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Chapter 4 | Personality 4.3  |  Personal sellingPersonal selling The marketing tool of personality can be used effectively to promote personal selling and give more ‘body’ to the work floor. Personal selling is the sale of goods or services through personal contact with guests.INKIJKEXEMPLAAR ©SVH As the hospitality sector is a service industry, there is a lot of contact between staff and guest. Such a contact moment can be used to draw the guest's attention to certain products in the range. A significant advantage of personal selling is that there is interaction between staff member and guest. The staff member can thus respond to the message that he receives from the guest. If the staff member is trying to sell something, he will always seek selling arguments. Selling arguments are reasons for the guest to purchase something. During a sales talk, the staff member can discover the purchase motives of the guest. The staff member can use this information to provide the right advice. Take the example of a traditional restaurant recommending wine. Internal personal sellingInternal personal selling If the guest and staff member talk to each other within the business, this is termed internal personal selling. A good host encourages guests to stay longer, thus increasing the amount that they spend. Restaurant staff can also influence the guest's decisions. Many hospitality entrepreneurs tell their hosts to recommend a certain dish, wine or combination to the guests. At peak times it is a good idea to take the pressure off the kitchen by instructing the hosts to sell the weekly menu as much as possible.Cross-selling Receptionists in a hotel are trained in cross-selling and upselling. If the receptionist tells the guest that there is a restaurant in the hotel, this is called cross-selling.Upselling He can also inform the guest of the activities in other sections of the company. Upselling is the technique of selling a more luxurious room to the guest instead of the standard room that he has booked. This method is also used on a large scale in fast-food restaurants. For instance, the option to upsize the menu in certain fast-food chains. 101

Marketing & Sales for the Hospitality Industry The top eight irritations of corporate clients 1. Indifferent reception, not being shown to a table: a bad chord is struck from the start. 2. Staff who don't make eye contact with you, not being able to get the waiting staff’s attention, staff not reading your body language. 3. Staff who make empty promises such as ‘I’ll be with you in a minute’ and then do not return; being unable to pay because the staff have disappeared. 4. Staff who are unable to put themselves in the shoes of the corporate guest and fail to understand how important a meal is for them. 5. Staff who thrust the menu under your nose straight away but then make you wait really long to order. 6. Staff that are too friendly too soon and use the informal ‘je’ and ‘jij’. Over-friendly comments such as ‘Do you guys want a pudding or are you full?’. 7. Staff who constantly ask if everything's alright when you're in the middle of important business negotiations. 8. Unprofessional service, such as a wet tray, lipstick on your glass, coffee spilled on your saucer and the napkin and cutlery in the wrong place.INKIJKEXEMPLAAR ©SVH External personal selling The manager or staff of a hospitality business will seek out potential guests or businesses to promote the business to.External personal selling External personal selling is meeting potential guests outside the hospitality business. Hospitality entrepreneurs increasingly seek out potential guests. Those that offer accommodation use a sales manager. The entrepreneur will have to make a particular effort to attract corporate guests if the economy is not going well. The brochure is an important tool with this type of personal selling. It shows the business formula of the business. This is necessary because the personal selling does not take place at the hospitality business. During the meeting, the salesperson must gain an idea of the purchase motives and any possible purchase resistance. The salesperson can remove any doubts by listening for any clues hinting at this.102

Chapter 4 | Personality 4.4  |  Reducing/extending services The hospitality product consists of a tangible product (the cup of coffee or meal) and a service process. The hospitality product is labour intensive, because this service is nearly always provided by the entrepreneur and his staff. The service is about taking activities out of the guest’s hands. After the service has been provided, responsibility for the activities returns to the guest. The service is clearly defined and has a beginning and an ending. Every business formula sets different boundaries for the service it provides. In a fast-food restaurant, guests queue to place their orders, find their own tables and are expected to leave the table clean after they have eaten. In a luxury restaurant, the staff take the guest's coat, accompany him to his table, bring food and drink and accompany him to the cloakroom at the end of the visit. A luxury restaurant has a very different service process from a fast-food restaurant. Some luxury restaurants provide extra services again to give the guest the feeling that he is that bit more welcome.INKIJKEXEMPLAAR ©SVH Extended servicesExtended services The existing service process can be extended or reduced. In the hospitality business this is called extending or reducing services. Extending services means to take on activities from the guest that tie in with the services currently provided by the business. The hospitality business provides extra services for the guest, for instance if a hotel offers a package that consists not only of accommodation but also of a meal and a recreational programme. Other examples of extending services are a caterer who takes responsibility for the entire organisation of a party, a hotel that employs a porter to bring suitcases to the rooms, a shuttle service that drives from the hotel to the centre or airport or a restaurant with valet parking. All these services are not necessary, but can add value to a particular business formula. If a hospitality entrepreneur chooses to extend his services, he will need to keep an eye on the cost, because the increased labour intensity makes the costs much higher. 103

Marketing & Sales for the Hospitality IndustryReduced services Reduced services Reducing services means passing certain services on to the guest, thus limiting the services. A self-service restaurant is a good example of a business that has looked carefully at the services it provides. The entrepreneur tries to get the guest to do as much as possible himself.INKIJKEXEMPLAAR ©SVH The La Place business formula is an example of a successful self-service restaurant. If a hotel provides meeting rooms, the people at the meeting can pour their own coffee. Guests at Formule 1 hotels use their credit card to collect a room code from a machine. It will mainly be cost considerations that lead a hospitality entrepreneur to want to reduce services. If he wants to reduce services, he will need a good idea of the guest’s expectations of the business formula. Guests are not prepared to take responsibility for services with every business type.104

Chapter 4 | Personality 4.5  |  The entrepreneur and his staff In a hospitality business, the guest comes into direct contact with the service provider, because consumption and production take place simultaneously. This makes the production process vulnerable, because people do not always work at the same level. People are not machines. All mistakes are visible to the guest. People can be influenced not only by personal circumstances, but also by unforeseen external events. The personal circumstances of staff or unforeseen situations in the business have nothing to do with the guests. They come and pay for the hospitality and service. The business formula and pricing of the business are based on the faultless provision of the hospitality service. If it is not faultless, an acceptable solution will need to be found for the guest. It is therefore essential that complaints are dealt with properly, but it is even more important to avoid complaints in the first place. Providing a good-quality service requires a lot of training, and staff must follow procedures and manuals that have been explained to them in advance. Staff will only put the customer first if they are motivated and committed to the business, and the working environment is a pleasant one. The staff must have sufficient self-confidence and receive sufficient supervision and training if they are to provide a good service. They must enjoy their work and possess the skills needed to perform the service tasks as fitting. With the marketing tool of personality, the hospitality entrepreneur must take the following into account:INKIJKEXEMPLAAR ©SVH Staff recruitmentAttitude Staff must have a service mentality and possess the basic skills that the business formula requires. It is important to have an idea of the service mentality required when interviewing potential staff, because this has proven difficult to learn. In the interview, the staff member must give the impression that he enjoys helping others. Motivation The staff must be prepared to meet the expectations of the guest. If a guest visits a hospitality business, he has certain expectations. The staff must be able to make a good guess of what these are and want to try to meet them. This requires a certain drive in the staff. 105

INKIJKEXEMPLAAR ©SVHMarketing & Sales for the Hospitality Industry Training Everyone in a hospitality business must perform at a certain level. The entrepreneur must ensure that the knowledge and expertise of the manager and other staff is up to scratch and corresponds with the message that the business formula aims to convey. Communication The entrepreneur must ensure that there is a clear communication structure in the business. The better the staff are informed of the business activities, the more committed they will feel. Giving staff responsibility and letting them participate in decisions, can greatly increase their commitment. This motivates them more to meet the needs of the guest.106

Chapter 4 | PersonalityBe specific about hospitality note of their expectations and to say how the business can exceed these. After theYou can use mystery guests to find out visit, the mystery guest states what hisabout the guest’s experience and any points expectations were and whether they wereof improvement. This requires a clear vision exceeded. And if so, how. This approachand goal. Provide training about the points provides more information than just askingfor improvement that the mystery guests closed questions such as: was the pavementhave suggested. outside clean?INKIJKEXEMPLAAR ©SVH1. Work in a structured fashion. 5. Targeted trainingUse the mystery guest for a particular goal. It is preferable to train staff on specificDecide what your business stands for and aspects of hospitality rather than hospitalitywhat you want to achieve in terms of service in general. If it becomes apparent that,level and hospitality. for instance, staff structurally forget to say goodbye to the guest or fail to do this2. Be specific. properly, you could devote a number ofYour staff will need to be aware of the training sessions to this. Van den Berg: ‘Thishospitality concept of the business. But what is quite a common one: once guests havedo they take this to mean? ‘Make it specific. paid, the staff no longer have eyes for them.State what you understand by hospitality. Help them put on their coats, hold the doorFor instance, you could make it clear that open and ask if they enjoyed their meal. Youyou want every guest to be greeted with will immediately hear what people thought.’and to leave the business with a smile.’ Givestaff the information in digestible chunks. 6. Collect fans‘State per contact moment what you expect Guests who give a hospitality business aof your staff. Will you choose to welcome mark of 8 for hospitality are satisfied. An 8clients with: ‘Good morning Mr Jansen. is a good mark. But if you want to exceedDid you have a good journey? or: ‘Hi Peter. expectations, you will need a 9 or 10. ThisManage to find your way did you old boy?’ is how you create loyal guests. Van den Berg: ‘The waiter hears that a child of one of3. Right type of guest the guests would like to eat spare ribs butEntrepreneurs will need to know what goes these are not on the menu. However, theyon in their business. Van den Berg: ‘We can are on the menu of a nearby restaurant, sofind this out for the entrepreneur based on as a one-off the waiter orders them in fromthe needs of guests. We tailor our services the other restaurant. That's how you createto achieve this and send the right type of fans.’mystery guest. The mystery guest must suitthe target group of the business, so that he 7. Give your staff freedomcan put himself in their shoes.’ It may sound like a contradiction: staff must be able to be spontaneous and genuine4. Note your expectations with a sincere smile on their face, but theyBefore mystery guests visit a business, must also stick to the hospitality concept.Mystery Review asks them to make a written 107

Marketing & Sales for the Hospitality Industry These two concepts do not need to clash. 8. Listen The waiter must be able to give the odd A common mistake that people in general bottle of wine away, for instance, as the and hospitality workers in particular make situation dictates. And successes must be is to talk too much and not listen enough. shared. Put the emphasis on what is going That can sometimes be tiring for the guest. well and say how this could be even better. And then you fail to find out exactly what Also bring up points of attention that the the guest wants. Van den Berg: ‘Get staff staff must work on. Get the message across to listen to the guest. They will be quicker in a positive and transparent manner. to understand what the guest needs and And get the staff to suggest possible will make him feel important. Simple, solutions. obvious things often go wrong in hospitalityINKIJKEXEMPLAAR ©SVH businesses. Guests find a table and are not greeted at all or only superficially. The phrase ‘I’ll be with you in a minute’ is often rolled out. Give them your sincere attention. If, for instance, they choose to sit outside, give them the menu already and ask if they have any special wishes. Ask if they want to sit in the sun or the shade. Once you have asked those questions, tell them that you will be back in a minute. This greeting only needs to take five seconds, but gives guests the feeling that they are welcome.’ Source: Missethoreca.nl108

Chapter 4 | Personality 4.6  |  Internal marketing The end product that the guest perceives is the result of activities in all steps of the business process. All staff members must work to meet the expectations of the guest. All the staff of a hospitality business must be fully aware that the business is fully dependent on the guest. They must therefore focus on meeting the needs of the guest wherever possible. In a factory, it is not important what the staff think about marketing, but in the hospitality industry nearly all staff members come into contact with the guest. Some staff in the hospitality sector have a lot of contact with the guest, such as a restaurant manager or hotel receptionist. But the staff responsible for cleaning the toilets or chambermaids in a hotel also need to put the guest first. The moment of truth arrives if a guest asks these staff members for something. The guest also judges this situation.INKIJKEXEMPLAAR ©SVH Satisfied staff mean satisfied guests. The staff must be encouraged to go that bit further to help the guest if that is what is required. One tool that can be used to achieve this is internal marketing.Internal marketing Whereas external marketing tries to get the guest into the business, internal marketing ensures that the guest’s expectations are met, both behind the scenes and in the front of house. One of the basic tenets of internal marketing is that satisfied staff mean satisfied guests. An entrepreneur who makes sure that his staff are satisfied will automatically have satisfied guests. Steps The main focus of internal marketing is on the staff of the business. The internal marketing process consists of the following: 1. create a guest-focused business culture; 2. ensure that optimal use is made of the staff's talents; 3. make the information from staff who come into contact with the guest pivotal to the marketing process; 4. recognise and reward guest-focused staff. 109

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INKIJKEXEMPLAAR ©SVHChapter 4 | Personality Creating a guest-focused business culture The whole organisation must be convinced that what the guest wants is central to the business process. Not just the staff who are in regular contact with guests but the other staff too. Rules and regulations from management must also support this focus on the guest. This can cause friction with other management roles, such as cost management. An organisation that decides to focus on service will need to convince all layers of the organisation of why this is necessary. A common way to achieve this is if managers have a few days’ per year of direct contact with the guests. Ensure that the staff’s talents are used as much as possible The staff must feel that the management wants them to help the guests. This is achieved in a guest-led business culture. But staff must also have the internal motivation to want to do this. The more they like their job, the more they will be likely to go that extra mile for the guest. The entrepreneur must ensure that the staff like their work. He can achieve this with task rotation, co-participation, training programmes, career opportunities and the like. The management must listen to the staff who are in contact with the guest. An entrepreneur who wants to operate from his marketing concept will have to listen to the guest. The bigger the organisation, the less contact the entrepreneur has with the guest. He will then need to use other ways to find out what the guest wants. There is a certain risk to holding a survey, namely that the information is incorrect because the wrong questions or suggestive questions are asked. However, the staff who are in daily contact with the guest can say exactly what the guest wants and what he does and does not like. The entrepreneur and his managers will need to use this information. It gives the entrepreneur the opportunity to get to know his guests better and gives the staff the feeling that they are taken seriously. Recognise and reward guest-focused staff A staff member must know if he is doing his work well. He must receive feedback about his work. An internal marketing programme should describe the services that the business provides, so that the staff can see if they are performing their duties correctly. The descriptions of the services should include a method to measure whether they are being performed to satisfaction. A guest survey can be of use here. The entrepreneur or manager can reward the most guest-focused staff. This will encourage other staff members to focus more on the guest. The organisation must ensure that the descriptions provide room for staff to perform non-routine actions too, because it is in exceptional circumstances that the guest judges the business's level of service. 111

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INKIJKEXEMPLAAR ©SVHChapter 4 | Personality Customer satisfaction survey For many hotel operators, guests not returning is a big problem. Attracting new guests is expensive business. It is therefore important to try and convince existing guests to visit more often. Sometimes hoteliers do not see their guests return. For some reason, the guests do not want to stay in the hotel again. The hotel manager will want to find out why not. Dorint Airport-Hotel in Amsterdam (Schiphol) regularly asks its guests to fill in surveys so that it can see which aspects are important to them. And which minuses are serious enough to never want to sleep in a hotel again. All guests are given a short survey. It takes 30 seconds to complete. Dorint has four different surveys in circulation. It now has a good idea of what the guest sees as drawbacks in a hotel. What is striking is that 80 percent of the guests who do not want to return to a hotel say this is because they have complaints about the quality. Only the remaining 20 percent of these guests found the hotel too expensive. What are the complaints about quality? This varies. • Almost 15 percent of the guests who do not return, do not return because the location does not meet their expectations. The hotel is too far from the airport or city centre. • About four percent of the guests who do not want to return, think that the hotel is lacking facilities such as Internet, a sauna, a swimming pool or a lift. • A lack of atmosphere in a hotel is another reason why guests do not return. • The staff can make or break a stay. Over 15 percent of the guests who do not want to return to a hotel say this is because of the staff. The guests say that the staff were not properly trained, did not deal with complaints properly and entered the room at inopportune moments. Staff members not keeping their word is a particular irritation. • The room itself can disappoint too. Too small, old-fashioned decor, the wrong temperature, dirt and broken equipment are things that a guest is not prepared to accept. And the restaurant in a hotel can be a source of irritation too. If the food is bad, a guest will never come back. 113

INKIJKEXEMPLAAR ©SVHMarketing & Sales for the Hospitality Industry 4.7  |  Questions about the chapter Answer the question and then find the answer in the chapter. 1a In your own words, explain what the owner of a restaurant must focus on in the marketing tool of personality. 1b List six important points. 2 What is the difference between a system-led business formula and a service-led business formula? 3 Which aspects of the guest’s attitude influence the image of a hospitality business? 4a How can the marketing tool of personality be used to effect in a hospitality business? 4b How should the business go about this? 5 What does good quality and a certain level of service in a restaurant depend on? List five points. 6 What does internal marketing in a hospitality business have to do with the guest? 7 What is a guest-focused business culture? 8 How do you create a guest-focused business culture? Develop a step-by-step plan for a restaurant. 9 Describe the service formula of a restaurant on the basis of: a. The welcome phase. b. The stay phase. c. The leaving phase. 10 What are five common complaints about staff in the hospitality industry?114

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Chapter 5 | PlaceChapter 5PlaceINKIJKEXEMPLAAR ©SVH The chapter at a glance 118 5.1 Introduction  119 5.2 Choosing a location 120 5.3 Location and premises 126 5.4 Distribution  134 5.5 Questions about the chapter 142 For more information, questions, answers and supporting material see: www.masaho.nl 117

Chapter 5 | Place as a Marketing Tool Marketing and Sales for the Hospitality Industry part 2INKIJKEXEMPLAAR ©SVHChecklistFactors Location Business for-choice mula A-B-C Purchasing behav- Locations iour stimuliwww.masaho.nl - questions: e-mail to [email protected]

Chapter 5 | Place 5.1  | IntroductionLocation The marketing tool of place comprises of a number of topics, including choosing a location and assessing a property. The location is the town or region in which the entrepreneur wants to set up a business. The hospitality entrepreneur will make a conscious decision for a certain city or region.INKIJKEXEMPLAAR ©SVH In the next section, we will look at choosing a location. The property in which the entrepreneur wishes to establish his business must meet a number of requirements. We will discuss these requirements in this chapter. The chapter will end with the topics of distribution, logistics and purchasing. In traditional marketing theory on branded products, the marketing tool of place mainly stands for choosing the right distribution channels. For hospitality entrepreneurs, the distribution process primarily relates to managing incoming and outcoming goods flows. The choice of supplier plays an important role here. The marketing tool of place is the least flexible marketing tool. Once the hospitality business is established somewhere, the operator will not be able to change location at short notice. This is why the choice of a certain location determines the commercial strategy of a hospitality business. The other marketing tools cannot usually compensate for an inferior location. The success of fast- food companies in particular success depends on their location. The entrepreneur will therefore need to choose a location and premises carefully. Business formula depends on location. Practically all environments influence the clientele of a hospitality business. A snack bar at a train station has a different clientele from a bar in a residential area. The business formula depends on the chosen location. A location greatly determines the type of guest. Hospitality operators will also adjust their range to the chosen location. The choice of premises is crucial to the business too. An old characteristic building has different possibilities from a small modern one. The hospitality operator will therefore have to adjust his business formula accordingly. 119

Marketing & Sales for the Hospitality Industry 5.2  |  Choosing a location In practice, hospitality entrepreneurs take one of two approaches to choosing a location. In the first approach, the entrepreneur consciously chooses a certain target group and develops a good idea of the required business formula. The entrepreneur then seeks out a catchment area where it will be possible to implement his business formula and make a profit. He then looks for a location in which he can reach his chosen target group. This entrepreneur will primarily want to know if a potential property meets his requirements. He can develop a list of requirements that he will use to find the best location and premises.INKIJKEXEMPLAAR ©SVH In the second approach, the hospitality entrepreneur sees a property that is to let or for sale. He will want to consider the possibilities of these premises. He will want to know which business type and formula best suit these premises and will want to investigate the surrounding area. In this investigation, he will want to take a closer look at supply and demand and the associated factors in the catchment area. Relevant factors include: 1. consumer loyalty to an area; 2. turnover forecast; 3. macro level market analysis 4. meso level market analysis We will now take a closer look at these factors. Footfall 1. Consumer loyalty to an area The entrepreneur will look for a location in which enough guests can be expected to enable him toConsumer loyalty to an make a profit. For some types of business, the possible turnover at a particular location is greatly area dependent on footfall. If businesses want to set up in the centre of a village, town or city, it is important that this centre is attractive. The attractiveness of a centre determines how loyal consumers are to it. If the centre is very attractive, not only the local residents will spend money but also the residents of surrounding villages, towns and cities. The reverse is also true. A city, town or village with little going on, shops that are unattractive to the guest and few attractive hospitality businesses, will notice customer spending shifting elsewhere. An entrepreneur who wishes to establish his business in a certain city, town or village will therefore need to determine how attractive the centre is.120

Chapter 5 | Place What determines whether a city, town or village is attractive to consumers? • The presence of department stores and a range of high-quality local businesses makes the main shopping area more attractive. • The presence of activities for day tourists and nearby accommodation may attract many visitors from outside the city. • A historical centre with historical monuments and facades makes a place very attractive to visitors. • An entertainment district with a wide range of venues attracts plenty of visitors. • A centre with good transport connections for both local and regional consumers (infrastructure). • Sufficient low-cost parking. • Little or no competition for the town-centre shops from out-of-town shopping centres. • Consumers who are loyal and unlikely to use other regional shopping centres.INKIJKEXEMPLAAR ©SVHMarket prognosis 2. Turnover forecast If the hospitality entrepreneur can gain a good idea of consumer loyalty and thus the market, he can make a market prognosis of the whole catchment area. A market prognosis is an estimate of the possible turnover that all hospitality entrepreneurs could earn as a whole.Turnover forecast If the entrepreneur divides the market into the consumer, corporate and tourism markets, this will enable him to make a very precise market prognosis. By estimating the turnover of the competition, he can forecast the turnover of his own business. The entrepreneur takes the following into account in a turnover forecast: • the size of the business; • the attractiveness of the location; • the competitiveness of the business formula; • the strength of the competition. The data from the turnover forecast allows the entrepreneur to estimate his net profit. 121

Marketing & Sales for the Hospitality Industry 3. Macro-level market analysis A hotel needs a catchment area that is geographically larger than that of a bistro. It is reliant on the national and international market. If an entrepreneur wants to investigate whether a location is attractive enough and has sufficient potential turnover for a hotel, he will have to investigate this in a large region. This is called a macro-level market analysis. It will reveal whether a hotel is feasible in this location. The entrepreneur will also need to take future developments into account. The macro-level market analysis looks at the following:INKIJKEXEMPLAAR ©SVHMacro-level market analysis • the infrastructure of the location; • the tourist value of the region; • the presence of large businesses and institutions in the region. The market for hotel rooms will be national and international. Larger hotels also often have a restaurant and meeting facilities. If the hotel has meeting facilities, the market for these will be regional. If the hotel has a restaurant, it will need to actively cater to the local market rather than solely to its own guests. Macro level market analysis.122

Chapter 5 | PlaceChecklist of location factors Key features1. Demand: • number of nights stay • average length of stay • type of clientele • type of population • reason for stay • seasonal patterns • consumer demand • size and quality of the business community • size and quality of the tourism marketINKIJKEXEMPLAAR ©SVH2. Location costs • construction costs • furnishing costs • staffing costs • energy costs • insurance costs • tax/grants3. Competition (supply) • direct competition from hotels • level of the competition • market share and image • occupancy rate • pricing • type of target group • construction plans4. Staff recruitment • level of education • language proficiency • seasonal employment • staff availability5. Infrastructure • regional connections • transport connections • location (airport, motorway) • spatial planning6. Legislation • building regulations • environmental legislation • opening and closing hours7. Landscape and climate (tourist • climate, weather value) • landscape/vegetation • cultural and tourist sights8. P resence of large businesses • important businesses and institutions and institutions • airport • conference and trade fair accommodation • sporting and cultural activities 123

Marketing & Sales for the Hospitality Industry 4. Meso-level market analysis A meso-level market analysis plays a significant role in a study of the feasibility of a hospitality business in the catering sector, because the catchment area of such businesses is often not that large. Hotels and luxury restaurants attract guests from a larger region, but guests generally do not want to travel very far for food and drink.INKIJKEXEMPLAAR ©SVHMeso-level market analysis The meso-level market analysis looks at whether the catchment area is attractive for the entrepreneur. It consists of an analysis of demand in the hospitality market in the chosen catchment area and a competitive analysis of this catchment area. The entrepreneur will want to make a turnover forecast and draw up a budget based on this analysis. He can then determine whether he can establish a profitable hospitality business here. The market analysis The entrepreneur must possess a lot of data before he can form an impression of possible turnover in the location. We already mentioned market demand and the turnover of the competition. Desk research He can obtain much of this data through desk research. For instance, the CBS can help him form an impression of the size of the market. The tourist office and the municipality can provide additional information about the tourism and corporate markets. The Chamber of Commerce also has information about the corporate market. The entrepreneur will need to conduct field research as well. He can observe the numbers of passers-by and the occupancy rate of the competition. This will help him estimate the turnover of the competition. Field research124

Chapter 5 | PlaceBuy or rentNew and small businesses often need to make significant investments. Representative prem-ises and modern company resources are particularly important for hospitality entrepreneurs. Itis often difficult to determine with any precision beforehand how the business will grow. Thisputs the entrepreneur at risk of buying or renting premises that are too large or too small.The entrepreneur has the option of buying or renting premises.INKIJKEXEMPLAAR ©SVHThe option he chooses depends on his plans, financial options and sometimes family circum-stances. It is advisable to seek advice from experts, such as an accountant, estate agent forthe hospitality industry or the Chamber of Commerce. Choosing business premises is one ofthe most important decisions as a starter. • you are responsible for all overheads;BUYING • you are less flexible;Buying business premises is a big responsi- • the value of the property is at greaterbility and requires a significant investment. risk if the surrounding area changes.You are in one place for a longer period. It iseasier to terminate a rental contract than to RENTsell a property. It is difficult to know what the Advantages:market will be like in a few years’ time. The • your assets are not tied up;business may make a big profit on the sale • flexible;of these premises but it could equally make • the landlord pays for most of thea huge loss. In addition, the property may maintenance.have been specially modified, which couldmake it difficult to sell. ‘Holding onto it’ can Disadvantages:lead to other problems. The zoning plan • you are to a certain extent dependentcould be changed or the area around the on the plans of the landlord;building could become much less attractive. • getting maintenance done can be somewhat tricky;Having business premises built is a risky • you benefit less from any increase in realenterprise. In exceptional cases, it will be estate value;worth considering or necessary to build • you will have to recover your investmentbusiness premises. in the interior from any new lessee. • Advantages: As you can see, there are disadvantages• you are your own boss; to buying and renting. With both, but• you benefit from any increase in with buying in particular, it is extremelyproperty value; important that you know what you are• you can also use real estate as security buying or renting. for loans; Source: StartersInformatieCentrum• you are in control of maintenance;• you have more security.Disadvantages:• it ties up a significant amount of your assets;• you are responsible for all maintenance costs; 125

Marketing & Sales for the Hospitality Industry 5.3  |  Location and premises An entrepreneur will want to investigate the area around the premises. Every environment makes its mark on the target group and this determines the type of hospitality business that can be run there. When assessing the business location, the entrepreneur will focus on the presence of shops, traffic, other hospitality businesses, recreational provisions, houses and the amount and quality of footfall. Whether the location is considered attractive, depends on the type of business.INKIJKEXEMPLAAR ©SVH Footfall A hospitality business that needs passers-by will need crowd pleasers nearby. The best location for a lunchroom is a shopping street. The more crowd pleasers in the direct vicinity there are, the better the footfall and therefore the location is.A, B and C locations We distinguish between A and B locations. An A location is a top location with the right footfall. A much higher price must be paid for this (when buying or renting premises) than for premises in a less favourable location. Premises at less favourable locations are called B locations. The amount and type of footfall determines whether a location is an A or B location. The authorities also use A, B and C locations in their zoning plans. A locations are in the centre by a train station. B locations are within walking distance of the centre. C locations are by a motorway exit. These can all be very interesting locations for particular hospitality businesses. Business formula that follows or attracts customersBusiness formula that A hospitality business that follows the customers sets up where they are. A lunchroom in a busy follows customers shopping street is an example of a going where the customers are, as are hospitality businesses that find premises by the motorway and focus on road traffic.Micro-level market If a hospitality business is dependent on footfall, it is a good idea to investigate in the micro-level analysis market analysis who passes the location and when. The entrepreneur can use his own observations together with data available from the municipality for this. The Directorate-General for Public Works and Water Management has information about the traffic intensity on most roads in the Netherlands.126

Chapter 5 | PlaceBusiness formula that There are enough restaurants in parts of the Netherlands that are off the beaten track. Only a attracts customers strong business formula can ensure they have enough guests. This is what is known as a business formula that attracts customers. Hospitality businesses with a business formula that attracts the customers must have enough parking spaces in the immediate vicinity. The business must also be easy to find. If it is not, the entrepreneur can try putting up signs to show the way. He must focus on any changes to the municipality’s zoning plans. Planning and infrastructural change can have drastic consequences for the accessibility of the business.INKIJKEXEMPLAAR ©SVH The premises Not only must the location meet all sorts of requirements, but the premises themselves must meet the requirements of the business formula. A hospitality entrepreneur will focus on the following aspects when assessing a building: • visibility; • accessibility; • external presentation; • structural state; • legislation and regulations; • location costs. Visibility If businesses are dependent on passers-by to make impulsive purchases, it is particularly important that people notice the premises. The premises must therefore be in the line of sight. The number of passers-by who actually enter the hospitality business determines the stopping power of the business.Stopping power The stopping power is determined by whether the business stands out, the first impression of passers-by and the strength of the business formula. Visible, accessible premises are important for hospitality businesses. Accessibility It is particularly important that businesses that are located by the motorway are easy to find. If such a business is clearly visible, it will attract passers-by. If these passers-by leave the motorway, they expect to be able to find the business easily. The entrepreneur must ensure that the exit and route are clear for people who are unfamiliar with the area. Accessibility is important to all hospitality businesses. Disadvantages for hospitality businesses in a town centre can be lack of parking spaces and many one-way streets. The entrepreneur must ensure that the guest can easily find the hospitality business. 127

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INKIJKEXEMPLAAR ©SVHChapter 5 | Place External presentation The external appearance of the business must give guests an impression of what to expect inside. The business formula must already be visible from the outside. The style of building must correspond with the business type and formula. If the entrepreneur is not the owner of the property, it can be difficult to make drastic changes to the exterior. Structural state The physical requirements that the property must meet depend on the chosen business formula. There must be sufficient space for the required sales area, kitchen, toilets, stockroom and any other facilities. The property will need to be large enough to implement the business formula. If an entrepreneur wants to start a luxury restaurant, he will need to work out how many square metres he will need for the guests and kitchen. He must have a realistic turnover forecast. The Licensing and Catering Act (Drank- en Horecawet), the Commodities Act (Warenwet), the municipal building regulations and the Working Conditions Act (Arbeidsomstandighedenwet) specify various building regulations that the business must comply with. Legislation and regulations A hospitality entrepreneur will need to take a number of regulations into account. Municipalities regulate the use of land and buildings with zoning plans. These often specify which buildings may provide hospitality services. A property that appears to be suitable is not always a designated on- trade outlet. The entrepreneur will have to investigate the options carefully. Hospitality businesses are also subject to the Noise Abatement Act (Wet geluidhinder). The residents who live close to the hospitality business must not experience any nuisance from the business, such as noise nuisance or unpleasant smells. The Estates Act (Natuurschoonwet), Monuments and Historic Buildings Act (Monumentenwet), Expropriation Act (Onteigeningswet) and Environmental Management Act (Wet milieubeer) may apply to some hospitality businesses. 129

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Chapter 5 | Place Location costs The location costs depend on the quality of the location (A or B) and of the property itself. Whether the entrepreneur decides to rent or buy the premises, will depend on such matters as a cost comparison and his financial options. He will have to look carefully at how suited the building is to his chosen business formula.INKIJKEXEMPLAAR ©SVH If the entrepreneur is interested in a property, he will have to consider why the owner wants to sell or let it. It is advisable to look at the current business's results over the last three years. These will help him determine the value of the premises.Goodwill However, he must not blindly trust the information that he is given. If he is taking over an existing business, he will most likely have to pay a fee for goodwill and the inventory. Goodwill is a fee for taking on the good name of the previous owner. How much goodwill the entrepreneur has to pay can differ substantially. This makes it a good idea to seek specialist advice.a fee for goodwill andthe inventory. 131

Marketing & Sales for the Hospitality IndustryINKIJKEXEMPLAAR ©SVHBeach pavilions 3 Be original The beach has become a hive of activity. Hit the mark with eye-catching special The owners of beach pavilions do all sorts offers, but remember the location. of things to attract guests. But does this High costs, high uncertainty. If you run a actually work? ‘Yes, it can work, but you beach pavilion, you must be good if you will need to be original,’ says Neuféglise. want to make a profit. Be creative but ‘Theme nights such as Caribbean or ‘Sil de realistic. Respond to the latest trends with Strandjutter’ are old hat. Surprise people. special offers, but remember the location How? That's up to the entrepreneur.’ He and its limitations. adds that the owner of a beach pavilion should not limit himself to one activity. 1 Don't do it He should diversify and offer things such If you are planning to start a beach pavilion, as meeting facilities and deckchairs, sun it’s a good idea to reconsider your plans. Tip loungers, beach huts and boat rental. 1 is don't do it. The costs are high and so is the uncertainty. High costs because the ma- 4 Corporate activities jority of beach pavilions have to be erected Offer activities and facilities for the and dismantled each year. High uncertain- corporate sector. This could mean all sorts ty, because the weather is so important. of different workshops from the culinary Cloud, rain and wind can ruin the summer. and musical to the creative. Increasing But that’s not the worst of it. The worst is if numbers of beach pavilions offer facilities the Water Authority (Hoogheemraadschap) for meetings or brainstorming sessions. The or another official organisation decides to beach and sea act as a source of inspiration. raise the level of the sand, for reasons of safety. ‘The pavilion is now in the way and 5 Hire an agency will have to move because it's in the public’s If you want to offer original activities but interest for it to do so,’ says advisor Thierry don’t have enough staff or the right staff, Neuféglise. hire an event agency. Then you will be sure that the activity will be done properly. 2 Organise Don't limit yourself to beach volleyball. ‘The beach sector should organise. Making kites or a game of ‘Wie is de mol’ They could then join negotiations can be fun ideas. Beach pavilion Piet Hein with the municipality and other official in Vlissingen is forging the way. They hire an organisations,’ says Neuféglise. You would agency to provide these kinds of activities. then be able to prevent huge increases in the lease price, for instance. You could also influence other important matters such as parking strategy, because lack of parking limits accessibility.132

Chapter 5 | PlaceINKIJKEXEMPLAAR ©SVH6 Success depends on location 9 Think of the 16 and 17-year-olds Originality is to be applauded, but do New legislation means that 16 and 17-year- realise that it won’t work in some places. If olds can no longer drink alcohol. The owners the beach pavilion has a nearby hinterland, of beach pavilions should therefore focus on you stand a big chance of success. But this group and offer alcohol-free beers such if the hinterland is far away, it's another as Radler. ‘This is set to become more pop- story, says Thomas van der Ploeg, owner of ular this year,’ say Van Spronsen & Partners. beach pavilions Paal 6 in Julianadorp and ‘Alcohol-free mixers are also a thing. There Woest in Callantsoog. ‘If the hinterland is far is a wide range of alcohol-free spirits, from away, you can organise the most fabulous whisky and sangria to rum and liqueurs. A activities, but if the weather is bad, no one result for young people who want to drink a will come and it will end up costing you rum and coke, but then alcohol-free.’ money.’ 10 all-year-round is not ideal 7 Pop-up store If you want to get more out of your beach Pop-up stores are temporary shops that pavilion, you could make your business an open in empty premises. Create a pop-up all-year-round one. wine bar on the beach to give wine lovers Then instead of being dismantled the pavil- a taste of your wine selection and to tickle ion stays open all year round. But this is less the senses. A pop-up restaurant on the attractive than it seems. Guests tend not to beach would also work. Give a famous chef come to the beach if the weather is bad. Your a platform and attract a different group of turnover stagnates but you still have your set visitors, perhaps when the weather is less outgoings. In some cases, this is exacerbated clement too. by the fact that you must be open a certain number of days per week, even if the weather 8 Create a cinema is bad and hardly anyone comes. Such an Pop-up cinemas are the latest thing, say agreement with the municipality, for instance, Van Spronsen & Partners. ‘We’re seeing can turn out to be costly. them more often now.’ Restaurant One in Roermond serves a meal in combination Wedding on the Beach with a film, for instance. A beach pavilion Admittedly, the idea of offering beach on Curaçao holds a weekly film night. A pavilions for weddings is far from new. But successful one too. ‘Why not work with you can make it extra attractive by providing cinemas and hold movie nights in the more than the party alone. Beach pavilion summer season?’ say Van Spronsen & Het Wantveld in Katwijk does this. ‘We can Partners. ‘What could be better or more arrange for a wedding planner, photographer, romantic than watching a film outdoors with music and even transport and wedding car your feet in the sand and a cocktail in your for you,’ says its site. hand?’ Source: www.missethoreca.nl 133

Marketing & Sales for the Hospitality Industry 5.4  | Distribution Distribution If we are discussing the marketing tool of place, we also need to cover the theory of distribution, because this topic is related to the location of a hospitality business.INKIJKEXEMPLAAR ©SVH Direct distribution By distribution we mean the route that a product takes from leaving the factory to arriving at theIndirect distribution consumer. With direct distribution, the manufacturer supplies directly to the consumer. A restaurant or bar makes use of direct distribution. Indirect distribution uses intermediaries. Supply chain Supply chain We discussed the term supply chain in part 1. A supply chain is the sum of businesses that are needed to make a product. A supply chain is a snapshot. Changes in the purchasing behaviour of consumers, technological developments and changes in the balance of power between the links cause changes in the supply chain. Using an intermediary In a supply chain, we distinguish between businesses that produce and businesses that trade. Indirect distribution uses intermediaries. Trading companies buy and sell goods. They have a bridging role in the supply chain. This bridging can relate to: • Quantity The trading company buys large quantities of products and supplies the required quantity to the client. • Time By keeping products in stock, the trading company can supply them when the client wants. • Place The trading company brings together different products, so that the client does not need to look at different manufacturers. • Quality The trading company sorts its range into different quality categories. This selection makes the range suited to the next link in the supply chain. • Knowledge Knowledge is transferred through the supply chain with the products. This information moves in two directions: the client wants product information and the manufacturer wants market information. • Capital The trading company is responsible for stocks and is prepared to finance this (supplier's credit).134

Chapter 5 | Place A number of these roles are also fulfilled by hospitality businesses. Intermediaries are not only used in supply chains in which a physical product is manufactured and traded but also by businesses that provide services. This could mean a hotel that works with tour operators, travel agencies and airlines. The hotel benefits from the knowledge of these companies and their wide network of points of sale. The hotel can therefore be active in multiple markets (corporate and tourism market, domestic and foreign market). For a hotel, this trading method helps keep costs down, although it will have to pay a fee.INKIJKEXEMPLAAR ©SVH Logistics The supply chain is the sum of businesses that are needed to make a product. Logistics describes how the product moves from one link in the supply chain to the next and finally ends up with the consumer.Logistics Logistics is the collective name for all activities that are required to get the end product to the consumer. Activities that count as logistics are packing, checking and transporting raw materials and end products. Logistics: analysing, planning, implementing and managing goods flows from manufacturer to end user. The following aspects play an important role in the logistics process: • time of delivery; • precision of delivery; • reliability of delivery; • level of service; • availability of stock; • information on goods flows • HACCP; • type of product. 135

Marketing & Sales for the Hospitality IndustryLogistics management With a hospitality business, there are seven important moments in logistics managements: 1. purchasing; 2. receipt of goods; 3. storage; 4. issue of goods to departments 5. kitchen production process; 6. restaurant distribution process; 7. waste management.INKIJKEXEMPLAAR ©SVH Hospitality businesses and establishments are making increasing use of cook-chill systems, which are causing new problems in logistics management. Vendor rating 1. PurchasingRegister of suppliers The price and quality of the products and the level of service will determine which supplier the hospitality entrepreneur chooses. Many perform a vendor rating. In a vendor rating, your business formula (and the associated quality and service level) determines your choice of supplier. In large hospitality businesses, the purchasing department keeps a register for each supplier. This contains ordering and delivery information, quotes, prices and the delivery and payment terms. Suppliers registers are essential information when purchasing and can serve as the basis for calculating food cost. By keeping a register, the entrepreneur is better aware of the available suppliers and their quality. If the entrepreneur is to purchase the right amount stock, he needs information about when the business is making its turnover. Figures such as the daily turnover are essential here. The products in the range also have a significant influence on purchasing. The wider the range, the more products are needed and the larger the stock. The volume purchased is determined by the volume of the business’s storage facilities. The entrepreneur will need to know the size of the freezer, cooler and stockroom for this. Entrepreneurs increasingly use automated ordering. This means fewer ordering errors, makes checking easier and saves time. The entrepreneur is more likely to benefit from advantageous prices and special offers.136

Chapter 5 | Place Important decisions in purchasing strategy: a. Quality: is determined by minimum specifications set by the business.INKIJKEXEMPLAAR ©SVH Order costs b. Quantity and delivery time are influenced by: Stock costs • ordering costs, costs incurred to order goods • inventory costs, costs incurred to hold stockOptimum order size • (interest, space, risk); • optimum order size, order size at which the sum of order and inventory costs is lowest. c. Price and payment terms: • goods for which certain prices apply (auction or global market prices); these are governed exclusively by external factors; • goods for which catalogue prices apply; the buyer can try to get a discount; • goods for which the price can be negotiated. d. Choice of supplier (the marketing strategy of the supplier plays an important role here): • quality of the goods; • time of delivery; • service; • price; • discounts; • speed of physical distribution. 137

Marketing & Sales for the Hospitality Industry Vendor rating How do your select a supplier? Hospitality entrepreneurs often choose their supplier from intuition or habit. Howev- er, choosing a supplier is too important to leave to chance. The purchasing costs in the hospitality industry are 30 percent of the turnover, after all. A hospitality entrepreneur who improves his purchasing sees an immediate increase in his return. In many cases, it is advis- able to order as much as possible from one supplier. This saves you time and money. When choosing a supplier, the price is important of course, but the hospitality entrepreneur must also consider the service provided. Service is taken to mean such matters as: • Keeping your word. • Whether the products are manufactured, packaged, transported and delivered according to HACCP standards. • Whether the supplier wants and is able to provide express delivery. • Whether price decreases are immediately passed on. • Whether the supplier can also provide product information. If the entrepreneur wants to make an informed decision about which supplier to choose, he could perform a vendor rating. This means comparing a number of suppliers on particular points of focus. How important these points of focus are has been assessed beforehand. Each point is assigned a weighting factor. The entrepreneur must consider and evaluate all the factors that are important to him. The table below can help the entrepreneur. For each point of focus he must say how impor- tant it is to him. A one means that it is not important whereas a five means it is very impor- tant. The supplier with the most points is most suitable.INKIJKEXEMPLAAR ©SVH Point of attention 12345 How often will the supplier deliver orders? Can the supplier deliver in the evening or at the weekend? Does the delivery and packaging comply with HACCP? Is the supplier easy to contact? Is the pricing competitive? Which payment options are there? Does the supplier provide the required quality of goods? Payment method? Can the supplier easily provide extra information about the goods?138

Chapter 5 | PlaceDivision of roles 2. Receipt of goods Receipt of goods is the point at which goods from outside the business (external) are received and stored in the business (internal). It is important that the goods are received by one department. It is a good idea to divide responsibilities between different people to facilitate controls.INKIJKEXEMPLAAR ©SVH This must be done by one person in small businesses. On receipt of the goods, the warehouse manager checks the original order list to see if: • the right goods have been delivered; • the right quality has been delivered; • the products are at the right temperature; • the goods have been packaged and transported according to the required hygiene code; • the price and quality correspond with the order; • the delivery date is correct. If the delivery is correct, the warehouse manager accepts the goods and sign the delivery note. The financial department processes, pays and files the invoices.Storage costs 3. Storage of the goods Once the goods have been received, they will have to be stored in the business’s available storage areas. Holding too much stock costs money. Too little stock can render the business unable to meet the guests’ needs. The optimum amount of stock for a business is that amount that enables the production and sales process to run without a hitch. When determining the optimum amount of stock, the entrepreneur must take into account the order, storage and risk costs. The storage costs are the greater part of the stock management costs. An important aspect of good logistics is managing the daily stock and the stockroom inventory.Food cost percentages 4. Issuing goods to the departments Leakage Fresh ingredients generally go directly to the departments that need them. Stockroom goods often go to a central stockroom. Large businesses take an inventory of their stockroom every month or quarter. This information is needed to calculate the food cost percentages for the beverages and meals. The inventory reveals the leakage percentage too. Leakage is the difference in stock that arises because of such things as breakages, theft, spoilage and drying out.Food and beverage The management needs this information in order to address such problems. The stockroom can controller only release goods if an authorised member of staff has signed for them. Monitoring internal goods flow is an important responsibility of the food and beverage controller in large companies. 139

INKIJKEXEMPLAAR ©SVHMarketing & Sales for the Hospitality Industry 5. Kitchen production process In the kitchen, the chef writes a standard recipe and the method. This recipe is compared with the actual ingredients used. The manager therefore learns how efficient the kitchen staff are. The ingredients and semi- prepared products (cooled and frozen) are processed in the kitchen to create end products. 6. Restaurant distribution process The restaurant staff are responsible for the goods flow between kitchen and guest. Checks are in place in the restaurant through the till. The dish can be provided once it has been entered into the till and the order has been passed on to the kitchen. Checks are made here by comparing what has been issued with the takings. The routing of dirty plates, cutlery and glassware are also part of the logistics management. 7. Waste management Even the best things have their drawbacks. All the delicacies in the hospitality industry are packaged and this produces waste. The preparation also often produces ‘residual products’ too. And then there are those guests who don’t finish their plates. To compound this, there are strict regulations in the Netherlands on hygiene in the kitchen and other areas in which people work with food. The entire hospitality process thus produces many types of waste: • glass; • kitchen waste; • packaging material; • grease; Swill • swill; • residual waste. It is therefore essential to have a good waste-management process. The whole process costs a lot of money. This is in terms of staff time, but also in terms of the waste disposal costs. The waste costs can be reduced somewhat, because some types of waste bring in some revenue.140

INKIJKEXEMPLAAR ©SVHChapter 5 | Place Waste management Waste management must be understood in the broadest sense of the word. Drains The drains in hospitality businesses must be one size bigger than those for domestic use. Fat and sludge traps also need to be present in the kitchen. These ensure that fat does not end up in the drains. Various types of equipment are available on the market to extract, filter and transport fat. Insect prevention All sorts of flies and insects can be found in hospitality businesses. They enter through windows and doors. They must be prevented because they disturb the guest and may carry infections. Pest control companies, insect spray and electric insect killers can all serve as pest control. Waste disposal Waste can be disposed of in various ways. Firstly, there are waste containers that are collected and returned clean by waste management companies. Secondly, there are compression containers that compress and thus reduce the volume of waste. These are mainly for big businesses that produce a lot of waste. Third, there are the special services for chemical waste. Separating waste can deliver savings. Returnable packing material To limit waste, it is a good idea to reach agreements with your supplier about a returnable packing material system. For instance, by having goods delivered in packaged crates. Source: Koninklijke Horeca Nederland 141

INKIJKEXEMPLAAR ©SVHMarketing & Sales for the Hospitality Industry 5.5  |  Questions about the chapter Answer the question and then find the answer in the chapter. 1a In your own words, explain what the owner of a restaurant must focus on in the marketing tool of place. 1b List ten important points. 2 In practice, hospitality entrepreneurs take two different approaches to choosing a location. The first is based on a concept. The second is based on the entrepreneur seeing a building to let or for sale. He will want to consider the possibilities of these premises. He will want to know which business type and formula best suit these premises and will want to investigate the surrounding area. In this investigation, he will want to take a closer look at supply and demand and the associated factors in the catchment area. Important factors here are: a. Customer loyalty to an area, turnover forecast, macro level market analysis and meso level market analysis. b. The six Ps: product, presentation, personality, place, price and promotion. c. The hospitality concept. 3 What is a market prognosis? 4 Which factors are relevant when choosing a business location? a. Customer loyalty to an area, turnover forecast and macro-level market analysis. b. Turnover forecast, micro-level market analysis and macro-level market analysis. c. Customer loyalty to an area, turnover forecast and purchasing strategy. 5 What does the entrepreneur take into account when making a turnover forecast? a. Business size, attractiveness of the location, competitiveness of his business formula, strength of the competition. b. Present VAT rates, purchasing power and government policy. c. Business size, attractiveness of the business plan and upcoming legislation. 6. Give an example of a macro-level market analysis of a restaurant. 7. We distinguish between A, B and C locations. Which of the following is correct? a. A locations are locations with the right footfall, B locations are within walking distance of the centre and C locations are by a motorway exit. b. A locations are locations within walking distance of the centre, B locations are locations with the right footfall and C locations are locations by a motorway exit. c. A locations are locations by a motorway exit, B locations are locations with the right footfall and C locations are locations within walking distance of the centre.142

INKIJKEXEMPLAAR ©SVHChapter 5 | Place 8 The marketing tool of place is the least flexible marketing tool. Which of the two statements below is correct? 1. Once the hospitality business is established somewhere, the entrepreneur cannot change location at short notice. 2. The other marketing tools can generally compensate for an inferior location. a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Neither statement is correct. 9 Which requirements must a building meet for a hospitality entrepreneur? a. Legislation, appearance and location. b. Structural condition, location costs and visibility. c. Visibility, accessibility and location. d. External presentation, accessibility and appearance. 10 What is meant by goodwill? a. The fee for taking on the good name of the previous entrepreneur. b. The fee for taking on the good name of the business of the previous owner. c The fee for taking on the inventory of the business. 11 What is the difference between desk research and field research? a. Desk research is performed in an office and field research is performed with data that is already available or has already been acquired. b. Desk research is research performed with already available or acquired data and field research is research performed with data that is specially acquired for this research. c. There is no difference between desk research and field research. 143

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Chapter 6 | Price (strategy)Chapter 6Price (strategy)INKIJKEXEMPLAAR ©SVH The chapter at a glance 148 6.1 Introduction  149 6.2 Pricing methods 151 6.2.1 Cost-led pricing methods 151 6.2.2 Competition-led pricing methods 153 6.2.3 Demand-led pricing methods 154 6.3 Range and pricing strategy 156 6.4 Price discrimination and price differentiation 162 6.5 Questions about the chapter 168 For more information, questions, answers and supporting material see: www.masaho.nl 147

Chapter 6 | Price as a Marketing Tool Marketing and Sales for the Hospitality Industry part 2INKIJKEXEMPLAAR ©SVHInfluential fac- tors Pricing Pricing Price differenti-methods strategy ation Price dis- Range & pric-crimination ing strategywww.masaho.nl - Questions: e-mail to [email protected]

INKIJKEXEMPLAAR ©SVHChapter 6 | Price (strategy) 6.1  | Introduction All marketing tools entail costs, with the exception of the tool of price, which brings in money. The hospitality entrepreneur uses pricing to determine what he wants to be paid for his hospitality product. The hospitality entrepreneur will want the best possible return and will thus be inclined to keep his prices high. However, he will also be aware that guests must be willing to pay his price and that they will turn to the competition if his prices are too high. He must therefore consider which price he can ask for his products. It is through his pricing that the hospitality entrepreneur expresses what he thinks his product/ service is worth. He must therefore try to discover beforehand if the guest shares this opinion. Target group For businesses in the service industry, such as hospitality businesses, the price is the marketing tool that tells the guest something about the quality that the business provides. It is difficult for guests to form an impression of this quality beforehand. The price is a way of expressing the desired quality. The hospitality entrepreneur uses the marketing tool of price to position himself in the market. The price tells the guests something about the service provided and the quality of the products. Furthermore, a certain price will attract one group of guests and repel another. The hospitality entrepreneur will have to discover how much money his target group is willing to spend for the hospitality that he offers. For the guests, this amount will depend on the value that they assign to the hospitality. A cup of coffee with a slice of apple pie is cheaper in a cafeteria than in a bistro, but is cheaper in a bistro than in a restaurant, and a restaurant can serve it for a lower price than a four-star hotel can. Factors that influence the price When deciding on a price, the hospitality entrepreneur must consider: • the business formula; • the quality and level of service; • the costs; • his marketing objectives; • the competition; • the target group; • his gross profit. 149