Boutique hotels are "less reliant on the corporate market, depending more on leisure stays" (Harmer 2010). HdV described leisure and social spending as the highlights of 2009. Many HdV hotels have successful events departments with the Devonshire Gardens hotel hosting 84 weddings during 2009.
HdV has seen a decline in their corporate customer base and an increase in leisure business (HdV annual report, 2009). As the corporate market begins to grow again and the leisure market is threatened by the impacts of recent budget cuts it will be important for HdV to attract more business customers as well as trying to maintain leisure market business. HdV has already begun a new promotion aimed at serving the business market.
HdV describes itself as having a loyal customer base. Hence HdV should focus on attracting new customers while ensuring that they continue to serve returning customers.
3. Marketing information
Customer comment cards are left in all guest bedrooms but guests are not asked to fill them out and cards are often left untouched. Any completed cards and verbal comments which staff receive are passed on to management. The introduction of a reward for completing the comment cards, for example a free glass of wine during their next visit, may encourage customers to fill in the cards, which would provide the marketing management with more information from a wider range of customers.
The marketing department at HdV keep a close eye on travel guide websites, such as Tripadvisor.com, which are growing rapidly. Tripadvisor now has over 9 million registered members (Online Travel and Hospitality, 2008) and has over 1400 reviews of HdV hotels. Therefore it is an important marketing research resource for the company. The website also allows management to reply to comments posted on it which can help to deal with complaints.
In 2009 HdV invested in management software which enables them to monitor room prices of their competitors (HdV annual report, 2009). This information is up to date and reliable and is used effectively to help HdV vary their room rates accordingly.
With 14 hotels across the county HdV is now a major hospitality company. Bowie and Buttle (2004) explain that these companies have developed computerised data bases which use guest histories to track customer segments and identify emerging trends.
4. Key opportunities
HdV hotels have successful restaurants and food and beverage departments which account for around 55% of total business. HdV offer a number of promotions based around their bistros. With occupancy levels this year lower than 2009, it is therefore important to focus on attracting customers to the accommodation offered by HdV hotels.
The UK has an aging population and a growing number of adult households (Keynote report, 2009). There is potential to target this segment with short-break offers.
Government spending cuts are likely to affect the leisure market so it is important to target this sector in order to try and retain the increased business provided by this sector over the past year.
There is increasing competition in the boutique hotel market particularly from large international hotel chains entering the market with new brands. It is important for HdV to continue to differentiate itself from these brands and to increase brand awareness. (See appendix 4 for full SWOT analysis).
HdV describes itself as ideal for a romantic weekend away; however, it does not provide customers who would like a romantic night away with anything special. Many of HdV's competitors have romantic packages and promotions for couples (see appendix 5).
5. Objectives and Issues
The objective is to increase average occupancy rates to 80% in 2011 with a particular focus on increasing occupancy during the low season months of January, February, March, October and November. The marketing strategy should also increase brand awareness of HdV.
HdV is successful at retaining customers; it says it has a 'loyal customer base'. So the aim of the strategy will be both to attract new customers as well as to offer increased value to retain returning customers. Kotler et al. (2010) identify an important challenge "to increase the value of the product" for the target market. The objective of this strategy will be to do just this, rather than to offer rooms at a reduced rate.
6. Marketing Strategy
6.1. Product
'Romantic Indulgence'. The basic package includes one night's accommodation in a double room with champagne on ice, handmade chocolates, bubble bath and bath salts in the room. Dinner in the evening and romantic room service breakfast in the morning is included. There will also be a selection of optional extras and upgrades available for purchase. These include in room spa treatments for two, a bouquet of roses, room and dinner upgrade. Wine upgrade, advised by in house sommeliers, will also be available on the night.
6.2. Price
The basic package will cost £299 (see appendix 6 for detailed product pricing). There will be a 10% discount for bookings made for January and February.
6.3. Place
The package will be available to reserve on HdV’s website or by telephone through the CRS. The website is globally accessible and provides customers with all the information they need. HdV do not use travel agents or other websites as they are not suitable for HdV's brand image of a desirability, sophistication.
6.4. Promotion
This marketing strategy adopts the concept of integrated marketing communications. It involves a sales promotion which is effective in creating a "stronger and quicker response" from consumers (Kotler, 2004). It uses advertising, public relations, personal selling and direct marketing methods. It is important for all these marketing methods to be integrated in order for HdV to portray a consistent and compelling brand image and message (Kotler et al., 2010).
The promotion begins with direct marketing by sending current customers on HdV's database a 'Happy New Year' card from HdV detailing the promotion. According to Kotler et al. (2010) direct marketing is interactive, personal and helps to build customer relationships. It is also comparatively cheap.
The promotion includes advertisements printed in the Sunday Times magazine and Decanter magazine. Kotler (2004) explains that advertising in a national magazine or newspaper is advantageous as it can reach geographically dispersed buyers which is significant for HdV as it has hotels across the country. According to Web Windows (2010) the Sunday Times dominates the Sunday newspaper market, has the widest span of readers in terms of age and the highest proportion of ABC1 and AB readers. 46% of all Sunday paper readers read The Sunday Times Magazine. Decanter magazine, a specialist wine magazine, sells 46,000 copies a month, is bought by a very broad age range with a fairly even spread from 25 to 64 years of age and the average reader keeps a copy for 9 months. Decanter targets a market segment with an interest in wine which fits in with the HdV concept.
A feature article, subject to a successful pitch (see appendix 7), will be published in Red magazine. This magazine is aimed at professional women, with higher disposable incomes, aged between 28 and 44. This represents the female segment of a large proportion of HdV's target market. Research undertaken by Thetraveleditor.com (Evans, 2009) found that in 8 out of 10 cases women take control in relationships when deciding holiday destinations. In other words women often take on the role of influencer and decider in the buyer decision process.
Flyers detailing the promotion will be given to HdV Bistro customers with their bill. Roberts (1993) identifies previous experience as an important influence on customer behaviour; if a customer has enjoyed an experience at HdV then it is likely that "there will exist an in-built preference influence". Hence these flyers will attempt to target customers who have just had an enjoyable HdV experience and would like to return again.
(See appendix 8 for promotion samples)
6.5. Competitive response
Kotler et al. (2010) explain that marketing based purely on providing customers with financial benefits can be easily copied by competitors. In response to this promotion HdV's competitors may change the price of their packages (see appendix 5). They may also add value to their product by adding extras such as handmade chocolates and bubble bath offered in this promotion. However, HdV's unique concept of a devotion to wine and the inclusion, in this promotion, of a meal in HdV's destination restaurant is much harder for other companies to compete with and gives HdV a competitive edge.
7. Budget
The budget (appendix 9) includes activities by form of media on a month-by-month basis. Flyers are handed out throughout the year. Other marketing activities are focused on increasing occupancy rates during low season months.
8. Controls
When taking reservations staff must ask customers where they heard about the promotion. This will help management to assess the efficacy of different methods of promotion. Sales statistics should be monitored on a monthly basis and used to assess and, if necessary, adjust pricing of the product according to demand. Computer systems already in place should be used to track the proportions of new and returning customers using this promotion. This will increase HdV's understanding of customer desires and preferences. An inventory of flyers at each hotel should be taken weekly in order to have sufficient quantity and not to order surplus.
9. Conclusions and Recommendations
The head chef will need to be consulted in order to devise and plan the romantic room service breakfast. Employees must be informed of the details of this sales promotion in order to respond to customer enquiries satisfactorily. The promotion must be entered into the computer systems. The promotion must be detailed on the HdV website and must be changed immediately if aspects of the promotion are changed to avoid customer dissatisfaction. There must be good communication between departments to ensure guests receive the correct service. The strategy should not cause many implementation problems for management, as it requires merely informative and not technical training for staff.
The marketing strategy outlined in this report is based on the analysis of consumers and competitors relevant to the market at present. However the changing economic and demographic situation means that this strategy may become inappropriate. It is important continuously to assess consumer needs and competitors’ strategies in order to adapt and develop appropriate strategies over the coming years.
Word Count: 2410
Bibliography
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Appendix 1 - PESTE analysis
Political
- Minimum wage has just increased to £5.93 for those over the age of 22. The hospitality industry relies heavily on minimum wage workers so this will increase costs for Hotel du Vin.
- Stable political environment.
- Public sector and other Government spending cuts announced recently are likely to have an impact on both corporate and leisure travellers..levels of disposable income will have an impact on this year will hich impact travel budgets for business travel. This impacts the hospitality industry, however Hotel du Vin has more leisure travellers than corporate so should not be affected by public sector cuts as badly as many other hotels.
Economic
- The UK is now in a period of economic recovery with GDP growing by 1.2% in Q2 2010 (BBC, 2010) however forecasters say that momentum is slowing and the UK economy remains at risk of a double-dip recession.
- According to PWC the weakness of the pound continues to fuel overseas leisure demand. Equally the weak pound is a factor which encourages Britons to take their holidays within the UK.
- According to Deloitte hotels in Regional UK are experiencing a slower recovery than London hotels. HdV has no hotels in London so is not benefiting from the faster recovery rates in London.
Sociological
- The UK has an aging population along with a growing number of adult households. A Keynote report (2009) says that these groups can be targeted by the short-breaks market.
Technological
- Use of mobile and social networks is increasing which has an impact on how consumers interact with companies and how they share their travel experiences. Keeping up to date with these rapid changes presents a challenge.
- Developments in internet sales are changing the way in which travellers search for, investigate and make hotel reservations.
- Mobile technology provides travellers with easy access to information anytime and anywhere. Provides opportunities for the hotel to provide guests with new and useful services but also important to make sure they function well on new devices.
- A report by Deloitte (2010) identifies the increasing pressure on hospitality companies for better cost control and reduced waste. The use of modern technology is vital in meeting these demands.
- Technology is developing at a rapid rate there is a risk of spending too much money on new technology which could be outdated in only a few years (Deloitte 2010). Therefore it is important to assess projected returns before making investments in new technology.
- The use of social media is not restricted to young adults but is also growing in usage amongst older adults. Deloitte states that from 2008 - 2009 usage of social media by the 35-54 age group increased from 28% to 35%. This means that a growing number of market segments can be reached through these forms of technology which if used wisely HdV could benefit from.
Environmental
- Public concern for protecting the environment is increasing. According to a Keynote report (2010) holidaymakers are being urged to consider the impact their travels have on the environment. 95% of business travellers in a survey taken by Deloitte believe that the hotel industry should be improving their green initiatives. HdV could gain customer approval by taking steps to reduce their negative environmental impact and making guests aware of their actions.
Appendix 2 – Porter’s five forces analysis
Appendix 3 - Maslow's Hierarchy of Needs
Source: Simons, J.A., Irwin, D.B., Drinnien, B.A. (1987) Maslow's Hierarchy of Needs
Appendix 4 - SWOT analysis
Appendix 5 - Competitors' products and prices
Appendix 6 - Specific product and pricing
Basic package
- Superior double room (this deal is not offered on standard rooms)
- Dinner - 2 courses from the set menu and a bottle of house wine
- Bottle of Champagne
- Selection of home made chocolate truffles
- Bubble bath and bath salts
Cost £299
Optional upgrades
- In room spa treatments from £30 per person depending on treatment choice (limited to the 8 HdV's which have spa facilities)
- Bouquet of roses £25
- Room upgrades - price dependent on different hotels as hotels have different gradings of rooms and prices.
- Dinner upgrade to 3 courses from the A La Carte menu £40
- Wine upgrade dependent on wine chosen
All costs are based on room rates, current promotions and menu prices obtained from the HdV website.
Appendix 7 - Outline of pitch for feature article in Red magazine.
(This pitch uses information and quotes form the HdV website)
The overall angle of the pitch will focus on the lifestyle experience that HdV offers, the growing trend of boutique hotels, the prominent women who work for HdV. This is taking into account the target market of the magazine, as explained in the marketing strategy and the common feature articles which focus on lifestyle and inspiring women.
Why Hotel du Vin?
- Boutique, lifestyle hotels are a growing trend in the travel sector currently so this article is contemporary and relevant.
- Hotel du Vin is one of the UK's leading lifestyle hotel brands which is gaining a reputation for being at the cutting edge of hospitality.
- "Quintessential British style. Elegant and unpretentious", like Red readers.
- "Hotel du Vin provide a range of luxury and boutique hotels landmark in locations around the United Kingdom" and so are accessible to most Red readers.
The article
- Will focus on the luxury lifestyle experience offered by HdV by including mini interviews by prominent women within the HdV business.
- The article will include details of the sales promotion and will offer Red readers a 10% discount if they book a night during February.
Why Red?
- Red treats readers like intelligent women.
- Aimed at a broad age range 28 to 44.
-
‘Red is for women who have grown out of Glamour and Cosmopolitan but are never going to be old enough for Good Housekeeping,’ (Wallace, 2008) i.e. readers are not shallow and celebrity hungry but are fashionable and trendy.
- The average Red reader is educated and most have a career.
Appendix 9 - Budget
Overall budget
The marketing budget for HdV is unknown. However, a 4* London hotel, The Cavendish, has an annual EBITDA of £6.6 million and has a budget of £20,000 per month. The 2009 HdV annual report states that HdV had an annual EBITDA of £11.221 million so an estimate for the monthly advertising budget (based proportionally on figures from The Cavendish) is £34,000. This gives an annual marketing budget of £408,000. The budget for the sales promotion outlined in this report would require a maximum of 18.6% of the annual budget leaving over 80% for all other HdV marketing activities.
Greetings cards
"Happy New Year" greetings cards to be sent at beginning of January 2011.
"Happy Christmas" greetings cards to be sent middle of December 2011 thanking customers for their custom and support during 2011.
HdV did not provide the information required to form an accurate estimate of the number of greetings cards to be sent out. However an independent boutique hotel of similar size to an individual HdV was consulted. The following information was provided: the hotel would only contact guests with UK addresses who have stayed at the hotel during the past year. The marketing manger estimated that they would send greetings cards to just over 1000 customers.
For 5000 cards the cost estimation is:
A6 double sided colour print greetings cards (www.onlineprinters.com) = £143
Envelopes = £63
Address printing onto envelopes = £50
Royal Mail postage with 12% business discount = £1408
Total cost per 5000 greetings cards including postage = £1664
Total cost for 15,000 greetings cards including postage = £4992
These costs are estimated using external printers. It is likely that HdV can provide internal printing and thus this is an upper limit for the cost of sending the greetings cards
Flyers
Flyers are to be given to HdV restaurant guests with their bill (one flyer per table). The average HdV bistro has 80 covers, which across all 14 hotels is an estimated 1120 covers and 2240 covers per day when lunch and dinner is included. Based on an average occupancy of 50% with the average table having 3 covers the estimated number of flyers need for the year would be 130,000.
Flyers will be printed monthly in order for changes in price and other details to be made according to monthly assessments of the promotion. The number of remaining flyers should also be reported each month and order quantities adjusted accordingly.
www.ukflyers.com charges £295 per 10,000 flyers.
Hence, according to an estimated need for 130,000 flyers the cost for the year will be £3835.
Decanter Magazine
Decanter magazine charges £3,410 for a full page colour advertisement and offers a discount of 6% if 3 bookings a made (Robinson, 2010). Thus if HdV publishes an advertisement every other month the total cost for the year will be £9,616.
Sunday Times Magazine
The Sunday Times Magazine charges £14,175 for a half page advertisement (nicommercial.com, 2010). Advertisements would be printed the first weekend of February, the first weekend of March, the first and third weekends of September in order to try to encourage sales for February, March, October and November.
