on an individual basis
Beverage profit 50% 60% rather than making generalizations about
what will work for all hotel properties.
operation prior to proceeding with a project
like the one between Holiday Inn Interconti- In conclusion, from our perspective there
nental and Good Eats Grill. is no question that now and in the future we
will see more hotel and restaurant companies
Final analysis. Throughout this case study establishing strategic alliances. It is no longer
analysis, we emphasized how important the financially feasible for a hotel restaurant to be
repositioning strategy was in turning around operated as just a support function to the ho-
the Houston Holiday Inn Intercontinental. A tel’s lodging operations. The hotel restaurant
quick look at key property performance indi- must now be viewed as a selling point to gen-
cators (Table 6.9) demonstrates the success of erate increased room and restaurant rev-
that repositioning strategy. enues. The hotel restaurant must be managed
as its own profit center where the goal is to
Moreover, we focused primarily on only maximize overall property profits. For the en-
one part of the hotel’s repositioning strategy, tire property to be profitable, the restaurant
that is, its strategic alignment with a particular concept and the hotel’s market position must
restaurant concept. Other factors also con- complement each other. Put another way, in
tributed to the property’s improved per- today’s competitive business environment the
formance, including new ownership and hotel restaurant cannot—and should not try
management, an influx of cash for renova- to—be all things to all people. To achieve a
tions, and its new market position. Neverthe- competitive edge, hotel companies must con-
less, the alliance between Bristol and Good sider operating a franchised restaurant brand
Eats Grill is seen as key to the property’s or leasing space within the hotel to a restau-
turnaround. The property’s previous restau- rant company. Doing so may improve cus-
rant, the Grand Cargo Cafe, was being oper- tomer perception and value, and as a result
ated as a hotel amenity rather than as a profit increase the overall profitability of the
center. To capitalize on the restaurant’s po- property.

282 Chapter 6 ᭿ Food and Beverage Division

6.6 C O N T E M P O R A R Y H O T E L C AT E R I N G

Patti J. Shock and John Stefanelli

Although on-premise catering is generally the audio-visual requirements, etc. In hotels
second largest source of revenue for most ho- where conventions are not an important mar-
tels, following sleeping rooms, the on-premise ket segment, Convention Service may not ex-
catering area has been virtually ignored in the ist, in which case Catering would handle all
hotel school curriculum. The colleges that do food and non-food logistics.
offer a course in catering usually focus
on hands-on classes consisting of planning, The Director of Catering assigns and
cooking, and serving a meal, which is good oversees all functions; oversees catering sales
background, but is not the role of the hotel managers; oversees all marketing efforts; in-
catering department. teracts with clients and catering managers; co-
ordinates with the hotel sales director; and
Catering is often the highest visibility the works with the chef to update and create
hotel has on a local level. Catering can create menus.
an image for the hotel, both locally and
nationally. Under the Director of Catering there may
be an Assistant Catering Director who helps
᭤ DEPARTMENT with marketing, oversees Catering Sales Man-
ORGANIZATION agers, and services one or more accounts.
There may be several Catering Sales Man-
In most hotels the Director of Catering re- agers, depending on the size of the hotel.
Catering Sales Managers maintain client con-
ports to the Director of Food and Beverage, tacts and service accounts. Their role is to sell
with Banquet Managers and Banquet Set-Up and service functions. They must seek and
Managers reporting to Catering. In other ho- consult with clients, plan menus, themes, room
tels you may find a Director of Catering and set-up and decor; negotiate prices; and coor-
Convention Service reporting to the Director dinate with inside departments and outside
of Marketing, with the Banquet positions re- vendors. There are several excellent graphic
porting to Food and Beverage. In the latter room-setup software packages available on
arrangement, Convention Service usually the market.
handles food and beverage functions for
groups with 20 or more sleeping rooms with The Catering Department may also em-
Catering selling and servicing the local social ploy Catering Sales Representatives who are
and business markets. Convention Service usually involved only with selling, leaving the
then does not sell; the room sales department servicing to others.
handles that aspect. Convention Service in
most hotels, however, handles all of the non- The Banquet Manager implements the
food related logistics, including room set-up, Director of Catering’s requests; oversees
room captains; supervises functions in
progress; staffs and schedules servers and bar-
tenders; and coordinates all support depart-
ments. He or she is the operations director, as

283Section 6.6 ᭿ Contemporary Hotel Catering

opposed to catering executives, who primarily bles; and attend to guest needs. Beverage
sell and work with clients to plan events. Servers serve alcoholic beverages, usually at
receptions. Bus persons, whose primary re-
The Assistant Banquet Manager reports sponsibilities are to clear tables, restock side
to the Banquet Manager and supervises table stands, and serve ice water, rolls, butter and
settings and decor. There may be two (or condiments, sometimes back up servers.
more) assistants; for example, a hotel may
have one for the day and one for the evening The Bartender concentrates on alcoholic
shift. beverage production and service. Bartenders
are often assisted by Bar Backs, whose pri-
The Banquet Set-up Manager supervises mary responsibility is to initially stock and re-
the banquet set-up crew; orders tables, chairs, plenish the bars with liquor, ice, glassware and
portable bars, and other room equipment other necessary supplies.
from storage; and supervises the tear-down of
the room after the event has concluded. Housemen (sometimes referred to as
porters) set up function rooms with risers,
The Scheduler, often referred to as the hardware, tables, chairs and other necessary
Diary Clerk, enters bookings in the Master equipment. They report to the Banquet Set-
Log (now usually computerized); oversees the up Manager.
timing of all functions and provides adequate
turnover time between functions; is responsi- Attendants “refresh” meeting rooms dur-
ble for scheduling meeting rooms, reception ing breaks by emptying ashtrays when smok-
areas, pool-side areas, meal functions, bever- ing is permitted, refilling water pitchers, and
age functions, other functions, and equipment removing trash. Some catered functions also
requirements; keeps appropriate records to require Coat-Check Attendants or Restroom
ensure against overbooking and double book- Attendants.
ing of space; and is responsible for com-
municating this information to relevant The Clerk (or Secretary) handles routine
departments. correspondence, types contracts and banquet
event orders (BEOs), handles and routes tele-
The Maître d’Hôtel is the floor manager. phone messages, and distributes documents
He or she is in charge of all service personnel to relevant staff members and other hotel
and oversees all aspects of guest service dur- departments.
ing meal and beverage functions in the vari-
ous function rooms on the floor. The Engineering Department provides
necessary utilities service, such as air condi-
The Captain is the room manager and is tioning/heating, setting up electrical panels
in charge of service at meal functions in a spe- for major exhibits, hanging banners, and set-
cific room. Captains typically oversee all ac- ting up audio visual displays.
tivity in the entire function room or,
depending on the size of the room, in a por- Other miscellaneous positions include the
tion of it. They also supervise the Servers in following. A Sommelier (or Wine Steward) is
their room or section of the room. used only at fancy, upscale events. The
Cashier sells drink tickets to guests at cash
There are two types of Servers, Food bars. A Ticket Taker may be required to col-
Servers and Beverage Servers. Food Servers lect tickets from guests at the door to the
deliver foods, alcoholic and non-alcoholic function. Finally, most catering departments
beverages, and utensils to the table; clear ta- employ Stewards to deliver the proper

284 Chapter 6 ᭿ Food and Beverage Division

amount of china, glassware, and silver to func- develop contracts, and provide required prod-
tion rooms. ucts and services.

Whatever the organizational structure, The initial contact for a function can
catering’s favorable impact on hotel prof- come from the client or the catering depart-
itability is primarily due to the fact that cater- ment. In many cases, the potential client
ing has more control over the variable makes the first inquiry. He or she may contact
expenses than does the manager of a typical you by phone, by letter, fax, email, or in
restaurant. In a restaurant, labor must be person.
scheduled, heat/air conditioning must be on,
and food must be kept in inventory, whether If the contact is by phone, be sure the per-
or not any guests are present in the facility. In son answering the phone can answer ques-
catering, a function must be booked before tions, or that someone knowledgeable is
these items are scheduled or purchased. So always available. Too often a low-paid, un-
there are more variable costs in catering, and trained person in the office answers the
more fixed costs in restaurant foodservice. phone, and this can hamper the selling effort.
The phone should always be answered within
᭤ THE SALES AND three rings. Always secure the name and
SERVICE PROCESS phone number of the caller.

Selling is a vital part of catering (see Figure If the initial contact is by letter, email, or
fax, try to answer with a phone call. Copies of
6.2). To sell a catering event, potential mar- the letter were most likely sent to several
kets must be identified and cultivated. Target caterers and it is best to be the first to re-
markets must be established. Potential mar- spond. More information is often needed,
kets include association meetings (local such as the budget the client has for the event
monthly meetings as well as the national an- or the objective of the function. This initial
nual conventions); corporate meetings, in- contact also provides the opportunity to in-
cluding training sessions and incentive vite the potential client to the property for
banquets; weddings and anniversaries; bar lunch and a tour. Every effort should be made
mitzvahs; proms; garden clubs; holiday par- to get the potential client into the hotel, on
ties; reunions, both school and military; and your home turf.
fraternal organizations, such as Rotary and
Lions. The list is endless. Sometimes a letter will include a Request
for Proposal (RFP), which is a written pros-
A marketing plan should be developed pectus from professional meeting planners.
that clearly defines the desirable target mar- An RFP usually indicates that the poten-
kets; defines the demand; describes compet- tial client is very knowledgeable about
ing caterers; sets financial goals; considers catering and is usually a sophisticated
other potential income that catering can gen- negotiator.
erate for the hotel; and describes standard-
ized procedures that must be used to canvass If potential clients stop by in person with-
for new clients, qualify leads, make sales calls, out an appointment, have someone see them
as soon as possible. Offer some light refresh-
ments to keep them occupied until someone
is available. Give an accurate estimate of how
long they will have to wait. Have the recep-

285Section 6.6 ᭿ Contemporary Hotel Catering

Figure 6.2 Steps in Selling and Servicing a Catering Event

Potential by telephone, letter, Hotel qualifies Isolate
client fax, request for proposal, potential client; decision
contacts maker
hotel in person credit check

Hotel by telephone, personal letter,
contacts direct mail, cold call,
potential sales blitz
client

Negotiations Proposal: Facility
menu, decor, prices, tour
objective, budget, theme
Implement
Contract(s) Book room.
Signature(s) Plan menu, floor plan/layout.
Inform chef, banquet service and banquet
setup, engineer, outside vendors, other

internal departments.

BEO Payment Follow-up
distribution

tionist obtain preliminary information, such A Group History File should be created
as their desired date(s) and type of function, whenever initial contact is made. The file
to get them involved in the planning process should include all facets of the business rela-
right away. Also, keep a binder handy for tionship, from initial contact to final disposi-
browsing that contains testimonial letters tion. Standardized information includes name
from happy clients and photos of previous of contact, name of decision maker, titles, or-
events. ganization, types of events held, number of

286 Chapter 6 ᭿ Food and Beverage Division

events held, when events are held, attendance dards; professional attention must be paid to
figures, all correspondence, notes from phone all details; the function host should be made
conversations, contracts, credit history, poten- to feel like a guest at the event, instead of a
tial for future business, and client preferences. harassed and worried manager. Last minute
requests and crises must be handled quickly
The manager responding to client in- and efficiently. It is imperative to be flexible.
quiries must understand the hotel’s capabili-
ties. He or she especially needs knowledge of Follow-up is vital for repeat business.
food and beverage production and service. Standardized procedures should be devel-
Planning a menu for a small group is quite dif- oped for thank-you calls and individualized,
ferent from a large group. For example, souf- personal thank-you letters. Completed
flé for 1,000 would be quite impossible. events should be evaluated with staff and
client input. Referral business should be so-
When planning a menu, the caterer must licited. Appropriate souvenir gifts may be
first know the occasion or reason for the presented. And outstanding accounts should
event. The style of service also depends on the be settled.
occasion. It would be inappropriate to have a
deli sandwich buffet for an auspicious awards ᭤ FUTURE ISSUES
banquet.
Issues facing the catering department in the
With international events, protocol must
be considered in everything from decor to di- future include new alcohol restrictions; the
etary restrictions. The World of Culture web- demand for more menu alternatives, includ-
site (http://www.webofculture.com/) provides ing low-fat, pesticide-free, generally safe, un-
good information on a variety of cultures. contaminated products; the competition from
off-premise catering firms; waste disposal reg-
Public space or function rooms must be ulations and recycling; consumers becoming
forecast for space utilization, just as the hotel more value conscious; and service becoming a
sales department forecasts sleeping rooms more important point of differentiation.
requirements.
Subcontracting will become more com-
Working well with inside departments is mon, especially for labor and food. Calling
critical. Linens have to be requisitioned from one company to provide servers is more effi-
the linen room; engineers must insure that the cient than having staff on the phone calling
room temperature is appropriate; tables must individual on-call workers. The independent
be set up; and purchasing must order the labor contractor trains staff and does all of
correct amounts and types of food and the payroll and paperwork.
beverages.
Caterers can’t afford to have all types of
Outside vendors, such as decorators, expertise on their staffs. With a Japanese
audio-visual companies, florists, printers, and theme, a sushi restaurant may be subcon-
photographers may be needed by the client to tracted. Or a local barbecue specialist, oyster
ensure a successful event. roaster, or coffee service company can handle
unique events. The hotel would add about 20
Performing well is the next step. Here the percent markup to the subcontractor’s bill,
emphasis shifts from sales to service. Guests
must be treated with care; service must be
punctual; foods, presentations, cleanliness,
and ambiance must meet desired quality stan-

287Section 6.7 ᭿ A Day in the Life of an Executive Director of Catering Sales and Convention Services

and then add the cost of the rest of the meal tionship will become more important as ca-
prepared in-house. terers attempt to rise above the competition.

In the past, menus rarely changed. Today, There are a multitude of resources avail-
many menus are changed with the season. In able on the web, including, for example,
the future it will be important to be able Room Calculator (http://www.mmaweb.com/
to distinguish between a fad and a trend. meetings/Workshop/roomcalc.html), which
Fads, such as Nouvelle Cuisine, are short- will determine how many guests you can fit
lived. Trends, such as the demand for fresh into a room in various configurations. Many
foods and more nutritious food, are more caterers have their menus online which are in-
permanent. teresting to see. Special Events Magazine
(http://www.specialevents.com/magazine/)
Probably the biggest challenge is the per- and Event Solutions (http://www.event-solu-
ception among guests that all caterers are ex- tions.com/) have timely articles that are
actly alike. Buyers may feel that there is archived online and are searchable.
always another caterer able to provide similar
service. It is imperative for the successful A large collection of useful catering web
caterer to differentiate their food and service links can be found at: http://www.unlv.edu/
from their competition. The price/value rela- Tourism/Catering_and_Special_Events.html.

6.7 A D AY I N T H E L I F E O F A N
EXECUTIVE DIRECTOR OF CATERING
SALES AND CONVENTION SERVICES

Rich Benninger

Each day I wake up saying, “Today is the day are the backbone of catering. Their workday
I will get everything done.” It is my optimist here will end in four more hours, and many
side taking control before my realist side has will go to a second job.
a chance to ruin my day. Because I ply my
trade at a 5,034-room hotel with over 380,000 The day will not end for the catering di-
square feet of banquet space, it is usually rector until a few things are completed.The di-
around 8:00 A.M. when my realist side kicks in. rector has just one job, sort of, and is the front
By this time I have been at work for an hour person for the operation. Now, please allow
or more and start taking victories as soon as me to take you on a journey through a typical
they come. The day is half over for the dedi- day in the life of a catering director. But first I
cated line cast members who started working must make coffee. Nobody else in the office
at 4:00 A.M. so our thousands of guests can en- notices that 1 ounce of coffee left in a pot does
joy their morning breakfast. These employees not mean “There’s coffee in the pot.” The fol-
lowing describes what I did today.

288 Chapter 6 ᭿ Food and Beverage Division

᭤ BOOKING BUSINESS large industrial trucks, and when we tell her
we can put a concrete mixer right in the mid-
Customers are the number-one component of dle of her reception she is all smiles. I make
note to get the dimensions of the roll-up
a successful catering operation. Without cus- doors. We are going to be more expensive
tomers, the grandest ballrooms, the most than the competition, but we provide more
spectacular cuisine, and the best service are value. We can make this a one-stop shopping
all moot points. So, every day you must work experience. I make a note to call transporta-
to fill the pipeline with customers. The rooms tion companies and gather quotes. I know the
sales managers are really doing a great job. other properties will not get involved in deal-
They are booking over quota and getting con- ing with all the outside vendors, and I use this
tracts with great food and beverage mini- as a selling advantage. I make a note to list
mums. For just a moment, I fantasize that this this as a tentative piece of business worth
will never end and life will always be good. $165,000 or more.

Oh no! We have just been asked why the Next I make a hasty trip across property
week between Christmas and New Year’s does to check on a breakfast we are doing on the
not have any events. Transient room sales are stage of our production show. We are lucky to
strong, but they do not use function space. It’s have an incentive house tour our property,
up to catering sales to fill in the hole. My team and we have pulled out all the stops to let this
tells me that had sales not already done so VIP group know we value their business. I am
they could easily fill space a week before or a pleased with the spectacular stage sets and
week later, but that holiday week is going to the look of the breakfast. I laugh with the
be tough to fill. I know this is true, but the sen- sales manager when he apologizes for only
ior vice president does not care that some- giving us 36 hours notice on the breakfast. I
thing is tough. He wants to know what we are assure him the financial rewards of getting
doing to get business. And by the way, not dis- large incentive bookings will more than make
count business. We start out looking for full- up for the short notice. I make a note to send
paying customers and if that does not work, each guest a thank-you note for taking the
then we will look at discounting. time to tour our property.

I am excited to meet a customer for a site ᭤ FINALIZING PROGRAMS
visit at 7:30 A.M. I am the first property she is
looking at for a 2,500-guest reception and The only time a program is truly finalized is
concert. I just talked to her yesterday for the
very first time. All our meeting space is once the customers are gone and the final bill
booked but I’m in luck; we have space in our is paid. And then just the physical stuff is
arena. I work with the arena for about an over. Conversations about the really good
hour to get the space and brainstorm on stuff and the sometimes bad stuff can go on
things we can do to book this business. The for years. Repeat customers are usually the
arena operations guys are great to work with. best ones to have, but they tend to remember
They enjoy coming to the catering office for that five years ago the potato salad did not
cappuccino. I smile when I think how cheap have a spoon in it when the company presi-
cappuccino is and how many favors it buys dent went to the buffet 15 minutes before it
from operations cast members.

We spend an hour walking our customer
through her event. Her company sells very

289Section 6.7 ᭿ A Day in the Life of an Executive Director of Catering Sales and Convention Services

was scheduled to open. “Let’s not let that hap- ᭤ CREATING MENUS
pen this year.”
I promise a major corporate client that I will
You spend months working to get every-
thing planned at least three weeks in advance. write three custom menu options for their
Then you give all the information to the op- opening reception. I tell them I will do it on
erating departments two weeks out. For some Saturday and I’ll fax the menus so they have
groups this works really well, and once you them for a Monday meeting. I promise myself
work out the details they only make minor I will not commit to doing any more projects
changes. Other groups are not quite so tidy in on Saturday. It is going to be my catch-up
their planning. day, and I’ve been filling the day with new
projects. I may have to work a few hours on
Today I had a group arrive on site, and we Sunday to get on track for next week. The
reviewed their banquet event orders. It would great thing about writing custom menus is
be easier to say we redid their banquet event every time I do one I add it to my hot menu
orders (BEOs). At 9:00 A.M. we started re- file and just keep reusing it. I do make a no-
viewing 45 meal function BEOs. By 2:15 P.M. tation of whom I send each one to. I would
we had made major changes to 42 of them. I hate to send someone the same custom menu
wonder aloud if they would like to change the twice.
other three just for good measure. The chefs
are circling the catering office like sharks. All In this world of ever more sophisticated
the food ordering is on hold until the revised customers, the quest for new menus has taken
BEOs are signed off on. While I’m working on a life all its own. The unfortunate side of
with the clients to refinalize, the chefs and this sophisticated customer often comes with
purchasing agents are on the phone undoing fond memories of a gourmet dinner for two at
all the ordering they did days ago. Purveyors some exotic trendy restaurant. Other favorite
are all on standby to rush product to us. I am sources of wonderful ideas are glossy cooking
thankful we have excellent relationships with magazines and TV cooking shows. Now the
these wonderful people, who will now pull off simple task of any caterer is to figure out how
miracles to get us product over the weekend. to make these menus, designed to serve eight,
work for hundreds or thousands. Of course,
My assistant is ready to shoot someone. you are not alone in this situation. The culi-
Making the changes once is enough of a nary staff is right there with you. Please don’t
challenge, but now we are changing things take it personally that many of them think
for a second and third time in one day. I you are crazy.
smile as I say, “Yes, I’m sure I can get you a
completely new set of BEOs by 5:00 P.M.” ᭤ WORKING EVENTS
Just as I tell myself we must be done with
changes, my contact calls and changes two of Luckily for my catering department, we work
the remaining original three BEOs. I get no
comfort from the fact that the one lone orig- at a property where we are cast in the role of
inal BEO is for an event that does not hap- salespeople. Another team of professionals
pen until five days from now. I do, however, handles operations. Still, I can’t resist taking
get great comfort from the knowledge that 10 minutes and going down to see how setup
my clients will spend over $800,000 in the is going for a poolside reception. Somehow
next eight days.

290 Chapter 6 ᭿ Food and Beverage Division

I spend 45 minutes at the pool, and now I’m ᭤ BUDGETS
going to have to rush to a pre-con meeting.
The clients who spent the day making Yesterday we had our review for next year’s
changes are very big customers, and the pre-
con will be a big production. We have all our budget. I must start working on a really ag-
top executives coming by to say hello. I am gressive marketing plan to make the revenue
anxious to see how the eight cheerleaders will number we are after. For today, I’ll just start
do with the dance number they are perform- by having a binder made so I feel like I’m
ing in the center of the hollow square. I am making progress. I ask my assistant to run
very pleased to see the banquet and enter- some reports so I can take them home and
tainment departments have everything in per- look at them. I know I’ll never look at them
fect order. while I’m home, but if I find spare time I’ll
have them, just in case.

᭤ LEADING AN OFFICE ᭤ MENTORING AND
INDUSTRY INVOLVEMENT
One of my catering managers comes into my
I call two new interns from the university to
office and asks to talk. In two days she will re-
new her wedding vows and she is very nerv- confirm their Saturday appointments with
ous. I go into father mode and we make a list me. I need to meet with them to determine
of things she has to do. I laugh when I ask her their interests and what program they are go-
why she is nervous about having a party for 30 ing to follow for the eight months they will
people when every day she books parties for spend with us. I hope they will want to work
hundreds of guests. I try to ease her burden of on the marketing plan and be active in the
preparing some of the food herself. I suggest National Association of Catering Executives
she just bring in the bowls she wants to use (NACE). I also have a protégé from the uni-
and I’ll have the kitchen fill them up with versity, and it would be nice if all three can
whatever she wants. I smile when she says, work together on projects. I feel pressure to
“No, thank you, I make really good salads my- provide these students with an overwhelm-
self.” I wonder, does that mean our salads are ingly positive experience. Last year I was
not really good? voted Outstanding Mentor of the Year, and
now I feel a higher level of expectation.
Throughout the day, my staff gives me en-
couragement while I am working to get all the Unfortunately, I have to cancel my NACE
changes made on my group. They all offer to Board of Directors meeting scheduled for to-
help, and I notice the number of things I am day. I am the president of our chapter, and I
asked to look at is very low today. I am proud have not had time to work on the things I
of my staff and make a note to have a special need for the meeting. I do not want to waste
breakfast at our catering meeting next week. the board’s time. I make a note to call our
It has been almost two months since we NACE intern and schedule a meeting to see
started a new format for our catering meet- what tasks I can have her handle for the
ings, and I must say they are much better and Board. Involvement in NACE is rewarding,
everyone seems happier with them.

291Section 6.8 ᭿ The Organization and Management of Hotel Beverage Operations

but it is like a part-time job. What was I think- ᭤ PERSONAL LIFE
ing when we agreed to do a fund-raising din-
ner for 1,000 in February? I’m sure it was the My four golden retrievers are really happy to
same thing I thought when I said I would love
to teach an extension class at the University. see me. I know they have had dinner and were
It all seems so far away when I say yes. Some- well cared for while I was gone, but I feed
how it all works out. them again. It is the most wonderful thing I
do each day. I take my suit off and get into
᭤ ENTERTAINING sweats. It’s time to go for a walk and tell them
all about my day. They agree that making so
It’s 5:00 P.M. and I need to leave for a cocktail many changes is just not right. We devise a
plan to keep others from making my day so
party at a sister property across the street. I stressed. Then we talk about the three-day
am joining the vice president of sales and the trip we are taking to Utah the day my in-
executive director of convention services to house group ends. It will be our first motor
entertain clients. We have a cocktail party and home trip, and we are all excited. It seems my
then a 7:30 P.M. dinner and a 10:00 P.M. show. golden retrievers are tired of camping in a
The evening is wonderful. Our clients really tent. Additionally, I plan to spend time work-
enjoy the special attention we give them. ing on my online masters degree, and a motor
When 10:00 P.M. comes, I wonder if I’ll stay home will be a good place to work. I try not to
awake at the show. My fears are unjustified. think too hard about my degree. It makes it
The comedian is so funny my sides hurt from hard to sleep when I think of working on my
laughing. I think, what a great career. I get to final project.
have fun while I work. As the evening ends at
11:30 P.M. I confirm that I’ll play golf in two Now it’s 12:30 A.M. and I need to get in
weeks—just another sacrifice for my clients. bed. As I lie down, I resolve that tomorrow
will be “the day I get everything done.”

6.8 T H E O R G A N I Z AT I O N A N D
MANAGEMENT OF HOTEL BEVERAGE
OPERATIONS

Valentino Luciani

᭤ BRIEF HISTORY OF people together. Beverages have always made
BEVERAGES an impact on the evolution of humankind.
Thanks to modern technology and more ad-
A beverage such as a glass of wine, a beer, or vanced carbon-dating techniques, archeolo-
gists have now established with certainty
a cocktail has the magic power of bringing that our species has been around for several

292 Chapter 6 ᭿ Food and Beverage Division

hundred thousand years—a lot longer than on record to own a tavern and sell alcoholic
was estimated 50 years ago. In accepting the beverages to patrons was Samuel Cole. His
fact that alcohol is as old as we are, it would beverage business was already prospering by
be of great interest to discover what type of 1634.
beverages were consumed over such a span of
time. We can only assume that the earliest bev- Beer, which presently accounts for 51 per-
erages were fermented cider-type concoctions cent of alcoholic beverage sales, carries on a
made from various kinds of fruit, or brews fine tradition in our country. According to the
made from grain, seeds, and anything else na- diary of the Mayflower’s captain, the ship was
ture had to offer. These drinks were perhaps not scheduled to dock on Plymouth Rock but
enriched with spices, herbs, and probably more was made to stop there mainly because it had
exotic flavoring agents, some of which have run out of beer.
been forgotten or lost over the centuries.
Nonalcoholic beverages such as coffee,
What is known for certain is included in tea, fruit juices, and, later, carbonated bever-
recorded history, and it is relatively recent ages have also made a considerable impact on
when compared to the newly found lifespan our evolution and lifestyle. During the past
of Homo sapiens erectus. In recent excava- five decades, Coca-Cola has taken the world
tions, some of the first evidence of eating food by storm. Of the hot beverages, coffee and tea
and consuming a beverage in a communal are the uncontested kings. One has to only
fashion is found in the Orkney Islands, close observe the proliferation of specialty coffee
to Denmark. It was a custom then to build shops and kiosks to begin to understand the
dwellings around a common dispenser where impact of this beverage.
foods and drinks were prepared.
᭤ OVERVIEW
Egyptologists have recently published
photos of wall paintings found in pharaohs’ The beverage industry grows in popularity
tombs. In these remarkably preserved works
of art one can clearly see Egyptian workers every year. Restaurant U.S.A., the official pub-
harvesting grapes and preparing them for lication of the National Restaurant Associa-
winemaking. The (presumably filled) wine tion, reported in 1995 that total sales for bars
vessels were then placed in an orderly fashion and taverns neared the $11 billion mark. For
next to the tomb. The Egyptian nobles be- the year 2005, total sales for bars and taverns
lieved that these beverages made the best are expected to exceed the threshold of $15
companions for the pharaoh’s eternal travel. billion in sales. Hotels, restaurants, and resorts
have for some time regarded the beverage sec-
Greek and Roman historians report that tor as a profitable one. In a medium to large-
wine and other alcoholic beverages played a size hotel, a typical beverage department can
vital role in their societies. The fun-loving Ro- produce a profit of over 50 percent of sales. In
mans went as far as worshiping a beverage de- comparison, a food department shows, at best,
ity: Bacchus, the god of wine. Wine and brew a profit of between 15 and 18 percent of sales.
shops, which are thought to have been intro- Beverage is also gradually gaining a larger
duced approximately 6,000 years ago, could share of sales. Hotel operators report that
be found at every street corner of ancient while two decades ago the sales ratio was
Rome. In the United States, the first person

293Section 6.8 ᭿ The Organization and Management of Hotel Beverage Operations

85–15 (85 percent food sales, 15 percent bev- running and supervising all of the department
erage sales), today the average is closer to activities. The organization chart is a diagram
80–20. that shows the operation’s working positions
and how they interconnect. The beverage
Before World War II, in a small to manager usually reports to the food and bev-
medium-sized hotel and restaurant operation, erage director. In a very large hotel operation
the person in charge of the beverage depart- (over 2,000), the F&B director reports to the
ment was the restaurant manager. In many vice president of food and beverage.
properties, a lead bartender or the wine stew-
ard was given the responsibility to run the During the last decade, some properties
department. have adopted a different strategy where there
are separate food and beverage directors. In
Today, in a medium to large-size hotel op- these properties the executive chef, who in
eration, the beverage department has a dis- most cases acts more as a food director than a
tinct place in the organization chart, and the hands-on chef, is placed in charge of the food
beverage manager is the person in charge of

Figure 6.3 Organization Chart of
Beverage Department in a
Medium to Large Hotel

General Manager

Hotel Food and
Beverage Director

Beverage Manager

Assistant Beverage
Manager

(Head Bartender)

Bartenders Beverage Servers

Bar Backs
(Bartender Assistants)

294 Chapter 6 ᭿ Food and Beverage Division

department. He or she enjoys a higher degree management are applied effectively. As in
of independence and reports directly to the many other business sectors, these are plan-
general manager, vice president of operations, ning, organizing, directing, staffing, and con-
or, in some instances, directly to the hotel trolling. The wise and competent bar manager
president. The same is true of the beverage applies and adapts the fundamental principles
director. of each of these functions to the specific
needs of the operation. All five functions are
Both of these directors are considered determining factors in meeting the opera-
equal in the organization chart. They strive to tion’s ultimate objective: profitability.
work together effectively and to communi-
cate daily. They are interdependent in many It all begins with planning and continues
ways but also aware of the need for commu- in directing and organizing so that the staff
nication. In addition, each must establish a on a daily basis diligently adheres to the es-
sound working rapport with department tablished standards. Examples: checking
heads of other hotel sectors. These include bartenders’ opening and closing duties, stan-
front desk supervisors, executive housekeep- dardizing drink recipes, verifying that the bar
ers, human resource directors, and so forth. par stock (established amount of beverage
Typical of this case, the food manager and the product) is at the proper level, scheduling,
beverage manager, particularly, come to- forecasting, frequently communicating with
gether at the end of the month, when the re- other fellow managers (in particular the
sults of their efforts are included in the same catering manager and the executive steward),
profit and loss statement. and so forth.

Although larger properties find this or- The competent bar manager always finds
ganization chart modification beneficial to sufficient time to inspect the underbars (the
the operation, the majority of hotel properties working area behind and underneath the bar
retain the traditional hierarchy, structuring counter), the jockey boxes (the small com-
the chain of command in the same fashion as partment next to the ice bin), and the speed
for the past six or seven decades. A typical ex- racks (where the inexpensive, or well, bottles
ample of a classic organization chart for a and the more popular brand-name liquor are
beverage operation in a large hotel is shown placed).
in Figure 6.3.
The above are also the areas where man-
᭤ SHOP TALK AND THE agers cannot place enough emphasis on how
ACTIVE MANAGER vital it is to the operation to continuously ap-
ply sanitary standards and practice the utmost
The bar manager or beverage director is the cleanliness. Glassware must not only be
cleaned but sanitized as well.
person who makes it all happen in relation to
hotel beverages. Although specific responsi- An important organizational and training
bilities may vary from one hotel to another, function is the sequencing of beverage stock.
the fundamental role of the manager is to This is the order in which spirits and cordials
make certain that the five basic functions of are placed on the shelves or speed rack. It
also refers to the order by which the drinks
are called to the bartender by the serving
staff, and it must always be the same. Super-

295Section 6.8 ᭿ The Organization and Management of Hotel Beverage Operations

vising the beverage staff and ensuring that • Establishing ongoing training sessions.
control methods are foolproof are crucial and
demanding tasks; sequencing provides part of • Evaluating beverage staffs’ work per-
the structural mix that helps assure consis- formance.
tency of product and service.
• Checking city and county ordinances re-
᭤ MARKETING AND garding the service of alcohol and review-
MERCHANDISING ing state and federal laws on handling
liquor responsibly.
Throughout the competitive hotel industry,
• Preventing bartenders from committing
beverage managers consider smart marketing fraud and attempting illegal practices.
and effective merchandising the keys to suc-
cess. The marketing of the overall operation • Ensuring proper sanitary standards are
and the merchandising of the beverage prod- applied throughout the bar outlets and
uct require time, experience, and commit- the storage and the service areas.
ment. To make the beverage operation
attractive to different types of patrons and to • Making certain everyone in the depart-
convey a message of value in the service of ment adheres to proper safety standards.
beverages, bar managers and directors regu-
larly brainstorm. More trendy cocktails are • Writing, rewriting, and updating bar
being created daily. Light and refreshing working manuals and handbooks accord-
blush wines and sparkling wines are intro- ing to need.
duced in the preparation of new drinks.
Promotional programs and attractive enter- • Evaluating the bar menu offerings and,
tainment are featured to keep lounges full whenever possible, substituting slow-
and patrons eager to return. selling liquor brands with more attractive
and trendy ones.
Conscientious beverage managers never
rest on their laurels—they are always on the • In particular, renewing beverage product
lookout for profitable ways to stay ahead of selection of specialty beers (e.g., by fea-
the competition. As the beverage sector turing microbrewed products), brandies,
grows and patrons’ expectations increase, and cordials.
there are always new and challenging tasks to
deal with. The following is a list of managerial • Tracking trends. For example, a current
tasks with which beverage managers are oc- trend is apparent in cordials or liqueurs.
cupied on an ongoing basis: Beverage operators are finding that light,
sweet, and pleasant-tasting cordials such
• Introducing control systems that are as Godiva White Chocolate, Nocello,
more effective in monitoring the opera- Grand Marnier, Frangelico, Drambuie,
tion—for example, upgrading forms for and Bailey’s Irish Cream are enjoying
properly storing and issuing beverage newfound popularity. They are also seeing
products and for inventory purposes. lots of movement in attractive new prod-
ucts such as Remy Red and the fabulous
premium tequilas and Polish vodkas.

• Last but not least, assuring the consis-
tency and quality of the service provided
to the bar and lounge patron.

296 Chapter 6 ᭿ Food and Beverage Division

᭤ HUMAN RESOURCES cial event bookings for the forecasting period.
An accurate forecast helps the manager pre-
Outstanding service is the result of a sound pare for clientele volume so that potential
revenue can be maximized. It also helps
organization and diligent recruiting. Bar- greatly in effectively managing beverage
tenders and beverage servers can be talented stock, payroll, staff scheduling, and other
and willing, but if they are not provided with expenses.
the necessary resources, total management
support, encouragement, and guidance, their Many hotel executives agree that the first
efforts will be in vain. A situation may arise decade of the twenty-first century will be sig-
where the deciding factor in the delivery of nificant for the beverage industry. One pecu-
fine and consistent service depends less on liar prediction is that, although total hotel
personnel skills and attitude than on the role revenues are expected to grow considerably,
played by management. the ratio of beverage sales to room sales will
remain the same or decrease slightly. Because
Service is the backbone of the hospitality of the terrorist attacks in 2001 and the ongoing
industry. According to Kotschevar and Luciani wars in the Middle East, hotel revenues have
(1996), “with the new millennium passing by, not met expectations. Beverage sales, though,
customers’ expectations are on the rise.”An ef- have seen an increase in revenue growth.
fective leader finds the proper ways and means Much of this is due to vigorous promotion and
to provide the employees with the tools they merchandising, particularly of new cocktails
need to meet these expectations. and ambitious—even spectacular—wine sales
programs. Independent bar and lounge opera-
Progressive beverage managers now also tors also feel confident that, unless more un-
use the empowerment concept. Empower- predictable events take place, the rest of the
ment is a management decision by which an decade will be challenging but prosperous.
employee is given authority to take steps out-
side the spectrum of regular duties and make Beverage distributing firms are also opti-
certain decisions that are normally in man- mistic. They foresee a wider availability of
agement’s domain. According to many new beverage products not only for the hospitality
beverage managers, the progressive coach ap- industry but also in areas such as convenience
proach seems to yield positive results among stores, supermarkets, and beverage-specific
beverage staffs. The old disciplinarian man- retail outlets. Beverages that are expected to
agement style is increasingly out of place in substantially increase in sales volume are bot-
today’s beverage business world. tled waters, bottled specialty teas, single-malt
Scotch whiskys, Cognacs, aged bourbons, pre-
᭤ THE FUTURE OF mium tequilas, and grappas. There is a general
BEVERAGE OPERATIONS consensus among vendors that beer sales will
remain static and that wine will experience a
In medium to larger hotel properties, like all marginal but steady growth, particularly from
new areas of production, both nationally and
department managers, beverage managers are internationally.
required to prepare a business forecast based
on historical data, hotel occupancy, and spe- It is expected that federal and state liquor
laws will remain substantially unchanged,

297Section 6.8 ᭿ The Organization and Management of Hotel Beverage Operations

with minor exceptions. It also appears that the tives’ most recent comments on labor issues
states will maintain the basic structure of be- and concerns. During the past decade, it has
longing either to control or license categories. been frequently reported that staffing or find-
Many beverage managers are concerned ing the person most suitable for a particular
about government-imposed taxes on liquor job is becoming a tougher management func-
and hope they will not be increased. tion. Many managers agree that staffing re-
sponsibilities are requiring more time and
Beverage managers are concerned about effort than ever before. Part of this is attrib-
the continuing lowering of the blood alcohol uted to labor trends. The pool of steady and
threshold for driving under the influence loyal workers is decreasing in size. In addi-
(DUI) of alcohol or drugs. The lower the tion, the hospitality industry is experiencing
threshold—say, 0.08—the more careful in hir- unprecedented employee turnover. A major
ing, training, and supervising managers have restaurant company has recently reported to
to be. Over-service of alcohol is an industry- me employee turnover of nearly 200 percent
wide problem that presents managers with a for hourly employees, 60 percent for clerical
variety of challenges. It is important to have and secretarial staff, and 25 percent for mana-
policies under which the manager and opera- gerial staff. The turnover ratio of bartenders
tion work that minimize the risk to the busi- and cocktail servers was reported to be al-
ness and to the public while legally selling and most the same as that of typical dining room
serving beverages. staff such as food servers and bus persons
(Lattin, 1998). One can imagine the frustra-
Education in beverage management is ex- tion of a beverage manager who, after spend-
pected to extend to new horizons. Sonoma ing considerable effort, time, and company
State University offers a bachelor of science money in coaching and training a new bar-
degree in wine management. Through a well- tender, finds out she is planning to quit the
planned university extension program, the following week.
University of California, Davis, is expanding
on specialized short courses associated with What can be done to deal effectively with
their degree programs in enology and viticul- this concern? Rewards as motivators provide
ture. The William F. Harrah College of Hotel some positive results. Other means of provid-
Administration at the University of Nevada, ing monetary incentives so the operation
Las Vegas, started a beverage management can retain employees longer may also be
major commencing in the fall semester of effective.
2001. Cornell University’s School of Hotel
Administration, among others, is considering It is strongly recommended here that the
expanding their professional development best measure management can undertake for
courses and adding courses on handling and this purpose is to provide the employee with a
serving alcoholic beverages with care. comfortable working environment, promote
teamwork and camaraderie, and foster healthy
᭤ AS I SEE IT working relationships. In short, the beverage
manager is challenged to become the em-
While reviewing the industry’s projections, it ployer of choice for beverage professionals.

would be difficult to leave out hotel execu- In general, the beverage future looks
brighter than most other sectors of the

298 Chapter 6 ᭿ Food and Beverage Division

hospitality industry. However, the managers gies and list bar special drinks, promotions,
and directors who truly will make a difference and happy hour times; and never rests on his
will be those who step out, participate, and or her laurels.
make things happen. The aggressive new
manager always finds ways to establish a good The modern beverage manager is no
rapport with community leaders and is tire- longer just the head bartender. This profes-
less in devising and developing new means of sional is responsible for millions of dollars of
attracting additional clientele. Whenever pos- the hotel’s assets and operates in a high-
sible, he or she makes the effort to attend bev- energy, fast-paced, and challenging environ-
erage conventions and trade shows; uses the ment. It’s a lot of fun, though, and rewarding,
hotel website to reinforce marketing strate- too. It is a managerial position with a solid
future.

6.9 C A S E S T U D Y: C R I S I S I N T H E F O O D
COURT

Nancy Swanger

Morgan Black is the director of operations of register to pay for their meal when the son
an on-property food court made up of five suddenly collapsed and fell to the floor, hit-
branded quick-service restaurant concepts ting his head on the glass window separating
and one full-service casual dining outlet. The the customers from the sandwich preparation
resort hotel, of which the food court is a part, area. The boy, who was wearing short pants,
attracts affluent guests who are traveling with fell into a puddle of his own bloody feces as
their families. The food court is located in a he hit the floor. As it all happened so sud-
common area not far from some of the re- denly, those who were witnesses said it was
sort’s most popular, kid friendly recreational like the boy must have voided as he was col-
activities. It also attracts local guests who are lapsing, as there were no signs of any problem
not staying at the resort, but just visiting. prior to the actual fall.

One Sunday afternoon, when the hotel’s As one might expect, the scene caused
2,500 rooms and suites were nearly at full oc- quite a stir among guests in the area. One of
cupancy, an incident occurred at the branded the shop’s employees promptly called 911 for
sandwich shop that was both bizarre and an ambulance. Within a very short period,
frightening to those involved. paramedics arrived to care for the boy. It was
several minutes before he was stable enough
As was typical of the property, lunchtime to transport, as they could not get the bleed-
in the common restaurant area was busy and ing to stop. Morgan, who was on property, ar-
extended well into the afternoon as families rived just as the boy was being transported to
arrived for weeklong stays. A father and son the local hospital for treatment.
approached the counter of the sandwich shop
to order a bite to eat. They were nearing the Of course, a crowd had gathered, and talk

299Section 6.10 ᭿ Case Study: Outside the Box in the Food and Beverage Division

of the tragedy was spreading rapidly through- Points to Consider
out the property. The store was immediately • Involvement of the health department?
closed and the area around the sandwich shop • Notification of the brand’s corporate
cordoned off. In trying to assess the situation,
Morgan discovered the following: office?
• Condition of the boy?
1. When the young boy hit the floor, the • Clean-up process?
puddle of bloody excrement splattered • Treatment of contaminated items?
everywhere—even hitting other guests • Handling affected guests and employees?
who were in line. • Methods to reassure resort guests?
• When to reopen and resume business as
2. One of the employees, who probably re-
acted without thinking, began to clean up usual?
the mess with her bare hands. • Implications of what happened—short

3. The identities of the father and son were and long term?
not known. • Role of the resort’s crisis team?
• Training gaps?
4. A reporter from the local newspaper was
a guest at the food court that day and
wanted comments on what happened.

Suggest a plan for Morgan’s handling of
the situation.

6.10 C A S E S T U D Y: O U T S I D E T H E B O X I N
THE FOOD AND BEVERAGE DIVISION

The Corporate Food and Beverage Commit- has been a fairly conservative and risk-averse
tee, through its executive director, has or- hotel company.
dered each hotel in the SunRise Hospitality
chain (11 medium-size, full-service hotels sit- The corporate office wants to change this
uated in the Southeast, South, and Southwest) and, in the process, to involve each hotel in
to submit a plan to completely rethink one decision making. The executive director of
restaurant in each hotel. SunRise Hospitality F&B wants to evaluate plans from each ho-
specializes in catering to the upscale business tel’s food and beverage director that “think
traveler and, increasingly, the high-tech com- outside the box.” Among the ideas floating
panies that are now moving to the South from around the company on the F&B directors’
California, the Seattle region, and the North- grapevine are the following:
east. Their average room rates are consis-
tently in the top 15 percent of all hotels in • Feature menus that emphasize local or re-
their market areas. Historically, though, this gional cuisine. The idea here is to utilize
fresh ingredients and local meat, produce,

300 Chapter 6 ᭿ Food and Beverage Division

and seafood, and to feature the ethnic and sonal insult. He walks out in a huff, threaten-
cultural diversity of each hotel’s local ing to pack up his knives and recipes and go
market area. One goal of this plan is to back to France. The restaurant manager is in-
make the hotel restaurant appeal to local terested in the corporate idea but says she has
clientele in addition to its guests. just spent the last five months hiring and
training about half of her restaurant staff in
• Outsource one restaurant to a well- tableside preparation and service of the
established regional independent operator. French menu. She is worried that switching
menus this fast may cause her operation to
• Outsource one restaurant to a national suffer, at least in the short term.
chain.
The wine steward considers the challenge
• Hire a celebrity chef to bring prestige and somewhat ambiguous because, depending on
favorable publicity to the hotel. what eventually is decided, he will have to
choose a complementary wine list to enhance
These are only a few of the possibilities. the new concept or lose his job to an outsider.
As food and beverage director, you have
brought this plan to a meeting of your staff The director of purchasing is intrigued by
for purposes of general background discus- the idea of exploring new local markets. How-
sion and ideas about how to proceed. In- ever, he too worries that some of the options
cluded in this meeting are the executive chef may diminish his responsibilities.
and chief steward, the manager and assistant
manager of your formal French-service dining Your job as director of food and beverage
room, the wine steward, and the director of is to help each department head to develop a
purchasing. plan that will satisfy his or her concerns while
following the dictates of corporate policy.
After presenting the corporate plan, you
ask for ideas and comments. The chef, who is (Note: Additional insights into potential
French, is absolutely devastated and seems to solutions to this case may be gained by reading
be treating the corporate directive as a per- the essay by C. Lee Evans later in this book.)

REFERENCES

Allen, Robin Lee. 1996. “Hotel Chains ‘Taking It Hensdill, Cherie. 1996. “Partnerships in Dining.”
to the Street’ in Quests for Mainstream Din- Hotels 30(2):57–60.
ing Appeal.” Nation’s Restaurant News 30(17).
Hubsch, Allen W. 1966. “Hotel Food and Beverage
Dubé, L., C.A. Enz, L.M. Renaghan, and J.A. Management.” Cornell Hotel and Restaurant
Siguaw. 1999. The Key to Best Practices in the Administration Quarterly 7(3):9–11, 18–19.
U.S. Lodging Industry. Ithaca, NY: Cornell
University, Center for Hospitality Research. Kotschevar, L., and V. Luciani. 1996. Presenting
Service. Chicago: Education Foundation of the
Hanson, Bjorn. 1984. “Hotel Foodservice: Where’s National Restaurant Association.
the Profit?” Cornell Hotel and Restaurant Ad-
ministration Quarterly 25(2):92–96. Lattin, Gerald. 1998. The Lodging and Foodservice
Industry. East Lansing, MI: Educational

301Section 6.10 ᭿ Case Study: Outside the Box in the Food and Beverage Division

Institute of the American Hotel and Motel Strate, Robert W., and Clinton L. Rappole. 1997.
Association. “Strategic Alliances Between Hotels and
Liberson, Judy. 1995. “Restaurant Chains Partner Restaurants.” Cornell Hotel and Restaurant
with Hotels to Satisfy Different Needs, Administration Quarterly 37(3):50–61.
Tastes.” Lodging (September):1, 8–9.
———. 1996a. “The Global Dinner Plate.” Lodg- Withiam, Glenn. 1995a. “Trader Vic’s Wraps Up
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———. 1996b. “Holiday Inn Offers Assorted Food Restaurant Administration Quarterly 36(3):14.
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Parseghian, Pamela. 1996. “Branding Offers Ho- sion.” Cornell Hotel and Restaurant Adminis-
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Nation’s Restaurant News 30(23):96.
Siguaw, Judy A., and Cathy A. Enz. 1999. “Best Wolff, Carlo. 1995. “Hyatt Regency Columbus
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SUGGESTED READINGS

Books ing Appeal.” Nation’s Restaurant News
30(17):124–128.
Birchfield, John C., and Raymond T. Sparrowe. Hanson, Bjorn. August 1984. “Hotel Foodservice:
2002. Design and Layout of Foodservice Facil- Where’s the Profit?” Cornell Hotel and
ities, 2nd ed. New York: John Wiley and Sons. Restaurant Administration Quarterly 25(2):
92–96.
Foster, Dennis L. 1992. Food and Beverage: Opera- Hensdill, Cherie. 1996. “Partnerships in Dining.”
tions, Methods, and Cost Controls. Lake For- Hotels 30(2):57–60.
est, IL: MacMillan/McGraw-Hill, Glencoe Hubsch, Allen W. 1966. “Hotel Food and Beverage
Division. Management.” Cornell Hotel and Restaurant
Administration Quarterly 7(3):9–11, 18–19.
Katsigris, Costas, Mary Porter, and Chris Thomas. Parseghian, Pamela. 1996. “Branding Offers Ho-
2002. The Bar and Beverage Book, 3rd ed. tels Opportunities to Increase Food Sales.”
New York: John Wiley and Sons. Nation’s Restaurant News 30(23).
———. 1996. “Holiday Inn Offers Assorted Food
Khan, Mahmood A. 1990. Concepts of Foodservice Options with New Quick Food Concept.” Ho-
Operations and Management, 2nd ed. New tel Business (June).
York: John Wiley and Sons. Withiam, Glenn. 1995. “Harvey: Expansion and
Conversion.” Cornell Hotel and Restaurant
Pavesic, David V. 1999. Restaurant Manager Hand- Administration Quarterly 36(4).
book Series: Menu Pricing and Menu Design.
New York: Lebhar-Friedman.

Shock, Patti J., and John M. Stefanelli. 1999. Hotel
Catering: A Handbook for Sales and Opera-
tions. New York: John Wiley and Sons.

Articles

Allen, Robin Lee. 1996. “Hotel Chains ‘Taking It
to the Street’ in Quests for Mainstream Din-

302 Chapter 6 ᭿ Food and Beverage Division

SOURCE NOTES

Chapter 6.2, “Managing Food and Beverage Oper- Chapter 6.6, “Contemporary Hotel Catering,” by
ations in Lodging Organizations,” by Robert Patti J. Shock and John Stefanelli, adapted
H. Bosselman. from Hotel Catering, by Patti J. Shock and
John Stefanelli, Copyright © (year and
Chapter 6.3, “As I See It: Hotel Director of Food owner). Reprinted by permission of John Wi-
and Beverage,” by Dominic Provenzano. ley & Sons, Inc.

Chapter 6.4, “Best Practices in Food and Beverage Chapter 6.7, “A Day in the Life of an Executive
Management,” by Judy A. Siguaw and Cathy Director of Catering Sales and Convention
A. Enz, is reprinted from the October 1999 is- Services,” by Rich Benninger.
sue of Cornell Hotel and Restaurant Adminis-
tration Quarterly. © Cornell University. Used Chapter 6.8, “The Organization and Management
by permission. All rights reserved. of Hotel Beverage Operations,” by Valentino
Luciani.
Chapter 6.5, “Strategic Alliances Between Hotels
and Restaurants,” by Robert W. Strate and Chapter 6.9, “Case Study: Crisis in the Food
Clinton L. Rappole, is reprinted from the June Court,” by Nancy Swanger.
1997 issue of Cornell Hotel and Restaurant
Administration Quarterly. © Cornell Univer-
sity. Used by permission. All rights reserved.

chapter seven

MARKETING AND
ASSOCIATED ACTIVITIES

7.1 I N T R O D U C T I O N

For most hotel companies, it was only during planners who represent and book group and
the 1980s that the word marketing was any- convention business are educated and in-
thing more than a euphemism for sales. In- formed consumers. To serve this clientele, ho-
deed, in the competitive landscape of the not tels have had to develop marketing efforts
too distant past, an aggressive and knowl- and product segmentation, first to interest the
edgeable sales staff could accomplish most market, and second to allow people repre-
activities that related to putting guests in senting that market to make intelligent
rooms. In the competitive environment of the choices among competitors. Increasingly, indi-
present time, this has become impossible. vidual consumers and small businesses are
Hotel companies that design and market a becoming more sophisticated in arranging
sophisticated inventory of hospitality services their own travel plans over the Internet. This
need a similarly sophisticated scheme for represents yet another challenge to hotel
letting potential clientele know about their marketers: How do we market most effi-
services. ciently to all groups? Good question.

For most hotel companies in the twenty- Marketing has become an umbrella term
first century, true marketing has evolved to that covers a number of strategic and tactical
reflect this sophistication. This development activities designed to tell the clientele the
also acknowledges increased sophistication story of the hotel’s services and to encourage
on the part of guests and potential clientele. that clientele to make choices based on how
Business travelers, travel agents, and meeting one hotel’s marketing message matches their

303

304 Chapter 7 ᭿ Marketing and Associated Activities

needs better than the available alternatives. seeks in terms of quality, service, econ-
In any given hotel or hotel company, market- omy; user status (nonuser, ex-user, poten-
ing includes a range of sales activities, public tial user, regular user, first-time user);
relations, advertising in all media, design of usage rate (light, medium, heavy); loyalty
symbols and images, and (increasingly) the (none, medium, strong, absolute)
departments of convention services, reserva-
tions, revenue management, and, perhaps, While many of the specific details or pro-
catering. grams implied under the marketing umbrella
may be farmed out to agencies that specialize
It should be noted that research plays a in advertising or public relations, the genesis
major role in designing marketing strategies of the hotel’s strategic marketing plan must
and tactics. The monograph presented in this be within the hotel organization itself.
edition by Bianca Grohmann and Eric Span-
genberg has a research orientation at its core. The article contributed to this section by
It is designed to assist managers in choosing Fletch Waller provides a strong argument for
and generating data that are useful to staying broadening the definition of marketing to in-
successfully competitive. It is important that clude all operational aspects of the hotel. This
managers understand the range within which article is an excellent overview of the market-
this data may be interpreted and applied. ing process. Waller illustrates the relationship
Successful managers and high-quality organi- between marketing and operations as a “con-
zations are always seeking information and tinuing process” without which hotels proba-
data that allow them to make accurate deci- bly cannot remain competitive.
sions and design effective marketing and
managerial efforts. Yield management, long a practice of the
airline industry, has found total acceptance by
These data can take a number of forms hotel marketing and reservations systems. In-
but, for the most part, deal with the charac- deed, it has become an industry standard. The
teristics of the hotel’s target market segment article in this section by Paul Chappelle can
that affect their choice of hotels. In this case, be read in conjunction with that by Quain and
the research seeks to understand how con- LeBruto in Section 4 for a comprehensive
sumers make choices among hotels based on primer on yield management. Together, these
the value of their various attributes. articles explore various aspects of that prac-
tice from the viewpoint of Chappelle, current
Among other data that hotels find mech- practitioner. Chappelle lives the theory of
anisms to accumulate and interpret are these yield and revenue management on a daily ba-
kinds: sis and provides insights about how it works
in practice. As the revenue manager for over
• Geographic: what sorts of communities 30 hotels, Chappelle has the experience to
are represented; what parts of the country back up the theory.
or world; how far people travel
New for this edition, the Sinclair essay on
• Demographic: age, sex, occupation, in- hotel pricing should be read in the context of
come, ethnicity, family, education the issues and suggestions raised by the con-
tributions on yield management. But it goes
• Psychographic: client’s self-image, social beyond that. Drawing on Sinclair’s deep ex-
or peer group, lifestyle, personality traits perience in hotel operations, particularly
sales, this contemporary work on pricing is up
• Behavioral: whether the hotel choice is a
routine or special occasion; what guest

305Section 7.2 ᭿ Building Market Leadership: Marketing as Process

to date and useful not only from a conceptual cultural, and volunteer organizations, hotels
standpoint but a practical one. can serve the activities of those groups’ fund-
raising efforts and simultaneously position
Shaw and Morris bring their collaborative themselves to show the arbiters of potential
talents in academe and industry to the essay business how well the hotel can perform. His
on the organization of the sales function in examples are instructive. Richmond, who is
hotels. Because, as noted elsewhere in this president of his own very successful public re-
text many times, the potential markets for a lations firm in Seattle, retains the Sheraton
hotel’s services and the types of hotel are so and other hospitality concerns as clients.
numerous, sales efforts can be complicated.
Shaw and Morris present this complex de- All in all, the strategies, tactics, activities,
partmental function in a clear, straightfor- personnel, and concepts described in articles
ward fashion that is both theoretically and essays in this section provide an overview
relevant and operationally practical. that only hints at everything important to ef-
fective management of the marketing func-
Traditionally, the function of public rela- tion. Marketing is perhaps the most
tions for any organization, particularly hotels, written-about topic in hospitality literature.
was oriented toward the generation of favor- Because of the great diversity of opinion, it
able—usually free—publicity and the sup- can be argued that there is no one “right” way
pression or management of bad news. Louis to market, nor is any single piece of literature
Richmond proposes the different and ex- generally considered seminal to hotel market-
panded but not necessarily contrary position ing. The reader is urged to consider the refer-
that public relations activities can positively ences cited by contributing authors, the
enhance the hotel’s sales and marketing ef- suggested readings, and active perusal of re-
forts. He discusses his experiences in the case cent hospitality journals to achieve greater
of the Seattle Sheraton Hotel and Towers. Us- understanding of this fascinating process—
ing that example, he argues that through cre- and, by extension, its management.
ative cooperative efforts with local charity,

7.2 B U I L D I N G M A R K E T L E A D E R S H I P :
MARKETING AS PROCESS

Fletch Waller

The hotel business has changed enormously kets and in ways hotels relate to and
over the last 30 years, embracing special niche capitalize on them have put new demands on
forms of lodging (e.g., extended stay), new marketing.
ways of segmenting markets (e.g., W’s “fash-
ionables”), brand proliferation and consolida- Marketing, as addressed herein is not the
tion, new tools for acquiring customers (e.g., sales and marketing department; I mean mar-
email), distribution innovations (e.g., Expe- keting in its broadest sense of how hotels re-
dia), and globalization. These changes in mar- spond to and seize on market opportunities.
Definition? Marketing is a process of creating

306 Chapter 7 ᭿ Marketing and Associated Activities

and sustaining productive relationships with sight, willingness to change and evolve,
desirable customers. Its goal? To produce and, yes, discard.
such relationships more effectively than com-
petitors do. • . . . and sustaining . . . Loyalty over
time and repeat customers are the key to
Let’s examine the definition and its impli- productivity and optimal contribution
cations. Marketing is . . . margins.

• . . . a process . . . A process, a series of • . . . productive relationships . . . A re-
functions and actions for approaching lationship must be two-sided, with bene-
and dealing with opportunities. Market- fits for both partners in the relationship. In
ing, as used herein, is not a job but a way the case of customers, the benefits are
of proceeding to create and operate a ho- wants and needs consistently fulfilled and
tel focused on customers and competitors, full value received; in the case of staff, pro-
a way that incorporates all members of fessional satisfaction and operating profits
the hotel staff and its support. sufficient to fund improvements provide
attractive compensation, and provide re-
• . . . of creating . . . The essence of turns on investors’ or owners’ capital.
marketing is creation: imagination, in-

In the late 1990s, rising costs of acquiring price for which a room is sold. If marketing
were truly productive, we should have been
customers in U.S. hotels were masked by seeing costs per unit dropping.
strong increases in the average daily rate
(ADR). In 1995, marketing costs per occu- In dollar terms, full-service hotels saw
pied room (franchise and marketing fees, marketing costs per occupied room balloon
commissions, reservation costs, and property 38 percent in just five years, to $17.96 in 2000
marketing and sales expenses) in full-service from $12.99 per room-night in 1995! In
hotels averaged 15.3 percent of ADR. By higher-rated full-service hotels, acquisition
2000, it had risen to 15.6 percent; that three- costs rose to $22.71 from $15.86, a 43 percent
tenths of a point increase over four years increase. Resorts suffered a 27 percent in-
hardly alarmed people. But consider, of the crease, to $22.96 from $18.07 just five years
expenses that make up the costs of acquiring earlier. By 2002, as rates and occupancies
customers, only commissions vary directly softened, marketing costs per occupied
with rate; most of the expenses are personnel room in full-service hotels had begun to be
compensation and benefits and purchases— reined in, at $17.02, but now accounted for
of ads, brochures, sales calls, websites, global 16.4 percent of ADR (PKF’s Trend Reports,
distribution system (GDS) delivery services, 1996, 1998, 2001, 2003.) The main culprit is
telephone time, and so on. These expenses distribution costs. Whatever the cause, mar-
grow over time, but not as a function of the keting productivity must be improved.

307Section 7.2 ᭿ Building Market Leadership: Marketing as Process

• . . . with desirable customers. Not all ᭤ THE MARKETING
customers are equally desirable; we want PROCESS
those who are willing to pay, growing in
numbers, making multiple purchases, and Peter Drucker (1974) says the purpose of op-
whose needs we are able to fully satisfy.
erating a business is to create a customer and
And the goal? keep him (or her). Investors in a hotel may
have return on investment as their purpose,
• . . . To produce such relationships . . . but for us operators, it is useful to conceive
Production implies inputs, outputs, and our purpose as being to create and keep cus-
the measurement of productivity. Market- tomers. If we do this successfully, profits and
ing productivity has been lagging for the capital returns flow. Our marketing process is
last decade; the rising costs of acquiring our way of creating and keeping customers.
customers must be reined in. (Note: If
marketing efforts are a cause of customer Every business has a marketing process, a
decisions to purchase, then marketing way it “goes to market.” It is the way man-
productivity is the cost of stimulating that agement decides what they are going to do
purchase decision relative to the value of and offer, with whom they will compete, how
that decision. Productivity is best mea- they will attract the customers, and how they
sured by the cost of acquiring a customer will satisfy and keep them. Most businesses,
not only as a percent of sales but also as many hotels among them, do not reflect on
dollars per unit of sale—for example, dol- and carefully articulate their marketing
lars per occupied room, dollars per group process; they just do their thing by habit and
contract, dollars per cover.) by tradition. Other businesses make con-
certed efforts to regularly plan and review
• . . . more effectively than competitors their “going to market.”
do. Marketing success is judged in rela-
tive terms, using competitors and similar A hotel is a 24/7 business, running without
hotels as benchmarks. As a creative stop. Typically, because of the pressure just to
process, especially in a field like hospital- keep up, we do what we’ve done in the past,
ity wherein innovations are unprotected repeating our marketing process by habit.
and easily copied, the benchmarks and This is risky, for customers and competitors
goals are always moving targets. Besting are always changing. Does a hotel need a
the competition is the constant challenge. planned and regular review of its marketing
process? Considering our high fixed costs and
By the end of this chapter, it will be clear the large leverage on profits from small
that successful marketing of a hotel requires changes in revenues, yes—hotels should take
the orchestration of a wide variety of talents concerted and disciplined care of their mar-
and skills, of which sales and marketing per- keting process. For a hotel to remain effective,
sonnel are only a part. Chain hotels approach it should formally review its marketing
the process one way; independents must do so process at least once a year to be sure it is still
another. But in either case, market success de- suited to its market; if it is not, revise it to fit
pends on an effective integration of market- changing customer and competitor patterns.
ing and operations at the property level under Further, the hotel must measure the cost of
the direction and leadership of a market- acquiring its customers so as to steadily
driven general manager.

308 Chapter 7 ᭿ Marketing and Associated Activities

Figure 7.1 The Hotel Marketing Process

DECIDING WHAT TO BE AND WHAT TO OFFER TO WHOM
SETTING PRICES
CREATING AWARENESS AND STIMULATING DEMAND
MAKING THE HOTEL AVAILABLE
CLOSING, CONFIRMING, & MANAGING REVENUE
PREPARING TO DELIVER & DELIGHT
RETAINING CUSTOMERS
MEASURING SATISFACTION & EVALUATING PERFORMANCE

increase the productivity of its marketing tion of these customers you have attracted.
process. Then you have to work to retain those cus-
tomers and turn them into repeat loyalists.
A hotel marketing process (Figure 7.1) Lastly, you must measure their satisfaction and
starts with deciding what to be and what to of- evaluate your performance.
fer to whom. This is not just for new hotels in
pre-opening; existing hotels must adjust and Let’s examine these steps and, along the
fine-tune their offerings as market conditions way, comment on ways of improving their ef-
change. The next step is to set the price struc- fectiveness and productivity.
ture. These first two steps establish the hotel’s
value proposition. ᭤ DECIDING WHAT TO BE
AND WHAT TO OFFER
Next, create awareness and stimulate de- TO WHOM
mand among the people you hope to make
your customers. Then you must make the ho- In an existing hotel, the developer and archi-
tel available to them, and close the sale—that
is, commit, confirm, and manage revenue. tect already may have decided many of the
Flexible rate management within the pricing things it is—high-rise or resort, in the business
structure and response to short-term swings center or on the edge of town, large rooms
in demand and supply are necessary to create and baths or smallish, one restaurant or sev-
customers and optimize revenue per available eral, wood or marble, with ballroom or not,
room. and so on. Even so, the management team
must still consciously examine what they in-
Now begins the transition to operations, tend the hotel to be and offer to whom. The
but this is no less a part of the marketing type of customer originally in mind may not
process. In fact, this is the critical part of the
process. You must prepare the hotel staff to
meet and fully satisfy the wants and expecta-

309Section 7.2 ᭿ Building Market Leadership: Marketing as Process

be available now in enough numbers to sup- the target markets—the “to whoms”—and
port the hotel. Perhaps a competitor has come their needs and wants become the “what to
in and taken away a piece of the market. Per- be’s.” The key to successfully deciding what to
haps the business center has shifted to an- be and offer to whom is a matter of strategic
other part of the city. Perhaps new customers selection of, focus on, and commitment to a
from Korea or California have replaced the well-defined set of markets for whom the ho-
original ones from Europe and the East tel is best suited to compete. Trying to be all
Coast. Even though the owner has provided a things to all potential customers is a guaran-
basic envelope within which to operate, there tee of ineffectiveness.
still are options—many things the hotel team
can control, many choices to be made on what A good example of focus and targeting is
to offer and to emphasize to various market Starwood’s W. At risk of turning off a sizeable
segments. Is the hotel the place to be seen or portion of the business and leisure travel mar-
the place that guards privacy? Is it better to ket and leaving families well behind, Star-
stress family style or crisp, professional busi- wood focuses tightly on a lifestyle segment of
ness style? Should the hotel add services, like professional and business people, with re-
a Japanese breakfast, to meet the needs of markable success.
one particular group? Should the team put in
meetings express and add more small meeting The talents required to assess the market-
spaces to tap the short-lead-time corporate ing situation, create a data model of the mar-
meetings market? Should it drop some ser- ket’s segments, calculate a feasible share of
vices the market no longer wants to support? each, and select the targets on which to focus
are comfort with data, the ability to observe
The answers to what to be and offer are and infer, creativity, patience with detail, com-
found by studying the marketing situation, fort with the hypothetical, and an analytic
which comprises three parts: (1) strengths and curiosity. Usually, such analyses are uncom-
weaknesses, (2) the kinds and numbers of cus- fortably foreign to people with backgrounds
tomers available in the marketplace, and (3) in sales, and often to operators as well. It is es-
the other hotels with whom this hotel com- sential that we teach, motivate, and reward
petes for these customers. Careful analysis curious, careful, insightful analysis of history
yields a picture of which segments the hotel is and market information—skills that are not
best able to attract and serve. These become natural to those typically attracted to hospi-
tality management.

IMPROVEMENT TIPS tive director of marketing, like coming up
with three options for cutting into the small
• Send prospective general managers business meetings of a competitor or in-
and directors of marketing to a marketing creasing sales of the gift shop.
course, one with examples or cases in mar-
ket analysis.

• Assign analytic exercises to a prospec-

310 Chapter 7 ᭿ Marketing and Associated Activities

᭤ SETTING PRICES ter. Moreover, hotel accounting does not
measure discounts from a standard price, as
Having decided what to be and offer and to do almost all other industries. So there is no
visible cost in reducing price to meet com-
whom, the next most important decision is petitors. Remember: Any damn fool can cut
price. Pricing is a critical decision because it his price, and some damn fool always will.
determines, first, whether or not the intended Must everyone follow? No. The key is to get
customers will purchase, and second, whether in the head of the customer. The truly con-
they will be satisfied with the value offered trolling factor is customer comfort zones, and
and, thus, be willing to return. Third, it deter- all too often hotel management leave money
mines whether the hotel will be financially on the table because they don’t know what
healthy enough to maintain itself and reward those comfort zones are. At what price does
its employees so customers can once again be the offer attract and deliver value? That is the
satisfied when they do return. key question in setting prices.

Three factors must come into considera- Price setting requires talent and skill in
tion in pricing—the Three Cs of pricing, if you data gathering and analysis, accounting and
will: costs, competition, and customers’ com- building pro formas, interpreting and drawing
fort zones. In F&B, costs drive pricing of inferences, and decision making. Do not let
menu items and beverages. Drucker (1999, salespeople set prices; do not let controllers
115–6) says American industry has too much set prices. Only one person—the GM—can
cost-driven pricing, and that it needs more pull together the inputs of sales, control, oper-
price-driven costing. Doesn’t F&B have the op- ations, reservations, and the rest, and make
portunity to build and test menus to discover this crucial judgment call. Also, build at least
where price points should be set, and is not the three price scenarios and have the controller
chef challenged to manage ingredients and por- and marketing director agree on occupancy
tion size to deliver the cost and margin structure impacts. Then run a GOP pro forma on each.
desired? Yet the cost-driven practice continues. Out of that exercise will come a sense of the
best pricing approach to take. Setting prices is
In rooms, competition is most often the the one task the GM cannot delegate, for he
dominant factor. Costs play a role, but or she must live with and be accountable for
changes in variable cost of an occupied room all that results from this critical decision.
are generally small and rooms’ contribution
margins are large, typically 65 percent or bet-

PRICING TIP agent, a bellman, a bartender, and a front
desk agent. After probing them on what they
Include staffers in contact with cus- heard from customers about value, we in-
creased four of the seven proposed room type
tomers in pricing discussions. A ski resort prices, to the owner-operator’s delight.
owner-operator asked me to review his pro-
posed price schedules. I asked to have in-
cluded in our meeting a senior reservation

311Section 7.2 ᭿ Building Market Leadership: Marketing as Process

POSITIONING IN FIVE QUESTIONS

1. Who are the prospects; what do they 4. What do they need to come to be-
like; how do we find them? lieve so they will do that?

2. What do they now know or believe 5. What reasons can we offer them to
about us? hold this new belief?

3. What, specifically, do we want them
to do?

᭤ CREATING AWARENESS market segment they intend to target. These
AND STIMULATING statements are the blueprint against which
DEMAND each ad, promotion, and sales call is tested to
assure consistent messages are being sent.
Herein are the typical roles of the marketing And those statements should be shared with
all employees. When all parts of the hotel are
department: using sales, communications, and sending a coherent and consistent message of
promotions to attract the target markets. But what the name or brand means and what un-
creating awareness is not only marketing’s derlying promise is being made, the hotel es-
job. Everything the public sees and hears tablishes a clear position in the mind of the
about the hotel—its name or brand, its signs, prospects—ideally, one that is attractively dis-
its restaurants, the public activities of its man- tinctive from competitors.
agers, its charitable support and festivals—all
create a meaning, a picture of what this hotel Marketers can use a variety of tools to
means and offers. create awareness and stimulate demand—for
example, sales blitzes, telemarketing, newspa-
Starwood’s W again offers an example: per ads, Internet sites and ads, partnership al-
Every element of their presentation expresses liances, radio ads, and price promotions. The
the “to whom” they target. In decor, uniforms marketing mix is the range and balance of
(costumes?), tone, and attitude, they focus tools selected and resources devoted to each
and send a coherent message. It is critical that to achieve the hotel’s marketing goals.
every department understands the target
markets and agrees on the idea, the meaning In most hotels, direct selling is still the pri-
the hotel intends to have for each of the tar- mary marketing tool used to create awareness
get customer groups. This is called position- and stimulate demand. There are two parts of
ing; it’s something done not to the product effective direct selling: sales skills and sales
but to the mind of the prospect. management. Consider one the weapon, the
other the shooter.
The team should prepare written posi-
tioning statements, including a compatible but Sales skills are not natural; enthusiasm
individual positioning statement for each may be natural, liking to meet people may be
natural, but selling is a process that anyone

312 Chapter 7 ᭿ Marketing and Associated Activities

SALES PRODUCTIVITY TIPS annual room block and set goals for weekly
contract production as well. This will bal-
• Track competitors’ group commit- ance the sense of importance among sales-
ments so that a market’s uncommitted meet- people, whether assigned to large or small
ing spaces for future dates are foreseen, group segments.
guiding pricing.
• Don’t waste sales talent on cold call-
• Don’t “be fair” by treating everyone ing. Use a prospecting service to qualify
the same; motivate each salesperson individ- leads; focus your selling power on prospects.
ually with incentives and attention suitable
to his or her own style and need. • Clean out files at least annually. Sales-
people tend to hold on to prospects long af-
• Focus on team members who are be- ter the likelihood of a booking has dwindled.
low average, constantly improving the bot-
tom and driving average production up. • Automate. Customer and booking
management systems pay.
• Don’t just focus on room-nights. Cal-
culate the number of contracts needed (us-
ing your average size of group) to fill the

can learn and that must be practiced. Make Compensation of salespeople need not be
sure your salespeople are taught how to re- complicated. First principle: Tie compensation
search their prospect, to listen for needs and to goals set in terms of what you want them to
purposes, to acknowledge that they have do—that is, produce contracts and room-
heard the prospect, to transform relevant fea- nights. Don’t just set room-night goals; add
tures into benefits and to sell the customer’s measures of relationship or share of a specific
success, to anticipate objections and prepare customer’s business. Have salespeople sug-
responses, to negotiate, to ask for the order, gest their own goals for the coming year;
and to thank the customer and facilitate participation builds commitment. Second:
delivery. Provide them near-term reward and rein-
forcement, not postponed rewards. Pay out
Sales management is quite another thing; bonuses quarterly. Third: Build teamwork so
often (usually?) the top salesperson does not that one salesperson supports and encourages
make the best sales manager. The sales man- another. Add a team bonus multiplier to per-
ager must be able to select salespeople; rein- sonal performance measures. Last: Separate
force their training; coach, counsel and performance bonuses from overall job ap-
motivate them; assign them to prospects and praisal. No one attends to suggestions for per-
market segments; set goals, manage compen- formance improvement if he or she has just
sation, review performance; and troubleshoot. received a big check for exceeding goal.
He or she must also be the gatekeeper on
contracts and rates, making sure that inven- Many full-service hotels are over-
tory of group space is optimally committed. resourced in group sales and under-weighted

313Section 7.2 ᭿ Building Market Leadership: Marketing as Process

in transient market tools. Sales efforts should service. Don’t just have a site. And measure
be balanced with other parts of the marketing the experts against those goals. A passive, un-
mix—advertising, publicity, and promotions. managed, and undermarketed site is a waste
of money.
The range of communication options in-
creases geometrically with proliferation of Promotions can powerfully stimulate de-
new media—cable television, news magazines mand, but too often, price promotions are re-
and national papers, the Internet, and direct sorted to as a last-minute attempt to prop up
mail and telemarketing. But the eyeballs are a weak demand period. Promotions should be
not growing apace, meaning the audience for planned, justified on a breakeven basis, and
any one medium is steadily shrinking, putting used sparingly. Not all promotions need be
increasing demand on measures of productiv- price promotions; customers invest energy
ity, care in allocating resources, and creativity and time in transactions, too: value-added
to get through the clutter. As audiences of promotions that offer nonmonetary savings
prospects become increasingly expensive to can be used to avoid habituating consumers
reach through advertising, the tools of public- to buying only on sale or shopping only on
ity, the Internet, and direct marketing are in- price. Well-forged alliances for copromotion
creasingly the media of choice. can increase both productivity and absolute
sales volume.
The Internet is a demanding medium for
communication; use professional help to de- The skills and talents necessary in a com-
sign, maintain, and market the hotel’s website prehensive effort to create awareness and
as though it were, itself, a product for which stimulate demand include:
awareness must be created and demand stim-
ulated. To draw audience to the site and man- • In sales: Initiative; being goal-directed; lis-
age its visibility in search engines are skills tening with empathy and imagination;
beyond the property team. Set specific goals time management; self-confidence.
for the site: They might be to attract qualified
prospects, to sell services, to provide customer • In sales management: Coaching and coun-
seling; quantitative skills (for setting

COMMUNICATION AND PROMOTION TIPS

• Run breakeven analyses on each ad • Don’t ask if your GM likes an ad; ask
or promotion, asking what percentage in- if the intended prospect is likely to respond
crease over normal unit sales it will take to to it.
return these dollars, using contribution mar-
gins, not revenues. Is that a reasonable • Make sure the message the audience
expectation? will take away is consistent with your basic
positioning: what you intend to mean and of-
• Assign individual toll-free numbers to fer to that market.
each ad and medium so response to each can
be tracked.

314 Chapter 7 ᭿ Marketing and Associated Activities

booking goals and recordkeeping); prior- available in both systems, with helpful and up-
ity setting, time management, and sense to-date information? Are your prices sensible
of urgency; leadership and problem solv- in each outlet? Making the hotel available is
ing; ability to manage incentive programs. no longer a passive stance but an active part
of your marketing.
• In communications: Ability to write
clearly; ability to select, engage, and man- In other industries, distribution channel
age professional creative talents; ability to revolutions have brought efficiencies that
evaluate and allocate resources among benefit both consumers and suppliers. In the
options; comfort with and appreciation of travel distribution revolution now underway,
the Internet and the Web. the consumer has benefited, but costs to ho-
tels—the suppliers—have skyrocketed. Since
• In promotion: Ability to analyze 1993, full-service hotel costs of distribution
breakevens; creativity; anticipation; con- (commissions, Global Distribution System
ceiving and selling partnerships and fees, and reservation expenses) more than
alliances. doubled, to $1,377 per occupied room per
year in 2002 (PKF, 2003).
᭤ MAKING THE HOTEL
AVAILABLE Along with these new channels and third-
party room merchants has come pressure on
Once a person in one of your target markets prices. In the downturn of 2001–2003, this was
devastating. Price comparisons are quick and
is interested in buying, how does he or she easy for the consumer. Packagers and auction
reach you? Your hotel’s reservations office, sites, like Priceline.com, unconsciously culti-
the central reservation system, airline global vate the destructive idea that a hotel room is
distribution systems, corporate sales offices, a commodity, as is an airline seat. But hotels
and your property sales office are all parts of are not commodities; each differs in location,
a distribution network. Travel agents, corpo- features, and benefits. A hotel team must re-
rate travel managers and secretaries, meeting sist the idea that a room is a room is a room,
planners, and travelers themselves reach your must emphasize their hotel’s distinctive posi-
hotel through this network. tioning, and must resist the urge to simply
match the lowest price offered.
Travel industry distribution channels are
in chaos by virtue of the shift of travel agen- For the foreseeable future, both the tradi-
cies from commission to fee-for-service mod- tional and Internet-based distribution sys-
els, the rise of the Internet as a consumer’s tems will coexist and have to be managed.
direct booking channel, and online third- This raises a new question: What channels do
party intermediaries like Expedia and Trave- you want to encourage, and what ones dis-
locity. Increasingly, the Internet will become courage? Conventional wisdom, in recent
your key distribution channel, but in the years, has been to make the hotel’s inventory
meantime, you must manage two parallel sys- and rates available via as many channels as
tems, the traditional central reservation and possible so as to capture from anywhere in
travel agency channels and the new electronic the world the last drop of demand for arrival
channels. Are the rooms you want to offer on a given day. Given their sharply differing
costs, however, and the difficulty of managing

315Section 7.2 ᭿ Building Market Leadership: Marketing as Process

TIPS FOR DISTRIBUTION PRODUCTIVITY

• Bid all groups on net price basis; do nel, not just the revenues and average rates.
not commission meeting planning agencies. Consider differential prices by channel to
equalize contribution margins after variable
• Analyze and understand the contribu- distribution costs.
tion margins achieved through each chan-

coordinated presence in these new and over- and financial health of the hotel and deter-
lapping channels, the time may be coming for mines the customer’s expectation of value.
a new strategy. One possibility is to starve un- Revenues must be managed to optimize fi-
desirable channels with limited information nancial returns and customer satisfaction—
and access while being fully open and trans- that is, the customer’s willingness to return.
parent to others. Another approach might be
to price differentially among channels to re- No one department controls the tools of
flect their different costs. A large Hawaiian revenue management. They are shared
resort group is already doing that by explain- among salespeople, catering and banqueting
ing to consumers what comparative options managers, front desk agents, reservation
and costs are. Other chains advertise a guar- agents, and so on. To manage properly re-
antee that the lowest price will be found on quires frequent and open conversation be-
their own website, which is a low-cost channel tween managers, good forecasting, skillful
for them. selling by customer contact people, and an ap-
preciation of each week’s goals and targets
Reservations, revenue, and channel man- for the hotel. Poor forecasting, inflexible in-
agement constitute the fastest-changing part ventory policies, and conflicting approaches
of hotel management today. Channel man- by different departments with whom the cus-
agement requires a comfort with and interest tomer deals can undo all the best advertising,
in technology and systems, and a knack for selling, and promotion.
problem solving, anticipating, and risk taking
(to shut down past patterns and undertake Through the same forecasting disciplines,
new initiatives). hotel teams manage their revenues to maxi-
mize the productivity of the hotel and assure
᭤ CLOSING, its financial health. Revenue management
CONFIRMING, AND tools and increasingly affordable yield sys-
MANAGING REVENUE tems can have a major and salutory effect on
the financial health of the hotel.
How one commits space—a room, meeting
Another part of revenue management is
space, ballroom, or even a restaurant table— incentives for reservations upselling, conver-
and at what price—determines the revenues sion of callers, and average rate increases, and
for front desk agents upselling. In the same
way, F&B staff should be viewed as salespeo-
ple and given training on suggestive selling.

316 Chapter 7 ᭿ Marketing and Associated Activities

PRODUCTIVITY TIPS • Teach reservation agents that stay-
through restrictions are not mistreating
• Eschew seasonal price schedules and guests. A three-night stay room is a different
adopt pricing tiers based on forecast occu- inventory unit than a one-night stay room,
pancy for the dates in question. and is to be rationed.

• Saturday has become the highest de-
mand day of the week; make sure you are
not leaving discounts on the table out of
habit.

Inventory policies for tier price quotes by ᭤ PREPARING TO DELIVER
forecast levels of occupancy, for stay-through AND DELIGHT
restrictions, for same-rate substitutions and
upgrading to clear demand inventory cate- A marketer of a product can count on the fac-
gories—all these are tools through which
reservation and revenue managers optimize tory quality-control system to deliver a con-
the RevPAR performance of the hotel. sistent product for sale. When the sale is
closed, the customer takes the product away
It is in the area of revenue management and uses it. In a service business, however, the
that chains, especially multibrand manage- product is human behavior, and the customer
ment companies, have achieved significant uses the product in the hotel. Because we are
advantage over independent hotels and fran- humans, both customers and employees, our
chisees that do not participate in cluster or re- interactions are never the same one time to
gional revenue management. Decisions on the next. The job of the marketer is to help
pricing are still the domain of the property employees understand what the customer will
GM, but with a centralized expert staff col- want, need, and expect, and to sell employees
lecting data and forecasting, the advice and on doing their job with enthusiasm.
guidance available has brought yield and
RevPAR premiums to the chain member In a full-service hotel, the conference
properties. services department embodies this preparing
idea as its primary function. Conference
Revenue management requires attention service managers are the essential group
to detail and analytic and forecasting skills; business brokers between sales and opera-
tolerance for ambiguity and comfort with tions. Conference services people can create
change; and managing, training, leading, and loyal and repeat meeting planners; the job
motivating reservations agents. This is one of requires empathy, attention to detail, willing-
the most critical and dynamic areas of hotel ness to work unusual hours, action orienta-
management, one with which every aspiring tion, internal relationship building, and
general manager or director of sales and mar- persuasiveness.
keting should take pains to become familiar.

317Section 7.2 ᭿ Building Market Leadership: Marketing as Process

Preparing the hotel to fully satisfy and recognition and familiarity, on trust, and on
regularly make customers happy is as much a appreciation. Thus, guest and customer reten-
marketing task as attracting customers in the tion must be a planned and creative activity
first place. What makes marketing hospitality that involves both sides of the relationship—
services harder than marketing a tangible the customers and the employees. It takes
product is that for every market segment more than just smiling and trying hard.
there must be two marketing programs, one Among the talents and skills needed are ana-
directed externally to customers, the other in- lytic skills, curiosity, direct marketing plan-
ternally to employees. ning, and management of data retrieval and
direct marketing service providers.
᭤ RETAINING CUSTOMERS
᭤ MEASURING
The key to both financial health and market SATISFACTION AND
EVALUATING
leadership is retaining a higher proportion of PERFORMANCE
customers than do any of your competitors.
Retain more customers than others do, and If the purpose of the business is, in part, to
over time your costs drop—because of effi-
ciency, lower advertising and selling costs, bet- keep customers, does a financial statement of
ter forecasting—and your occupancy and rate, occupancy, revenue, expense, and profit
rates rise. Numerous studies validate the high give enough information? No. Also needed is
correlation between profit leadership and a scorecard of customer satisfaction, of how
customer retention. likely customers are to return or tell others
about your good hotel. That scorecard is the
Frequent-stay rewards are often mistaken guest satisfaction survey. Accounting state-
for retention programs. They are not. Re- ments tell of the hotel’s financial health; a
wards can motivate returns only as long as the guest satisfaction scorecard tells of its reputa-
customer values the points or airline miles or tion’s health. The scorecard also helps man-
whatever. But they do not create loyalty. They agement spot changes in expectations.
are valuable only insofar as they give employ- Customers are not the same from one visit to
ees the opportunity to come to recognize and the next. Experience with a new hotel, per-
satisfy the guest, and insofar as they give the haps even in another city, may raise a cus-
marketing department information on who tomer’s standards. To measure satisfaction,
the customer is and where he or she is coming one needs quantitative skills for tracking, an-
from. alyzing, and reporting data, and the ability to
manage the logistics of repetitive distribution,
Retaining customers takes more than just collection, and processing.
doing the job well. Guests and customers
must come to know they are valued. Manage- (Note: Many hotels rely on comment
ment must build relationships—the tie that cards for tracking guest satisfaction. That may
binds regardless of a new hotel opening in the work in some situations, but if your property
market or a hot promotional offer from
across the street. Relationships are built on

318 Chapter 7 ᭿ Marketing and Associated Activities

has a high rate of repeat customers and/or fre- continuous circle around which management
quent business travelers, comment card data must go again and again as competition im-
are unreliable. It is the infrequent traveler proves and as the customer segments in the
who bothers to fill out comment cards—un- market change. Only by reviewing and renew-
less there is a gripe to be expressed. Develop ing the marketing process will a hotel get
and use a continuing survey to get a reliable ahead and continue to be the leading hotel in
measure of guest satisfaction levels.) its market. This model of the marketing
process applies to both the whole hotel and to
The information helps management fig- any revenue or profit center within it. Use it
ure out what the hotel needs to be and to of- like a checklist when thinking through im-
fer next in order to remain competitive and proving the revenue and competitiveness of
keep customers. Note, now, the return to the any operation.
first step of the marketing process.

᭤ THE CIRCULAR ᭤ THE MEASURES OF
MARKETING PROCESS MARKETING

In other words, the marketing process isn’t the The health of the marketing process should

straight-line, step-by-step process shown in be measured over a longer time than a
Figure 7.1 but rather, as shown in Figure 7.2, a month or quarter or fiscal year, and it should

Figure 7.2 The Hotel Marketing Process 2. At What Price

1. Deciding What to Be &
Offer to Whom

8. Measuring
Satisfaction

7. Retaining Customers 3. Creating Awareness &
Stimulating Demand

6. Preparing to Satisfy 4. Making the Hotel
& Delight Available

Copyright, FCW Consulting, 1996. 5. Closing, Confirming, &
Managing Revenue

319Section 7.2 ᭿ Building Market Leadership: Marketing as Process

be measured by more than just profit and ᭤ MANAGEMENT OF THE
loss data. A healthy marketing process re- PROPERTY’S MARKETING
sults in: PROCESS

• Rising room revenues per available room As should by now be clear, the marketing
and rising F&B revenues per available
seat and catering space. process is larger than any one individual’s job.
Further, no hotel can afford the myriad tal-
• Rising market share to a share index over ents and skills that must be orchestrated to
100—that is, a larger share of a competi- create and sustain a healthy marketing
tive set’s occupied rooms than the hotel’s process; a single hotel is simply not a large
share of the set’s available rooms, which is enough business to afford having all those tal-
its “fair share.” ents on staff.

• Falling costs of acquiring customers, not Franchise companies and managed chains
on a percentage-of-revenue basis but as have the mass to employ a large proportion of
dollars per unit of sale—for example, those talents at headquarters, but even they
dollars per occupied room, dollars per must call on outside services in design, data-
cover, and so on. What is the acquisition base management, advertising, direct market-
cost? The total of the advertising and ing, and so on. But the chains’ ability to invest
business promotion budget (more often in new tools and hire diverse talents has led
now called the marketing and sales ex- branded chains, both management companies
pense), plus commissions, reservation and franchisers, to collect increasing numbers
costs, franchise fees, and marketing fees. of hotels under their umbrellas. The trend to-
These costs in times of inflation may not ward centralizing marketing functions to
actually decline but at least should grow serve several hotels in a region, often even
more slowly than do gross operating hotels of different brands, is accelerating, es-
revenues. pecially with the advent of Internet-driven in-
formation sharing. The advantages are the
• Rising customer satisfaction ratings. ability to integrate multiple sources of infor-
mation, to hire experts that a single hotel
• Increasing retention rates measured by might not be able to afford, to share the cost
the percentage of business from repeat of sophisticated systems for forecasting, rev-
customers. enue management and customer relation-
ships, and to reduce the expense of marketing
• Growing top-of-mind awareness among to individual properties.
target customer segments and, if the hotel
can afford to measure it, preference by Independents must counter such attrac-
segment rising to number one among tions with cooperative activities and aggressive
your competitive sets. local marketing. The Internet has leveled the
playing field somewhat, allowing independents
Management and owners should ask for to be found and reviewed by consumers and
an annual report card on the health of the travel agents in a way not possible when GDS
marketing process—of the hotel, of a chain, of systems were the only means of access.
a franchise group.

320 Chapter 7 ᭿ Marketing and Associated Activities

᭤ PROPERTY to apply what tools, and how to judge the ef-
RESPONSIBILITY FOR ITS fectiveness of the process. It means using the
OWN MARKETING marketing process as an organizing concept
for creating the management team and a uni-
To optimize performance, a property can nei- fied viewpoint of mission and challenge.

ther abdicate its marketing to a chain or fran- When a hotel is led by a general manager
chise group nor passively rely on location and who sees herself or himself as leader of the
presence to bring customers to the door. Each marketing process, when that process is
property, whether flagged or independent, thoughtfully conceived and well executed,
must be responsible for creating and manag- when all employees see themselves as joint
ing a marketing process tailored to its partic- operators/marketers, that hotel becomes
ular marketing situation—that is, its available customer-centered, competitive, and a leader
customers; its inherent strengths, weaknesses, in its markets.
and employees; and its competitors. Each
marketing situation is unique, even among Few GMs are trained to do this. Many
cookie-cutter chain properties. Each has its come to appreciate that location and flag are
own location, competitor, and customer not enough; many intuitively pick up a smat-
dynamics. tering of sales, distribution, advertising, and
customer retention. But it is the rare GM who
So, given the wide range of talents and weaves these parts into a coherent whole and
skills that must be orchestrated to create an thinks through the challenge of creating and
effective marketing process, who is to lead it? leading the marketing process. As marketing
Directors of sales and marketing cannot, for continues to develop more complex tools and
the process is much larger than the marketing as marketing productivity becomes a more
department. Only the general manager can pressing matter, owners, universities, and
lead his or her marketing process; only he or chains must address this issue of how to de-
she can integrate chain supports, operating velop GM candidates who are comfortable
departments, human resources (HR), the con- with and capable of leading a comprehensive
troller, and—yes, marketing and sales. marketing process.

᭤ THE GM AS LEADER OF ᭤ THE MARKETING
THE MARKETING PROCESS MODEL AS A
PROCESS PROBLEM-SOLVING TOOL

General managers must come to see them- One last word: The circular model of the

selves as the leader of their marketing process marketing process is presented here mainly in
and be comfortable in the role. This does not terms of rooms marketing. But the model can
mean becoming expert in all tools and disci- be applied to every revenue department—to
plines; it does mean seeing the whole and ap- food and beverage outlets, catering, the health
preciating when to bring in what talents, when club, the business center, and even the laun-
dry. The model can be used for planning, for

321Section 7.3 ᭿ Consumer Decision Rules and Implications for Hotel Choice

business reviews, for presentations to lenders tion, one in which employees see themselves
and owners, for troubleshooting, and as a as operators/marketers rather than just “in
checklist when preparing proposals for new operations” or “in marketing” or “in HR.”
services or facilities. The few hotels that achieve and nurture a
well-tuned marketing process and whose em-
Use the model, make it part of your bag ployees see themselves as integral parts of it
of management tools, and get your team to become leaders—in market share, in cus-
see their role in terms of this holistic and tomer and employee loyalty, and in financial
never-ending marketing process. If you returns to owners.
achieve that, you will have gone far to create
a customer- and competitor-focused organiza-

7.3 C O N S U M E R D E C I S I O N R U L E S A N D
IMPLICATIONS FOR HOTEL CHOICE

Bianca Grohmann and Eric Spangenberg

Consumers’ choices are influenced by the may use to make choices based on the evalua-
goals they attempt to achieve. Once a person tion of identified alternatives.
has recognized a need, such as the need for ac-
commodation when traveling for business or Attitude is the tendency to respond in a
pleasure, he or she engages in an information consistently favorable or unfavorable manner
search to identify alternatives from which to toward a target (e.g., brand or product). Im-
choose. Understanding how consumers evalu- portant to marketers is that, if measured ac-
ate competing alternatives in their purchase curately, attitudes are predictive of behavioral
decision processes enables marketers in the intentions and relatively stable over time.
hospitality industry to design better advertis- Simply put, consumers generally form inten-
ing and promotional campaigns leading to a tions to choose a hotel brand toward which
more favorable evaluation of their offerings in they hold positive attitudes. Behavioral inten-
travelers’ eyes. This is an important step in in- tions, however, do not always translate into
creasing the likelihood that consumers will corresponding behavior. For example, al-
choose their offering as opposed to that of though some consumers have preferences
competitors. Given that most travelers’ desti- and therefore form intentions to stay at Fair-
nations offer several hotels, how do people field Inn when traveling across the country,
choose among them? The answer to this ques- they might end up choosing other forms of ac-
tion lies, in part, in research on consumers’ commodation from time to time. Why would
attitudes and their relation to purchase inten- they act inconsistently with their intentions?
tions and subsequent purchase behavior. This Traveling with friends who have different at-
chapter describes several methods consumers titudes and preferences, temporary price re-
ductions of competitors, or the fact that a

322 Chapter 7 ᭿ Marketing and Associated Activities

Fairfield Inn is not readily available in a spe- choose among alternatives. In general, the
cific area might be reasons for inconsistencies stronger a consumer is motivated to search
between behavioral intentions to stay at a and the greater the risk associated with a
Fairfield Inn and actual choice behavior. choice, the greater the complexity of the deci-
sion rule he or she implements.
Despite situational factors sometimes in-
fluencing travelers’ choices, attitudes are ulti- Another important characteristic of mod-
mately useful in predicting actual behavior; eling decisions is the fact that (counterintu-
changing or strengthening the basis of con- itively and often counterattitudinally) people
sumer attitudes may therefore increase the often do not attempt to optimize choice. If a
likelihood of consumers engaging in desired person’s goal is optimal choice, considerably
behaviors. In order to change attitudes and more time and effort is typically required to
subsequent related behavior, marketers must identify and evaluate alternatives. Therefore,
understand a few basic decision rules associ- consumers often choose a satisfactory (as op-
ated with consumer attitudes. Below we intro- posed to optimal) alternative (as opposed to
duce decision rules likely to be implemented the best alternative possible) in order to save
by different segments of consumers under time and effort. The use of decision rules in
varying market conditions. these instances enables people to take short-
cuts in making decisions in the face of the ap-
᭤ DECISION RULES parently unlimited or overwhelming amounts
of information available regarding all possi-
Decision rules are strategies consumers use to ble alternatives. Consumers usually work with
a consideration set (i.e., a subset of alterna-
choose among alternatives. Several factors tives from the entire universe of choices) so
can influence what decision rule consumers they do not have to work as hard cognitively
ultimately apply in a specific situation. Typi- when required to make a decision in a given
cally, the more important and less frequent a product category. They then make a final de-
purchase decision is, the more time and effort cision from this reduced set of alternatives.
consumers are willing to expend making that Such decision rules are referred to as heuris-
decision. Choosing a resort at which to spend tics or rules of thumb. Employing heuristics,
a twenty-fifth wedding anniversary, for exam- people save time and limit complex informa-
ple, is a decision most consumers face only tion processing while still making reasonable
once and therefore are likely to take a rela- or satisfactory choices based on the few brand
tively long time to make, and they are likely attributes or characteristics most important to
to be careful and thorough in evaluating al- them at the time of choice. In the context of
ternatives. On the other hand, a salesperson hotel choice, brand attributes are things like
traveling frequently in a familiar territory location, room rates, and availability of a
likely chooses a hotel using a routine process swimming pool, restaurant, and so forth.
where far less time and consideration are
given to alternatives. Further, brand-loyal cus- Although the number of consumer deci-
tomers might choose to stay with the same sion rules is almost infinite and likely varies
hotel chain whenever possible, thereby avoid- by consumer, basic categories and a few spe-
ing a situation where they are forced to cific examples serve as useful tools in model-
ing and predicting traveler decisions. Two

323Section 7.3 ᭿ Consumer Decision Rules and Implications for Hotel Choice

general categories of decision rules are (1) market segment, these property attributes
compensatory and (2) noncompensatory. Be- may be very important.) The evaluations of
low we discuss how travelers make decisions salient attributes and the beliefs that brands
using these two types of rules. possess the salient attributes are included as
weights in an equation determining overall
᭤ Compensatory Decision brand attitude. The model is represented as:
Rules
n
Compensatory decision rules model con-
sumers as deriving an overall brand evalua- ΑAbrand A ϭ eibi
tion such that alternatives performing poorly iϭ1
on one attribute can compensate for their re-
spective shortcomings by positive evaluations where Abrand A is the overall attitude toward
of other attributes. For example, a high-priced hotel brand A, ei is the evaluative weight as-
hotel might not be perceived positively on the sociated with attribute i, bi is the extent to
dimension of room rates by some travelers; which the consumer believes brand A pos-
however, these same travelers might be will- sesses attribute i (i.e., strength of belief that i
ing to spend more money knowing they will is present in brand A), and n is the number of
receive better service or that the hotel is con- salient attributes in consideration.
veniently located—that is, in this example,
service and location compensate for the per- Operators and marketers typically mea-
ceived disadvantage of high room rates. The sure importance weights and strengths of be-
multi-attribute attitude model described in liefs using questionnaires. First, survey
the next section is perhaps the most popular respondents are asked to provide evaluative
compensatory decision rule. weights associated with each of the attributes
salient to their decision; these numbers repre-
Multi-attribute Attitude Model. The sent each attribute’s relative positive or nega-
multi-attribute attitude model we describe tive associations in consumers’ minds.
herein is also referred to as a weighted addi- Although scale endpoints may vary by re-
tive model or the Fishbein (1975) linear com- searcher preference, our demonstration of
pensatory model. In this model, people not this model assumes use of a 7-point scale on
only assess the value of each salient (or im- which Ϫ3 is the lowest importance rating pos-
portant) attribute of brand but also consider sible, ϩ3 is the highest, and a neutral impor-
the extent to which a given alternative pos- tance rating is zero. An attribute that is
sesses the attributes. (Note: In this context, it evaluated entirely negatively by survey re-
is important to note that salience is essentially spondents (e.g., the availability of guest laun-
equivalent to importance. Further, the attri- dry) would be assigned a value of Ϫ3,
butes salient to one market segment may be whereas an attribute that is highly positive in
very different from those of another segment. a consumer segment’s evaluation (e.g., low
For example, business travelers may not care room rates) might be assigned a value of ϩ3.
at all about a spa, an airport shuttle, and room
service breakfast quality, while to another Once consumer attribute evaluations are
determined, survey respondents state the ex-
tent in which they believe a brand possesses
respective attributes. Again, for simplicity of
demonstration, we assume that the belief
strength regarding any of the attributes to be

324 Chapter 7 ᭿ Marketing and Associated Activities

evaluated ranges between Ϫ3 (i.e., the brand ation set, and the brand associated with the
definitely does not possess the attribute) and highest overall attitude score is selected as the
ϩ3 (the brand definitely possesses the attrib- preferred alternative.
ute). For example, if a traveler believes that
Hotel X is a relatively high-priced establish- A few considerations should be kept in
ment, the consumer might assign a belief mind that are important to implementation of
value of Ϫ2 to this hotel on the attribute “low this model. First is the notion that the model
room rates,” thereby indicating that Hotel X is relative in nature—that is, an overall atti-
does not possess the attribute “low price” to a tude score of ϩ21 for a single hotel means
great extent. In other words, Hotel X per- nothing unless it is compared to the overall
forms poorly on the traveler’s low room rate attitude scores of its competitors as evaluated
criterion. The hotel offering the absolute low- by survey respondents in a relevant market
est price—say, Hotel Q—may be assigned a segment. Further, it is important to include all
value of ϩ3 on the attribute “low room rates,” relevant competitors in the model. As a rela-
thereby indicating the traveler strongly be- tive model, it may be that the market segment
lieves that Hotel Q does indeed offer low considers only one of five low-budget proper-
room rates. ties when traveling to a particular locale. If so,
include only those five; it is not helpful to
The next step in the model is multiplica- have comparisons made (explicitly or implic-
tion of attribute evaluation (ei) and belief itly) in respondents’ minds if they are not re-
strength (bi) for each of the salient attributes. alistic (e.g., it is likely that inclusion of the
If the traveler evaluated low room rates very Four Seasons in the consideration sets of
positively (eroom rate ϭ ϩ3), and Hotel X re- Quality Inn customers is inappropriate). By
ceived a belief score of broom rate ϭ Ϫ2, we cal- the same token, leaving out alternatives that
culate Hotel X’s contribution to overall respondents in the market segment may truly
attitude score relative to the attribute “low consider can introduce error; the result may
room rate” by multiplying evaluation and be- be a finding that the property has the highest
lief scores eroom rate ϫ broom rate ϭ (ϩ3) ϫ attitude score among those included on the
(Ϫ2) ϭ Ϫ6. Evaluation of Hotel Q on the low survey, yet the model is not predictive be-
room rate attribute will be more favorable— cause the survey omitted a strong competitor.
specifically, eroom rate ϫ broom rate ϭ (ϩ3) ϫ Also of paramount importance is the selec-
(ϩ3) ϭ 9. This procedure is followed for each tion of appropriate salient attribute sets. If
salient attribute for all brands in a considera- critical, differentiating attributes are left out
tion set. Other attributes, for example, could of the model, summated scores are not pre-
include location near the airport, availability dictive of behavioral likelihood; consumers
of room service, or complementary breakfast, using a compensatory model in actuality are
and the eattribute ϫ battribute products calcu- implicitly calculating scores using attributes
lated for each brand and attribute. that may have been missed by survey admin-
istrators. Thus, it is critical to select the appro-
Finally, the products of ei ϫ bi for each priate salient attributes for inclusion in the
salient attribute are summed for each brand. model. Note that appropriate does not mean
The resulting scores represent the relative all attributes. Surveyors often ask about
overall attitudes held for each brand. This things that do not really matter to respon-
weighted additive model is applied to all the dents. Once primed, however, respondents
brands included in the survey as the consider-

325Section 7.3 ᭿ Consumer Decision Rules and Implications for Hotel Choice

provide a score on attributes they may never Note that the evaluation weights (ei) as-
have thought of on their own, thereby con- signed to attributes remain constant across
tributing falsely (positively or negatively) to brands, while belief strength may differ from
overall attitude scores. brand to brand (indeed, should differ, unless
brands are identical). The overall attitude to-
We now provide an example of the linear ward hotels E, F, G, and H can therefore be
compensatory model, necessarily simplified calculated as follows:
with regard to number of brands under con-
sideration and salient attributes included. AHotel E ϭ (ϩ3)(Ϫ1) ϩ (Ϫ2)(Ϫ1)
Consider Charlie and Elsa Brown, a wealthy
New York couple looking for a hotel to stay at ϩ (ϩ1)(ϩ3) ϩ (ϩ2)(0)
while spending a weekend skiing in Vermont;
the Browns represent a market segment that ϭ Ϫ3 ϩ 2 ϩ 3 ϩ 0 ϭ 2
regularly visits this area for this purpose.
Based on a discussion with friends who know AHotel F ϭ (ϩ3)(ϩ2) ϩ (Ϫ2)(Ϫ2)
the area well, the Browns identified four ho-
tels (associated with four different brands) in ϩ (ϩ1)(ϩ3) ϩ (ϩ2)(ϩ2)
the area they plan to visit. Table 7.1 shows
four salient attributes the Browns consider, ϭ 6 ϩ 4 ϩ 3 ϩ 4 ϭ 17
the importance of each attribute (ei ranging
from Ϫ3 to ϩ3) and the beliefs (bi ranging AHotel G ϭ (ϩ3)(ϩ3) ϩ (Ϫ2)(ϩ1)
from ϩ3 to Ϫ3) regarding the extent to which
each of the properties possesses attribute i. ϩ (ϩ1)(Ϫ2) ϩ(ϩ2)(ϩ3)
(Note that there could be more or fewer
salient attributes depending on the product or ϭ 9 Ϫ 2 Ϫ 2 ϩ 6 ϭ 11
service in consideration and the attributes
salient to the perspective market segment.) AHotel H ϭ (ϩ3)(ϩ1) ϩ (Ϫ2)(ϩ2)

Using the above scores derived from sur- ϩ (ϩ1)(ϩ1) ϩ (ϩ2)(ϩ3)
vey responses, we derive an overall attitude
score for each of the hotels in the Browns’ ϭ3Ϫ4ϩ1ϩ6ϭ6
consideration by computing the sums of the
products of importance (ei) multiplied by be- Thus, assuming an optimized score being
lief strength (bi) for each attribute for each sought in this instance, Hotel F, scoring high-
brand. For example, for Brand E: est in overall brand attitude (17), is most
likely to be chosen. Hotel E, on the other
n hand, scored lowest on overall brand attitude
(2), and is unlikely to be selected.
ΑAttitudeBrand E ϭ eibi
iϭ1 ᭤ Noncompensatory
Decision Rules
ϭ (eproximity to skiing area)
Although many factors (e.g., high involve-
ϫ (bproximity to skiing area E) ϩ (elow rates) ment, high physical, social, or economic risk)
associated with a decision may lead con-
ϫ (blow rates E) ϩ (efine restaurant) sumers to use a compensatory decision rule,
the effort is relatively complicated and often
ϫ (bfine restaurant E) too time- and effort-intensive for people to

ϩ (eindoor pool) ϫ (bindoor pool E)

326 Chapter 7 ᭿ Marketing and Associated Activities

Table 7.1 Four Salient Attributes K Considers

Attribute Hotel E Hotel F Hotel G Hotel H
biG biH
ei biE biF
ϩ3 ϩ1
Proximity to skiing area ϩ3 Ϫ1 ϩ2 ϩ1 ϩ2
Low rates Ϫ2 Ϫ1 Ϫ2 Ϫ2 ϩ1
Fine restaurant ϩ1 ϩ3 ϩ3 ϩ3 ϩ3
Indoor pool ϩ2 Ϫ0 ϩ2

employ for many day-to-day decisions. As The most commonly used noncompen-
suggested above, consumers may use a com- satory decision rules are the lexicographic de-
pensatory decision rule if they spend a lot of cision rule, the elimination-by-aspects decision
time on the road, for a special vacation, or for rule, and the conjunctive decision rule. To
an extended stay abroad. However, they are demonstrate consumers’ use of noncompen-
unlikely to use such an elaborate rule when satory decision rules, we can use the same sur-
purchasing a beverage at a gas station or vey data as the compensatory decision model
when they need to find inexpensive lodging in regarding salient attribute evaluations and
the middle of a long drive to visit friends. brand beliefs regarding those attributes. The
Thus, many decisions are made using much data, however, are used differently, as de-
simpler rules. Noncompensatory decision scribed below. For the noncompensatory rules
rules tend to simplify decision making; they defined below, we again consider the evalua-
may lead to less than optimized results but tions and beliefs regarding Hotels E, F, G, and
are often employed when consumers satisfice, H introduced in Table 7.1.
or seek an outcome that is good enough
rather than optimal. Lexicographic Decision Rule. When us-
ing a lexicographic decision rule, consumers
When noncompensatory decision rules select a brand according to the alternative
are used, a brand or product cannot compen- that scores highest on a single attribute
sate for weak performance on one attribute deemed most important. This is probably the
by performing well on other attributes when way we make a lot of decisions. What is
competing alternatives are compared. For ex- cheapest? What is most convenient? What is
ample, if consumers choose a hotel based on the best-looking alternative?
the single criterion attribute of low room
rates, a hotel offering higher-priced accom- Consider the values in Table 7.1 as results
modations with better service would not be of a different survey for consumers from a dif-
chosen (unless rooms are not available at the ferent market segment: Four brands of hotels
hotel offering lower rates). In this case, con- are evaluated on the four attributes of prox-
sumers do not trade off room rates and ser- imity to skiing area, low rates, fine restaurant,
vice quality but make their decision guided and indoor pool. The importance of each of
solely by a property’s rates. these attributes is given by ei. Importance rat-
ings are proximity to skiing area (ϩ3), low

327Section 7.3 ᭿ Consumer Decision Rules and Implications for Hotel Choice

rates (Ϫ2), fine restaurant (ϩ1) and indoor consumer’s consideration set. For this exam-
pool (ϩ2). Proximity to skiing area is the ple, only Hotel F (bproximity to skiing area F ϭ ϩ2)
most important attribute in this case of hotel and Hotel G (bproximity to skiing area ϭ ϩ3) meet
choice, followed by indoor pool, fine restau- the cutoff criterion (ϩ2). Hotel E (bproximity to
rant, and low rates, respectively. According to skiing area E ϭ Ϫ1) and Hotel H (bproximity to ski-
the lexicographic decision rule, proximity to ing area H ϭ ϩ1) are not close enough to the
skiing area is the attribute determining con- skiing area to make the cut.
sumer choice in this case. Consumers have
reason to believe that Hotel G is closer to the When implementing the elimination-by-
slopes (bproximity to skiing G ϭ ϩ3) than are the aspects decision rule, the consumer replicates
other hotels in the consideration set, and these steps: He or she now considers the per-
therefore Hotel G is chosen. formance of the remaining brands with re-
spect to the attribute ranked second-highest
Elimination by Aspects. When an elimi- in importance. In our example, the consumer
nation-by-aspects decision rule is used, attri- next looks at the availability of an indoor pool
butes are again ranked according to their at Hotels F and G. Assuming the cutoff value
importance. Unlike choosing the hotel brand to be employed is ϩ2, both brands remain in
that performs best on a single most important the consumer’s consideration set, as the
attribute as with the lexicographic rule, how- scores for indoor pool Hotel F (bindoor pool F ϭ
ever, elimination by aspects involves the use ϩ2) and Hotel G (bindoor pool G ϭ ϩ3) both
of cutoff values. A cutoff value is a minimal meet this criterion. At this point, the con-
performance score a brand must have to stay sumer has not yet found the best offering ac-
in the consumer’s consideration set. A con- cording to the elimination-by-aspects rule.
sumer first looks at performance scores of
brands regarding the most important attrib- Consequently, the consumer applies the
ute and eliminates all brands that do not ex- same procedure to the attribute ranked
ceed the predetermined cutoff value. We third—that is, the availability of a fine restau-
often do this with multiple attributes: “I won’t rant. Assuming the consumer still uses a cut-
pay more than $110 a night in city X, so I off criterion of ϩ2, Hotel G (bfine restaurant G ϭ
don’t even look at properties more expensive Ϫ1) is eliminated from the consideration set.
than that, but my choice also has to have a Hotel F (bfine restaurant F ϭ ϩ3), on the other
pool.” We essentially eliminate by the aspect hand, exceeds the cutoff criterion, is now the
of price first and then by whether or not the only brand left in the consumer’s considera-
hotel has a pool. tion set, and is therefore selected.

In the example shown in Table 7.1, prox- Note that using the same data set, the
imity to skiing area is the most important at- elimination-by-aspects decision rule leads to
tribute, with an importance rating of ϩ3. Let a different choice than the lexicographic deci-
us assume the consumer’s cutoff value is ϩ2. sion rule. From a strategic standpoint, the fact
That means that all of the hotel brands that that some consumers use an elimination-by-
have a score of at least ϩ2 on the proximity to aspects decision rule should encourage hotels
skiing area attribute are retained in the con- to improve their performance on several at-
sideration set, while brands that do not meet tributes important in consumer choice. It is
this cutoff criterion are dropped from the not enough to be situated close to a skiing
area. Other aspects of the offering might also

328 Chapter 7 ᭿ Marketing and Associated Activities

be important in consumers’ hotel selections, leads to elimination from choice considera-
and performance in these areas should be tion because it does not meet the cutoff crite-
monitored and, if necessary, improved. You rion of ϩ1 on the attribute “fine restaurant.”
can see, however, that it is crucial to improve Hotel H, on the other hand, exceeds the cut-
services that are valued by consumers—in off criterion of ϩ1 on all of the criteria. Thus,
other words, aspects of a hotel’s offering that using a conjunctive decision rule, Hotel H is
have high importance ratings. Shortcomings selected.
in aspects that are valued highly by con-
sumers, such as cleanliness and employee Accounting for Ties. Note that ties can
friendliness, cannot be compensated for by frequently occur using compensatory or non-
strong performance in areas to which con- compensatory decision rules; this usually re-
sumers attach no importance (e.g., internal sults in consumers moving to a new rule in
cost-control systems). order to break the tie. For example, if com-
pensatory values were equal for two competi-
Conjunctive Decision Rule. When a con- tors (not shown in the examples above), a
junctive decision rule is employed, consumers consumer might implement a lexicographic
process information by brand, as opposed to decision rule with proximity to a skiing area
attribute by attribute, as with the lexico- as the most important attribute used to pick a
graphic and the elimination-by-aspects deci- hotel. Or, if the conjunctive cutoff value were
sion rules.With this rule, consumers establish a Ϫ1 for all attributes, both Hotels E and H in
cutoff criterion that must be met by alterna- our example would stay in consideration; the
tives in the consideration set on all salient at- consumer may then use a lexicographic deci-
tributes for brands to remain in consideration. sion rule based on availability of an indoor
pool, resulting in Hotel H being chosen as it is
Let us assume that a consumer desires rated higher on this attribute than Hotel E.
that the chosen hotel should have a score of at
least ϩ1 on all of the attributes he or she con- ᭤ MARKETING
siders important. In our example, then, prox- IMPLICATIONS
imity to a skiing area, low rates, fine
restaurant, and indoor pool must all rate a ϩ1 Once consumer evaluations of salient attri-
on each of these dimensions to remain in the
consideration set. First, the consumer evalu- butes (e.g., availability of room service, con-
ates Hotel E on each of these attributes. ference facilities, wheelchair accessibility,
While Hotel E meets the cutoff criterion of children’s programs) are determined and
ϩ1 on fine restaurant, it falls short of the con- their beliefs regarding a hotel brand’s offer-
sumer’s cut-off rule when it comes to proxim- ings are known, managers can use this infor-
ity to skiing area, low rates, and indoor pool, mation to improve their hotel’s competitive
and therefore is eliminated from considera- positioning in the market. The goal of any
tion. The consumer then turns to evaluation marketing strategy is to increase positive atti-
of Hotel F, which meets the cutoff value of ϩ1 tude toward the offering or to encourage the
on three out of four relevant attributes. It is use of certain decision rules, thereby increas-
eliminated from choice consideration, how- ing the likelihood of being chosen by
ever, due to its failure to deliver on low rates. consumers.
The consumer’s assessment of Hotel G also

329Section 7.3 ᭿ Consumer Decision Rules and Implications for Hotel Choice

As we have seen, when consumers use a ward Hotel H would also benefit some of its
compensatory decision rule, the overall atti- competitors.
tude toward a hotel is determined by the sum
of the products of evaluations multiplied by Thus, sometimes a more effective strategy
beliefs regarding salient attributes associated for improving consumers’ overall attitude to-
with the offering. Consequently, travelers’ ward a hotel’s offerings is to improve con-
overall attitudes toward a hotel can be ren- sumers’ brand-specific belief ratings. For
dered more positive by strategies targeted at example, Hotel F could strive to improve con-
increasing the evaluation of an attribute in sumer belief that it offers a pleasant indoor
consumers’ decision making, or by changing pool by providing a picture of the pool on its
consumers’ beliefs about a hotel’s offerings. website, or by stressing the availability of the
indoor pool in advertisements. While con-
Travelers’ attribute evaluations can be sumer brand-specific beliefs are then likely to
influenced by stressing the attribute in adver- increase, Hotel F’s competitors will not bene-
tising (e.g., less money spent on accommoda- fit from its strategy, and Hotel F thereby im-
tion can be used to have more fun with the proves its competitive position.
whole family by spending the savings on
other activities, the availability of a business Assuming that Hotel E cannot do any-
center enables business customers to save thing to increase consumers’ belief that it is
time). This strategy of influencing attribute not located in proximity of a skiing area (i.e.,
evaluations is effective in attitude change its location is indeed far from a skiing resort),
and also relatively easy to pursue. It is, how- a strategy it may employ to increase con-
ever, not a strategy always recommended for sumers’ overall attitude toward the property
changing consumers’ attitudes when they are is to add a salient attribute to the set of at-
using a compensatory model. The potential tributes consumers consider when making ho-
problem associated with this approach is that tel choices. For example, Hotel E could
attribute evaluations are constant across provide free accommodation for children
brands in a consideration set. In our example staying with their parents. It is likely that par-
above, travelers evaluating importance of the ents would consider this option important
availability of an indoor pool (ϩ2) is the when choosing a hotel. As long as other com-
same for all hotel brands, E, F, G, and H. If petitors do not offer this service, Hotel E en-
Hotel H were successful in a marketing mes- joys some advantage in the choices made by
sage in increasing the evaluation of an indoor its target market. It is essential that when
pool with a segment of consumers, say to a adding a new attribute, marketers consider
rating of ϩ3, it would increase consumers’ the following: First, the attribute added must
overall attitude toward its brand. At the same be important enough to the hotel’s target
time, however, consumers’ overall evaluation market to be included in consumers’ subse-
of Hotel G would increase by the same quent decision making (i.e., is it indeed
amount, as both brands do not differ with re- salient?). Second, the belief that a particular
spect to consumers’ beliefs about their hav- hotel possesses this attribute must be stronger
ing a great indoor pool (i.e., both have a than the belief that any of its competitors do.
belief rating of ϩ3). In the end, the attempt This marketing strategy, often referred to as a
to increase consumers’ overall attitude to- strategy of differentiation, is likely to be
successful when these conditions are met.

330 Chapter 7 ᭿ Marketing and Associated Activities

Differentiation, however, is unlikely to be sus- ket segments usually weigh low rates more
tainable—that is, over time, competitors iden- heavily in their hotel choice. It is therefore
tify what added attributes successfully attract important for marketers to carefully define
customers and copy them, thereby creating the targeted market segment(s) prior to con-
consumer belief regarding their own proper- ducting their research and applying evalua-
ties. Thus, the hotel that introduced the new tion weights and beliefs to similarly disposed
salient attribute often can expect to lose its consumers.
differential advantage over time unless it
maintains a unique characteristic like a spe- In general, it is crucial to find out what at-
cial location (e.g., “there is only one view tributes targeted consumers feel are most
property on this section of coastline”) or a salient to their decisions and, in response, in-
fabulous chef in the kitchen. crease performance (or perceived perfor-
mance) regarding these attributes and
Increasing belief strength for a hotel’s at- commensurately inform market segments of
tributes is not always a successful strategy, as- this stronger position. The resultant positive
suming a compensatory model is being used. attitude toward the offering should then in-
For example, consumers may find it relatively crease the likelihood of the hotel being cho-
unimportant whether the hotel offers low sen by travelers using a compensatory
room rates or not. In the example data in decision-making model. Alternatively, as a
Table 7.1, the importance rating for low room strategic move, particularly for special niche
rates is Ϫ2—that is, consumers in this particu- properties, marketers may want to encourage
lar target segment evaluate low room rates consumers to abandon the linear compensa-
negatively, perhaps because they associate tory model. Niche market segments may exist
low rates with low quality or with small, un- or may be created through marketing com-
derfurnished rooms. In this case, stressing that munications; these target markets might be
a particular hotel offers low rates, thereby in- better served by hotels focusing on one or
creasing the strength of consumers’ beliefs, more of the noncompensatory decision rules
may adversely affect consumers’ overall eval- presented. For example, a segment of highly
uation of a property. If you compare Hotels F price-sensitive customers predominantly us-
and H, you will see that the strong belief that ing a lexicographic decision rule with low
Hotel H offers low rates (blow rates H ϭ ϩ2) rates as the most important attribute may
negatively affects its overall evaluation, as constitute the primary target market for a
(elow rates ϫ blow rates H) ϭ (Ϫ2)(ϩ2) ϭ Ϫ4. property. In this case, travelers can be tar-
Hotel F, on the other hand, benefits from con- geted by offering low prices and/or frequent-
sumers not being aware of low rates, such that stay loyalty programs. At the same time,
(elow rates ϫ blow rates F) ϭ (Ϫ2)(Ϫ2) ϭ ϩ4. services deemed unnecessary or unimportant
by this customer segment can be eliminated
It is important to note that importance or minimized. The fact that some customer
weights associated with attributes vary across segments expect a minimal level of perfor-
market segments. For example, while business mance on several attributes (e.g., cleanliness,
travelers on corporate expense accounts or convenience, and friendly service) when they
consumers on a once-in-a-lifetime vacation, use an elimination-by-aspect or conjunctive
such as a honeymoon, may attach less impor- decision rule, however, implies that focusing
tance to low rates, more price-sensitive mar-