Hotels and restaurants face an ongoing and costly battle with their competitors, a problem that originates from within their own establishments. While it may be convenient to attribute disappointing revenues and profits to tough market conditions and strong competition, a closer look reveals a clear display of incompetence on the part of executives responsible for outperforming their rivals.
In essence, claiming that “we are not making higher profits due to strong competition” actually translates to “we are not skilled enough to surpass our competitors.” These businesses often find themselves incessantly complaining about their rivals and investing substantial time and resources in competitive analyses, hoping to uncover a decisive competitive advantage. Yet, they fail to recognize why, despite their efforts, they are unable to outshine their competition. Despite conducting numerous SWOT analyses, they are trapped in the same line of thinking as their competitors. So, what does it take to rectify this situation?
Successfully identifying and addressing the real problems faced by hospitality industry businesses primarily requires a deep understanding of psychology—an area that is often neglected or scarcely covered in hotel management schools. This is evident from a recent poll conducted by a major global hospitality industry portal, which revealed that “GM’s number one focus is NOT the guest.” The fact that General Managers of hotels fail to prioritize their guests speaks volumes and requires no further elaboration.
The root cause of most problems faced by hotels and restaurants lies in their lack of understanding of human behavior. Without comprehending why individuals act and react the way they do, without understanding the driving forces behind their guests—both existing and potential—and without knowing their genuine needs, it becomes impossible to plan, implement, and operate a successful hospitality business. After all, hospitality is fundamentally about people, and as mentioned earlier, General Managers of hotels not only lack sufficient knowledge about human behavior, but they also fail to prioritize their guests. This should not come as a surprise since hotel management schools primarily focus on teaching administrative skills required to manage hotels and restaurants, which predominantly involve non-hospitality-related tasks. Likewise, operational training in hotels and restaurants primarily focuses on serving food and beverages, cooking, cleaning, and other related tasks. Consequently, these deficiencies lead to the problems discussed below.
The overarching problem within the industry can be summarized as follows: hotels and restaurants, particularly, suffer from a severe identity crisis known as “sameness”; they have become “me-too” businesses.
Throughout history, since the inception of “hotels,” not much has changed despite superficial developments from the early resting places to the modern-day hotel. Even today, hotels primarily offer guests a simple opportunity to rest, lodge, eat, and drink—rooms, food & beverages (in the case of restaurants). Even when additional facilities such as event spaces, swimming pools, saunas, and gyms are added, the core essence remains unchanged. In essence, the traditional concept of “hospitality” has always revolved around satisfying basic bodily needs, which are considered lower-order human needs. By confining themselves to merely fulfilling material needs, hotels and restaurants severely limit their chances of achieving true uniqueness, to say the least. Consequently, too many businesses within the hospitality industry find themselves competing for a small share of the market, using inadequate weapons on the wrong battleground.
By thinking and acting in the same ways as their competitors, hotels and restaurants inadvertently make the same mistakes, leading to uniformity rather than distinctiveness. This raises the question of why potential guests should prefer one stereotype of a hotel or restaurant over another. Where is the differentiating factor? Although hotels and restaurants claim to be the best, none of them truly stand out because they say the same things, show the same offerings, and present themselves in identical ways. A glance at their advertising campaigns confirms this. While there may be superficial differences within specific categories (often reflected in prices), the underlying essence remains the same across all categories. Every category is filled with businesses striving for better sameness, without any of them possessing a competitive advantage over the others. Consequently, gaining a significant position in the minds of potential guests based on being better than the competition becomes virtually impossible. This leaves price and location as the remaining selection criteria, as guests do not anticipate anything exceptional beyond what hotels commonly offer—just a place to sleep and something to eat and drink, which can be found almost anywhere, with good quality and reasonable prices. As Bruce Henderson, founder of Boston Consulting, aptly stated: “Unless a business has a unique advantage over its rivals, it has no reason to exist.”
How can hotels and restaurants attain and maintain a unique advantage over their competitors? The answer is simple yet profound: by gaining an understanding of the human being (their guests), changing their philosophy, and ceasing to be mere hotels or restaurants. Instead, they should strive to become exciting experiences, with the guest playing an integral part. The focus must shift to the guests and their overall satisfaction, emphasizing intangible values that hold greater significance than material values. Hotels should move away from merely providing rooms, food & beverages, and basic services, and instead prioritize immaterial values. Once owners and managers grasp this concept and translate it into action, their establishments will truly stand out. Until then, they remain ordinary at best, lacking any reason to exist, as Bruce Henderson aptly noted.
As a hospitality industry and marketing professional with extensive international executive experience and as an author, it has been my mission to raise awareness among hoteliers and restaurateurs about their real problems and to assist them in resolving these issues or learning how to do so themselves. I am the author of the hospitality industry textbook, “The Revelation Of The Secret Behind Success” (available here: [book links]).