Problem Competition In The Hospitality Industry, Its Cause And Solution

The main problem that hotels and restaurants are faced with is a constant and costly battle with their competitors. This problem - that in fact is caused by the hotels and restaurants themselves - and its solution I will briefly and in an easily understandable way address within the framework of this article.

Blaming tough market conditions due to strong competition for disappointing revenues and profits is easy and may sound good. However, looking at this more closely and putting it bluntly it actually is a clear show of incompetence on the part of those executives who should be making contributions to solving the problem of not being better than their competitors!

In other words, saying 'We are not making higher profits (if any) because we are facing strong competition' means 'We are not good enough to get better than our competitors'. Why else would they be continuously complaining about competitors and invest a lot of time and money in competitive analyses hoping (mostly in vain) to find something that could give them a decisive competitive advantage over their competitors? This leaves us with the question why these businesses are for all the efforts not better than their competition? Why do they not see their real strengths, weaknesses, opportunities, and threats although they do all make one SWOT analysis after the other? The answer is 'because they are just like their competitors thinking along the wrong lines'. So what does it take to get things right?

Both identifying and solving the real problems of hospitality industry businesses requires first and foremost good knowledge (and the skills to expertly turn this knowledge into powerful competitive advantages) in one area that is (although being the most important for success in the hospitality industry) at e.g. hotel management schools either practically not at all or at best only marginally touched; psychology. This fact is reflecting in the result of a recent poll conducted by a major global portal providing the latest hospitality industry insights and news for hospitality professionals according to which: 'GM's number one focus is NOT the guest'. Hotels the General Managers of which do not put their guests at the centre of what they are doing? That says it all and does not require any further elaboration!

The lack of knowing how the human being ticks is the primal source of most hotel's and restaurant's problems. Not knowing why human beings are acting and reacting the way they do, not knowing their guests (real and potential) main driving forces and, subsequently, not knowing what they really need makes it impossible to properly plan, implement and run a successful hospitality industry business. After all, hospitality is all about people and as mentioned above the General Managers of hotels do not only not know enough (if anything at all) about human beings (yes, guests are human beings) they are also not focused on them. Actually this should not come as a surprise. At hotel management schools, etc. it is taught how to execute and manage a hotel's or a restaurant's administrative parts once it is gone operational, which requires predominantly non-hospitality skills. As for the operational areas at training centres and in hotels or restaurants it is taught how to serve (deliver) food and beverages, how to cook, clean, etc. This leads to the problems detailed in the following.

The industry overarching root cause of competition is simply put 'being for lack of knowing how to do better like the competitors', something for which especially the hospitality industry serves as an excellent example. Taking a look at hotels and restaurants does immediately make obvious that they are suffering from a severe identity crisis called 'sameness'; they are 'me-too-businesses'.

As long as mankind exists there have been 'hotels' and since then - never mind the superficial changes during the development process from the first resting place to the hotel as it is known today - nothing much has changed. Now as ever hotels are offering their guests mainly something very simple; the opportunity to rest/lodge, eat and drink i.e. rooms, food & beverages (restaurants only food & beverages). Even if you add to this facilities for events, swimming pools, saunas and gyms this does not change anything at all. To cut a long story short, at the heart of this traditional understanding of 'hospitality' was and still is the satisfaction of bodily needs, which are human needs of the lower order. Since hotels and/or restaurants are still operating within the narrow confines of satisfying material needs their chances of becoming truly unique are slim, to say the least. The result: Too many hospitality industry businesses are fighting for much too little to be shared with the same inappropriate weapons on the same wrong battleground.

Thinking and acting in the same ways others do leads to exactly the same mistakes they make and to uniformity as opposed to distinctiveness. This being said, the big question is why a potential guest should prefer one stereotype to another stereotype of the category hotel or restaurant? Where is the distinguishing mark? All hotels and restaurants claim to be the best but actually none of them is because they say the same, show the same and offer the same in the same ways. Just take a look at their advertising. Yes, there are rather superficial category-specific differences (reflected in the prices!!!) but basically it is all the same within and across all categories. Each category is filled with businesses fighting for better sameness with none of them having a competitive advantage over the other. Against this backdrop it becomes clear that getting into the prospects consideration set for reasons of being better than the others is virtually impossible. From this it follows that the remaining selection criteria are price and location because the prospect does not expect to get anything better than that what hotels offer: a place to sleep and something to eat and drink i.e. ordinary things you can get at almost every corner at good quality and at reasonable prices. Here is what Bruce Henderson, founder of Boston Consulting said: "Unless a business has a unique advantage over its rivals, it has no reason to exist".

How can a hotel or a restaurant get and keep a unique advantage over its rivals? Here is the answer short and sweet: In that they learn about the human being (their guests!!), change their philosophy and put - ideally at the beginning of the planning - an end to being a hotel or restaurant and start being an exciting experience with the guest being integral part of it. It is the guests and the satisfaction of their overall needs (with stress on immaterial values that are much more valuable than material values) that have to be front and centre and not that what hotels usually provide namely rooms, food & beverages and rather basic services. Once this is understood by owners and managers and translated into actions the respective 'hotels' and/or 'restaurants' will be outstanding; until then they are just ordinary, at best, and have - to borrow Bruce Henderson's words - 'No reason to exist.'

I am hospitality industry and marketing professional with decades of international first-hand top executive experience and book author. I have since long made it my mission to make hoteliers and restaurateurs become aware of their real problems and to either solve these problems for them or help them to learn how to do this themselves. I am author of the hospitality industry textbook 'The Revelation Of The Secret Behind Success' here https://lnkd.in/fSPAtqM and here https://www.amazon.com/author/uwefinke