Marketing Strategies and Profitability in Hotel Management

RESEARCH FOR BUSINESS AND TOURISM 4 RESEARCH FOR BUSINESS AND TOURISM Research for Business and Tourism Student’s name: Name of the university: Author’s note: Background 2 Significance 2 Scope 3 Problem statement and objectives 4 Literature review 5 The concept of marketing strategy and profitability in hospitality 5 The theoretical perspective of marketing strategies and profitability 5 Effective marketing strategies of five-star hotels 7 Impact of marketing strategies on the profitability of the hospitality organisation 8 Reference List 9 Appendix 11 Background Marketing has become

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Student’s name:
Name of the university:
Author’s note:

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Table of Contents
Background......................................................................................................................................2
Significance.....................................................................................................................................2
Scope................................................................................................................................................3
Problem statement and objectives...................................................................................................4
Literature review..............................................................................................................................5
The concept of marketing strategy and profitability in hospitality..............................................5
The theoretical perspective of marketing strategies and profitability.........................................5
Effective marketing strategies of five-star hotels........................................................................7
Impact of marketing strategies on the profitability of the hospitality organisation.....................8
Reference List..................................................................................................................................9
Appendix........................................................................................................................................11

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Background
Marketing has become apparent that it is crucial for the development of the business and
profitability is the bottom line for the development of the business. The quest for the profitability
of the hospitality organisations is contributed by marketing strategies and the strategies need to
be diversified to survive in these inferior and modern economies. As stated by Kimes and Writz
(2015), marketing concept is the totality of planning of the marketing strategies and executing of
the marketing mix in proper way. Therefore, the target of the hotels is to reach the larger
audiences and to provide the satisfaction of the guests. The more guests will visit the hospitality
organisations, the more it will make the revenue. The organisations need to reduce the
operational cost and marketing cost so that the profitability becomes higher. According to
Jaeorski (2018), traditionally marketing concept is associated to the performance of the
organisation that direct the flow of the services or products from producers to consumers,
whereas, of late, marketing strategy is concerned with transactions those are stimulated, created,
valued and facilitated. Moreover, over the past five years, inbound tourism in Australia has
supported operators as the rising numbers of tourists have accelerated the demands for the five-
star luxury hotels. The depreciation of the Australian dollars made the hotels cheaper for the
international tourists to afford the luxury hotels. This study, therefore, focuses on the marketing
strategies taken by five-star hotels in order to make profitability in the competitive environment
in Australia.
Significance
Profit is left after all expenses have been removed from the accrued revenues (Leung et
al. 2015). Therefore, the five-star hotels in Australia have been focusing on making the profit;

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however, rising in the cost can lower the profit of the organisation. The marketing strategies of
the organisation need to satisfy the wants and needs of the individuals who are the target market
of the hospitality organisations. Hospitality is the service-oriented organisation where the guest
satisfaction is the ultimate. This study will be significant for the management of the five-star
hotels as they can gather the secondary information regarding the marketing strategy and
profitability. This study will be significant as maximum secondary sources have been focused on
marketing strategies on luxury hotels and profitability of the hospitality sector has been
discussed separately. There are already enough literature based on this topic; however, this
research puts a significant amount of emphasis on only in Australia five-star hotels. The
concentration of the study will be put on the traditional as well as online marketing strategies that
would help the organisations to have profitability to create positive ambience for the five-star
hotels in Australia. This study will be significant for the marketing managers of the five-star
hotels as they can learn about the process of making a profit using both traditional and modern
marketing methods. This study is different from other researchers as this study will give
emphasis on reasons behind frequent changes of marketing strategies in five-star hotels in
Australia.
Scope
The demographic scope of the study lies in finding out the marketing strategies of the
five-star hotels and the associated variables that are related when they make strategies for the
organisation. The luxury hotels only target the corporate travellers and upper-class people who
can only afford five-star hotels. Therefore, this study would focus on factors that are associated
with the target market of the five-star hotels. The geographic scope of the study is to find out the
marketing strategies of the five-star hotels in Australia to impact on profitability. The core focus

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of the study is limited to only Australia-based five star hotels. Maximum five-star hotels in
Australia situated in Perth, Sydney and Melbourne. Temporal scope of the study is to do the
reach between June and August 2018 at this time will be winter in Australia. Maximum leisure
travellers visit in Australia during winter; therefore, it is the peak season for the five-star hotels
and the five-star hotels make new marketing strategies to attract the guests.
Problem statement and objectives
Value of the Australian dollars has reduced in last five years and many of the five-star
hotels have become cheaper comparing to other Asian countries. Now, many of the middle
classes from several Asian countries have supported to visit Australia and it has increased the
rising inbound tourism. Mainly Chinese and Indian tourists have strived growth in tourism
expenditure and luxury hotels industry revenue reached to AU$4 billion in the year 2017
(McPhail et al. 2017). Annual growth is 2.9% in the five-star hotel industry in Australia;
therefore, the five-star hotels in Australia are trying to attract the guests (Ibisworld.cpom.au
2018). Industry competition becomes high and domestic tourists have reduced as a share of
industry revenue in the last five years. Therefore, substantiate market growth is needed for the
five-star hotels to become profitable in the future. Another issue of five-star hotels in Australia
facing is to frequent changing of marketing strategies.
Objectives:
 To explore the marketing strategies used by five-star hotels in Australia
 To find out the impact of marketing strategies on the profitability of the five-star hotels

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Literature review
The concept of marketing strategy and profitability in hospitality
In the hospitality industry, the organisations mainly focus on the quality services and
skilled employees. The marketing strategy of the hospitality industry is to provide personalised
service or to provide discount pricing. The marketing strategy leads maximum guests to visit the
hospitality organisation and the revenue of the hospitality organisations increases through this.
As stated by (Kusluvan et al. 2017), marketing is the activities, processes and set of institutions
for creating, delivering, communicating and exchanging the offers that can provide value for the
clients, customers and partners of the organisation. In addition, the marketing strategy of the
organisation helps the organisation to connect and communicate with the target audiences to
convey the value of the organisation to sell the services and products and with the emergence of
digitalisation, the process of marketing becomes easier in particular with the technological
innovation. Before starting the marketing strategy, the marketing team of the hospitality sector
research, communicate and target the audiences and make a strictly public relations to accelerate
the sales and make string customer base (Kandampully et al. 2015). Moreover, the profitability
of the organisation is to generate the more money that it expands and profitability of the
organisation can be gained through various tactics calculating through ROI (Return on
Investment) that helps the business o determine to generate the profit.
The theoretical perspective of marketing strategies and profitability
Marketing Mix Strategies
Proper marketing mix for a hospitality sector is crucial for development and success. As
opined by Litvin et al. (2018), marketing mix is utilised to indicate the marketing variables

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which are used by the sales team to aim the specific guests or target the market segment. The
authors further argued that five-star hotels provide service or facilities to the guests and offered
services are food and beverage, guest room, banquet rooms, recreational facilities, conference
room, health and wellness facilities, travel desk, executive lounge, business centre and parking
facilities. Five-star hotels offer services to different market segments and each of the segments
has different requirements. Place refers to the accessibility of the service to the guests; therefore
the location of the hotels must be good and easily accessible. Direct methods of reaching hotels
are sales through hotel team, online pay and personal telephone calls. Promotions can be done
through direct sales or social media techniques. Promotional and communication channels used
by the hotels are television, hotel websites, twitter, Facebook page, billboards, brochures and
SEO. The promotional strategies are important as it helps the hotels to reach the customers.
Lastly, pricing strategies of the five-star hotels depend on the marketing strategies of the hotels
as some of the hotels keep the competitive pricing and some of the hotels keep premium pricing.
The hotel rate and packages are defined to impress the guests and to attract more guests (Kimes
and Writz 2015). In peak season, the pricing rate is kept as high and in the lean season, the
pricing of the hotels keep a bit lower.
The strategic marketing planning process
The marketing strategy of a hospitality sector is done keeping in mind the company's
mission and vision. The objectives of the company are set by the management and the managers
try to meet the objectives. In order to meet the objectives; the management makes a marketing
strategy. As stated by Leung et al. (2015), the management of the hospitality sector research
about a prospective study like external opportunities and intra-company strengths and
weaknesses. The critics stated that marketing strategies start from the marketing segmentation

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where the organisation decides the target market. After targeting a segment of the customers, the
organisation does positioning by service line strategy. The organisation can make a direct
comparison of the hotels and pricing strategy needs to be competitive in order to survive in the
industry (Jaworski 2018). If the five-star hotels have a board of directors; therefore, this plan
needs to be approved and the implementation of the plan starts afterwards.
Effective marketing strategies of five-star hotels
Five-star hotels mainly take the strategy of differentiation where their services will be
different from another competitor in the market. Of late, five star-hotels are taking the strategy of
personalised service where the guests' services are making personalisation. International guests
often need consistency services when they travel the world. Therefore, differentiation makes the
hotel unique as per the requirement of the customers (Kusluvan et al. 2017). In addition, Sydney
is the place where maximum five-star hotels of different international brands are situated. These
hotels mainly take the strategy of innovation as the hotels always try to innovate with the service
and their advertisement of websites and social media present the innovative services. Marriott,
Hilton, Hyatt, Park and Four Seasons Hotels are some of the examples where the guests can have
innovative service concept. Moreover, cutting cost to increase the profits is the marketing
strategy during the time of the lean season when numbers of guests are lower. Additionally, the
hotels are trying to build the loyal customers base so that the customers visit the hotels again and
again. Hyatt Hotels give the guests ‘Privilege Membership Card' with which the guests can have
the services at reduced price throughout the year. Building loyal customers can increase the room
occupancy throughout the year and it will eventually make the hotels profitable. As opined by
Bowie et al. (2016), in their article that the hospitality organisations must try to keep the
employees happy so that they can provide luxury services and good behaviour to the guests. The

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authors further stated that hotels must provide superior quality services to the guests so that they
guests must come again and superior services lead to satisfaction of the customers. Lastly, social
media content strategy of the hotels help the hotels to increase the customers as the guests can be
enthusiastic to watch the images, services and offerings.
Impact of marketing strategies on the profitability of the hospitality organisation
The marketing strategies help the hospitality organisations to gain the competitive
advantage. Mainly, competitive advantage can be gained through two ways, first differentiation
strategies and second through cost-leadership. Five-star hotels mainly take the strategy of service
innovation and creating differentiation. Measuring marketing strategy effectiveness, the
organisation has to break down the functions of marketing into constituent parts. By doing this,
the managers can analyse the marketing expenses, ROI and value of shareholders. The managers
will further understand the internal motives that will propel to have value for the business (Ward
2016). The authors further argued that the hotel industry is about the service marketing, here
profitability of the organisation is decided through numbers of guests visit the hotels. In
Australia, the five-star hotels are expanding to larger geographic areas so that they can increase
the brand image and customer base. User-friendly website helps the guests to book the room and
decide the services and search-friendly content strategy provides the travellers to understand the
offers and discounts. Therefore, the marketing strategy of the five-star hotels is to increase the
customer base so that more guests can be aware of the hotels. Chiliya et al. (2015), stated in their
article that maximum occupancy in hotels can provide good profitability and in upscale hotels;
achieving peak gross needs operating profit also.

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Reference List
Ibisworld.com.au. 2018. Luxury Hotels – Australia Industry Research Reports | IBISWorld.
[online] Available at: https://www.ibisworld.com.au/industry-trends/specialised-market-
research-reports/consumer-goods-services/luxury-hotels.html [Accessed 26 Apr. 2018].
Jaworski, B.J., 2018. Commentary: Advancing marketing strategy in the marketing discipline
and beyond. Journal of Marketing Management, 34(1-2), pp.63-70.
Kandampully, J., Zhang, T. and Bilgihan, A., 2015. Customer loyalty: a review and future
directions with a special focus on the hospitality industry. International Journal of
Contemporary Hospitality Management, 27(3), pp.379-414.
Kimes, S.E. and Wirtz, J., 2015. Revenue management: Advanced strategies and tools to
enhance firm profitability. Foundations and Trends® in Marketing, 8(1), pp.1-68.
Leung, X.Y., Xue, L. and Bai, B., 2015. Internet marketing research in hospitality and tourism: a
review and journal preferences. International Journal of Contemporary Hospitality
Management, 27(7), pp.1556-1572.
Litvin, S.W., Goldsmith, R.E. and Pan, B., 2018. A retrospective view of electronic word-of-
mouth in hospitality and tourism management. International Journal of Contemporary
Hospitality Management, 30(1), pp.313-325.
McPhail, R., Patiar, A., Herington, C., Creed, P. and Davidson, M., 2017. Development and
initial validation of a hospitality employees’ job satisfaction index: Evidence from

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Australia. International Journal of Contemporary Hospitality Management, 27(8), pp.1814-
1838.
Solnet, D., Kralj, A. and Baum, T., 2018. 360 degrees of pressure: The changing role of the HR
professional in the hospitality industry. Journal of Hospitality & Tourism Research, 39(2),
pp.271-292.

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Appendix
Competitions’ analysis of Five-star hotels
Strengths USP Marketing strategy
Park Hyatt Worldwide portfolio,
banquet facilities
Technology upgrades
Hygiene standards
Delivering authentic
services to reach out
guests
Luxury and latest
technology
Four Seasons Hotel Popular hotel chain
Food and beverage
management
Collaboration with
corporate houses
Reaching target
segment
Upper class target
and business
travellers; social
media
Marriott hotel High brand recognition
Technological
innovation
Good employees
Various brand ranges
Global market
leadership
Prime location
selection and luxury
living
Hilton Hotel Brand location
Technical innovation
Good employee
retention
Run by experienced
and skilled
management
Target leisure
travellers and luxury
living
Table: Competitions’ analysis of Five-star hotels