Service Industry Dominance in Developed Nations

Introduction

In most developed countries, approximately 80% of the working force is present in the service fields. This field includes education, retailing, hospitality, tourism, communication, and also construction services. This industry estimates to account for about 75% of the gross domestic products of the developed countries. Tourism is also growing at a faster rate as compared to the overall UK economy, and it is estimated that 9 million visitors are being forecasted by the end of 2025(Statista, 2020). Tourism in the UK has contributed to 10 % of UK GDP and is supporting 3.8 million jobs which lead to about 11% of the UK’s number. The tourism industry has helped the UK in raising national income, employment level, payment balance, and also rate of foreign exchange. There are hotels that differ in styles and sizes, wherein some have 500-800 bedrooms. There are complete services and medium-size business class hotels wherein some of the hotels do business in budget sectors (Elliott, 2020). In the hotel industry, organizations are looking for ways so as to acquire, retain and also enhance the business as there are increased chances of losing customers. Services are termed to be the main factors to attract clients. The service role is of higher importance and is expected to enhance with time. Those hotels that possess the ability to grab attraction, satisfy as well, as retain customers are likely to survive in this competitive environment rather than hotels that do not hold customers attractions (VisitBritain, 2016). The successful retention of customers permits the hotels to build up linkage with customers. It is essential for the service organization to make an introduction of competitive marketing strategies so as to attract customers and manage the supply of services effectively. It is stated that a hotel’s focus on an effective marketing strategy helps hotels to maximize room occupancy. Marketing helps the company enhance the room occupancy level, wherein the marketing department needs to go through the right marketing strategy (Elliott, 2020). The application of digital or online marketing along with email marketing would enhance occupancy and levels of income. The approach to improve the revenues and occupancy of a room, the main point of attention of marketing is the satisfaction of customers. Room occupancy is a condition on how rooms could be sold as compared to the total number of rooms which are capable of being sold. The room occupancy in the UK has enhanced slightly in the past three years. In 2019, 79.9% of hotel rooms were occupied in the UK. London hotels are forecasted to attain an occupancy rate of 28.8% in 2020, wherein the UK regions were predicted by a higher occupancy of 37.6%. There was a significant decline in the occupancy rate from 54.6% to 37.8% in 2019(Statista, 2020). This study will analyze marketing strategy to enhance room occupancy of Ibis hotel in London. This study will also make a recommendation so as to strengthen room occupancy.

Research aim/objectives

The research aims to analyze how upgrading marketing strategy to improve room occupancy of Ibis hotel in London.

The objectives of this research are as follows:

To analyse the occupancy rate of Ibis Hotel in London

To identify the factors that impact the occupancy rate of Ibis Hotel in London

To analyses the marketing strategy to improve room occupancy of Ibis hotel in London.

To provide a recommendation to improve room occupancy of Ibis hotel in London and attain a competitive advantage

3. Literature Review

3.1 Defining marketing

It is stated by Armstrong, Adam, Denize & Kotler (2014) that Marketing is an integral part of the effective operation of business firms. Marketing is the social and managerial process through which the organization or individuals attain what is required utilizing the creation and exchange of values with others. It is also a process through which companies make the creation of discounts for their customers and also build up a stronger relationship with the customers to attain values from customers in its return. It is also a process to create, communicate, deliver, and also exchange offering which has discounts for its customers, partners, clients, and also society in the larger context. Marketing gives a significant focus on organizational function and processes. It is geared to marketing by means of value propositions which enable the expectation of individuals being created by promises and even fulfill expectation by giving support to the value-generating process to the customer. This helps in providing support to value creation in the customers and firms and also another function of stakeholders (Lengkoan, 2015).

3.2 Theories of marketing

Abraham Maslow’s hierarchy of needs is a psychological theory which stated that to reach self-actualizing, a human need to satisfy its needs at every level in the need’s hierarchy. This theory is used in marketing wherein it explains that hotel marketers need to develop strategies to attain customers. For the enhancement of the occupancy of the room, markets need to use marketing. Marketers should understand the needs of the customers of hotels. As per Maslow, there are five needs which include physiological needs, safety needs, belongingness, and love needs, and esteem needs, as well as self-actualization needs. Markets should focus on one of the categories and aim to target that needs (Aithal, 2016). Reciprocity theory is also the law of social psychology. This theory helps the marketers in crafting compelling message which prompt action. The theory reveals that marketers need to apply effective marketing strategies to provide value to their customers. This value could be in the form of promo codes or discounts. Marketers should also offer deals in different contents conditions so that customers stay engaged with the company regularly.

3.3 Marketing in the hotel industry

Marketing has taken place as an outcome of the business as well as financial pressure because of the need which takes place to give focus upon managerial measures so as to satisfy the needs of the customers. The main reason for marketing in the hotel business occurred due to the growth in guests who are in accommodation need and enhancement in competitions by the service providers of accommodation. In addition to that, since the hotel industry is becoming a more mature market, competition is enhancing worldwide. This has, however, acted as a significant issue as wining customers has become an important issue. Thus, there is a substantial shift in marketing. The marketing orientation arrives at the time of determination wherein priority needs to be given when a company decides. In the present context, most companies review customers as an essential factor where every marketing needs to be oriented.

3.4 Marketing strategy to improve room occupancy

It is stated by Gozaly (2015) that it is essential for hoteliers to spend and capitalize on the boosting of hotel occupancy rate utilizing online marketing strategies. The investment inappropriate digital marketing technology could assist in tapping into online markets to boost up its hotel occupancy. It is essential for the hotels to analyze the market insights and trends while conducting market research and laying strategic plans. This would assist in understanding the target audience in every aspect that includes preferences in the facilities of room and the budget for accommodation. The success of the online marketing strategy would be helpful in selling hotel rooms and thus enhance occupancy. The development of relevant content online also helps in improving more customers. Various hotel websites possess a general description of the hotels, location, amenities, rate, and pictures. Although, such data and information are of greater importance to attract a more significant number of potential customers. However, having an online presence needs other information too to grab customers. Thus, hotel sites that integrate additional information like travel tips, top destinations, and also trends while traveling help to attract an enormous amount of traffics. When there is relevant content, then traffics gets converted into bookings (Chatterjee, 2014). It is also acknowledged that running the rewards programs for customers by the hotel sites in the form of vouchers, offers, and discounted rates helps in retaining existing guests. Generally, a hotel loyalty program should enable its returning guests to attain points that will attract benefits that include free gym/spa treatment, complimentary flexible check-in and check the output, as well as free transfers from the airport. The application of discounts and special offers encourages guests to visit the hotel. The values help bring back the guests to the hotel and use excellent serves to encourage repeated visits (Gozaly, 2015). In addition to that, the usage of mailing lists is an effective marketing strategy that helps the hotels to keep retained customers on loops regarding discounts of hotels, promotions, and also changes that are needed—the involvement of the customers through sending of personalized emails for checking on welfare and make official communication. The personalization emails assist customers to feel that they are part of the business organization. Such respect and appreciation would help grab customer attention since the hotel business is more incredibly dependent on the occupancy rate of rooms, so digital platforms could assist the hoteliers in reaching a more significant number of customers (British Hospitality Association, 2017). The application of viral marketing is also an effective internet adaption of marketing that uses word-of-mouth effects. It is the advertising messages being spread by its customers to other customers. In these regards, the company should even make usage of online travel agents for the hotels as these agents give focus on marketing to grab the attention of a more extensive base of audiences, and this will help in expanding potential guests in the international markets which are out of reach of the independent hoteliers. According to Lengkoan (2015), The increase in occupancy rate can also be attained by inviting the gathered groups for functions to stay in the hotel. Since group events are profitable in the hotel industry as customers book many rooms at a time. There are various group events that take place annually, which leads to repeat business for the hotel and an increased rate of occupancy. In this regard, package deals should be amended to attract hotels. The advertisement for packages helps in attracting guests and enhance occupancy rates. Apart from expensive marketing, the mat release campaign is also an effective marketing strategy that leads to extensive media coverage by making in an effective marketing method to enhance the rate of occupancy (Armstrong, Adam, Denize & Kotler,2014).

Digital marketing includes the use of information and communication technology in marketing. In the hotel industry, digital marketing provides for the usage of internet-based marketing along with activities that are based on technologies like email, interactive digital televisions, and also phone communication. Digital marketing has become an integrated part of marketing activities. There are various ways by which digital marketing was conducted by the hotels, which are referred to as digital marketing communication (Assetsure.com, 2018).

3.5 Recommendation to improve room occupancy of hotel

When the occupancy rate of the hotel is lower than its competitors, then the target audience of hotels needs to be revisited. It is recommended that hoteliers target the right target market, which has a higher possibility of staying in the hotel room. The targeted audience needs to be business travelers, friends’ groups, young couples with family, etc. It is practical to collect data from guest records to understand appropriate approaches (Assetsure.com, 2018). It is also recommended that the company should also create packages and promotions that appeal to the target segment. The creation of packages and promotions would be using the information to own advantage. It is stated that apart from the marketing, the company should also invest in guest services and training of staff. Hotels should organize online or guest services programs to impress their guests and should also ensure that travelers like to attain more excellent occupancy rates (Kotler & Armstrong, 2010). It is further recommended that the company should also double up the higher demand amenities in the marketing communication and need to consider special packages to promote lower demand amenities to its guests. Lastly, it is also recommended that hotel companies should also remarket their ads wherein it should build email lists for every audience segment. The upgrading of the email lists would be helpful for the hotel industry to reach people who are already interested in the hotel.

Methodology

Since the study aims to analyze the marketing strategy to improve room occupancy of Ibis hotels in London, this study has applied qualitative methods. This study has used only the theoretical perspective of this study, wherein only secondary data have been gathered in this study. All the secondary data have been collected from books, academic journals, internet sources, and websites. The researcher has made the application of a case study to gathered data wherein Ibis hotel have been analyzed. All the data related to the company have been analyzed from company websites, newspapers, or annual reports. This study has made the application of theories like Maslow’s hierarchy of needs and also Reciprocity theory to understand the topic in depth. This study would have gathered data from primary sources as, but The Covid pandemic and time limitation has restricted the researcher from making the application of preliminary data. The burden of time has permitted the researcher to perform only secondary data. In this study, all the secondary data gathered have been attained from reliable and valid sources. Every source was reviewed and validated before making use of it. All of the data achieved were free of plagiarism and are attained from only good sources. This study has made the application of thematic analysis tools to analyze the data.

Finding

The IBIS hotel is a popular international hotel which is owned by Accor hotels. Being established in 1974 in Bordeaux, the hotel possesses more than 1218 hotels operating across 67 countries. There are altogether 155,678 rooms in total, employing a more significant number of people. The lower price of the hotels differentiates this hotel brand from other hotels globally. The company faces substantial competition with some of the big rivals such as Ashoka hotel, Orchid hotel as well as Tunga hotel. Ibis hotel chain has a global presence and possesses economy hotels. It provides the best values in the local market (ibis, 2017). This company is also projected in hygiene hotel wherein is located closer to railway stations, airport as well as city centers. The primary business strategy of the ibis is to provide international standard hotels to its customers at an economical price. Customers are given excellent values for their money in ibis, wherein all the rooms are designed as per the strategy (AccorHotels. 2017). The rooms facilities are as per the customers’ requirement and are meeting customer demands to a greater extends. Apart from giving focus on pricing, hotel designing, and amenities to grab the customer’s attention for occupancy, ibis has also given priority to marketing plans. The occupancy rate of Ibis hotels is registered to be over 50-60 percent before 2018. However, the company has reported an occupancy rate of more than 70% after 2018 after growing usage of the internet and technology by a company (AccorHotels, 2018). However, recent Covid-19 pandemic have affected the occupancy rate of Ibis from August 2020 till July 2021. The fluctuation is due to lockdown policy and restrictions.

Promotions are one of the main components of the Ibis brand, which has been maintaining the marketing plan through giving major highlights on its attainments. The company has made the application of advertising which gives particular preferences to its main features that include customer satisfaction. The company has also undertaken a contract titled 15-minute happiness that has shown company commitment towards the qualitative services. When there is the arrival of any issues, then the Ibis management team gives a solution within 15 minutes. This creates brand satisfaction which grabs the customers’ attention and helps in the attainment of higher occupancy. Ibis company has also produced positive brand awareness by offering discount cards for discounts and regular membership during off-seasons and weekdays.

The company even make the application of advertisement as well as ad-campaigns that are published in travel magazines as well as newspaper. The company’s official website also gives detail information regarding the interested customers (AccorHotels. 2018). It is reviewed that IBIS hotels even provide special promotions for the sake of booking, which are done by means of an online channel. There is a presence of Le Club Accor hotels loyalty programs which have various benefits such as getting access to the discounted rate of private sales 2 days before everyone else’s two times a year. This can assist in enhancing the occupancy of the room and also helps in the increased booking. These loyalty programs applied by the company even assist in providing online check-in and faster check out along with up-gradation of room and free nights. This membership even helps in providing free internet worldwide and even provides welcome drinks and exclusive Le Club Accor Hotel Lounge. The slogan of the company ‘for you you and you’ even show that the company is solely customer-centric. The loyalty program helps the company provide a competitive advantage and even helps in attracting newer customers and enhancing rooms occupancy (AccorHotels, 2021).

Apart from that, the company has also seen making usage of digital marketing in its operation. Ibis has started to make its interaction with customers utilizing smartphones, social media channels, and also emails. Since the usage of smartphones has increased, people enjoy researching and booking travel from their mobile itself. The company has started to provide online booking facilities which have eased the operation of customers and attracted a more significant number of customers. This has helped the company to enhance its occupancy rates and attain profits.

It is also reviewed from the case study of ibis that the company also possesses a more substantial social media presence. This has helped the company to be creative and stay connected with a more significant number of customers. This has helped the company to reach customers of another side of the world who have further increased the occupancy rate of the company. Ibis has been found to make the usage of travel-related content activate the imagination level of the guests. This travel content on social media has helped the company to build transportive effects upon viewers, which have inspired them to enjoy its journey. It is acknowledged that company is highly engaged in social media platforms as compared to other Accor hotels which could be seen in below figure.

Ibis has engaged with its travelers through Facebook, wherein the company post reviews, give travel advice as well as tips, and keep running local events lists. It also captivates images as well as videos to provide insights as well as direction. The company even make effective interaction with loyal followers and reward them after dealing with feedbacks of customers. The application of this marketing has helped the company to migrate communication to the Facebook messenger as well as encourage followers to pursue communication avenues. Ibis is also found to market on Instagram as it is one of the effective social media marketing platforms in the social and digital environment. Since Instagram possesses more than one billion users, ibis’s use of this platform has helped the company to increase its sales. The company has also applied hashtags to getting required responses. The creation of hashtags of ibis and campaigns along with posts have helped the company to enhance its customers base and improve the occupancy rate of rooms.

Lastly, it is also analyzed that hotel markets of ibis are even found creating videos so as to attract booking (AccorHotels. 2017). The YouTube channel of the company has helped the company to showcase different features of the hotels along with reaching new guests and drive site traffic. The company has even attained increased booking by means of video tours. The company has also expanded its booking occupancy from email marketing. It was found that the company has used this marketing tool to grab the attention of loyal customers. The company sends the email to those customers regarding new offers and discounts, which have helped the company grab attention and enhance sales (Ibis, 2021). The web teams of the company have enhanced the visibility of the hotel and have made booking easy through its websites. The hotel reservation system even became feasible as a company has developed an online mobile platform which has helped the company to enhance the reservation system and increased the occupancy rate.

Discussion

Factors that increase the hotel occupancy rate

It has been analyzed from the literature review and findings that rate of rooms, guest experience, online reputation, marketing tools, cleanliness of space as well as the quality of the facilities are factors that affect the occupancy rate of the hotel. It is reviewed from the Ibis hotel that the company had grabbed customer’s attention because of its lower price, good quality products, and services as well as practical marketing tools. It is also analyzed that since ibis is also present in all the famous and valuable sites, it grabs many guests and helps in enhancing the rate of occupancy. Apart from that, it was also analyzed those customized packages and promotion also helps on attracting guests and appeal to them to take hotels facilities. It is even analyzed from the Ibis hotel that the company has also made usage of loyalty programs and promotions to enhance occupancy rate (Hotelmanagement.net.,2018). It is also recognized from the finding and literature review that offering special discounts to its customers can also help in increasing booking and occupancy rates. The promotion of events is also found to enhance the speed of occupancy as pairing with event organizers allows the hotel to link their name with events on the website or occupancy rate. The providing as well as offering its guests free nights after the specific period of staying, discounts as well as rewards could also help customers to return to its old hotel. It has been analyzed from the whole study that when the needs of the customers are fulfilled, which includes facilities, price, discounts, etc., then it results in increased satisfaction which was linked with Maslow’s hierarchy model. It was relevant from these studies that when all of the needs of the customers are fulfilled by the business firms, then customers return for the next time. The providing of discounts and rewards apart from price, facilities, fee Wi-Fi fulfill customer needs and enhance their level of satisfaction.

Role of marketing to improve the occupancy rate

It has been acknowledged from the study that a company’s engagement in marketing, especially online marketing or booking, has helped in enhancing the rate of occupancy. The increase in internet usage by consumers, primarily in seasonal variation, has led to a change in the occupancy rate. The internet has enhanced the occupancy variation and has helped in increasing consumer engagement. It has been acknowledged from the case of ibis that the company has also improved its occupancy from its online or digital marketing strategy wherein it has made the application of various tactics. It is analyzed that the successful application of online marketing helps the hotel to sell its room and enhance the level of occupancy. The development of content assists in increasing a more significant number of customers. It is also acknowledged from the study that when a hotel website has a general description regarding hotels, amenities, rates as well as pictures, then it does not attract customers to visit the hotel. However, when a company gives travel tips, top destination information, and also trends that it attracts larger traffics. The increase in content helps in converting traffics into bookings (Assetsure.com, 2018). This study has also acknowledged that when a company makes usage of effective marketing strategies like emails, then it assists the hotel to retain customers and provide information regarding discounts of hotels, promotions, and also any changes in prices. When the company sends a personalized email to every customer, it gives a sense of respect, dignity, and appreciation which further helps in grabbing the attention of the customers. It was even seen in Ibis hotel that the company had enhanced its sales because of its mailing lists which have helped customers to reach larger customers’ size. The application of viral marketing strategy has also assisted hotel companies in expanding their business and enhance the occupancy rate of the room. The usage of offer packages is also found to have greater involvement in improving room occupancy (Business standard, 2021). It can thus be stated after reviewing both findings and literature review that giving value to the customers can help in enhancing customer satisfaction and helps in strengthening organizational business. According to the reciprocity theory and case study of ibis, hotel companies should value their customers by providing promo codes and discounts. They should also offer values in various forms of content and marketing techniques so that customers remain engaged with their company regularly.

Recommendation to improve hotel occupancy

It has been analyzed from the case study of Ibis hotel and literature review that hoteliers need to target appropriate market so as to attain higher customers engagement. It is even recommended that the company should focus on acknowledging appropriate approaches. It is even analyzed from the study that companies should create packages and promotions to attract targeted customers. It is further recommended that hotel organizations need to enhance marketing communication amenities and should promote lower demands amenities to their guests. It has further analyzed that company never focuses on attracting the attention of loyal customers of the company. It is, however, recommended that the company should remarket its ads and should make emails listers for each of the segments of the audience. It is further recommended that the company should not only make the application of online marketing tools but even make the application of traditional tools like print marketing, television, etc. This will even help the company to achieve a customer’s base and attain a higher rate of occupancy (Hotelmanagement.net.,2018).

Conclusion

The study aims to analyze the marketing strategy to improve room occupancy of Ibis hotel in London. The occupancy rate is a term used to determine the portion of rooms being rented compared to the total number of available spaces. This rate could be measured utilizing days, months, weeks, and also frequency which varies as per the period and duration—the higher in the rate of occupancy results in the increased booking of the rooms and more significant revenues. However, the occupancy rate could be affected due to various reasons that include season, quality of products and services, price, lack of knowledge regarding hotels, etc. It is, however, acknowledged that the company should make usage of marketing strategy to improve the rate of occupancy. It is stated that the company should make usage of these strategies to grab the customer's attention. The application of marketing tools like social marketing, video marketing, internet marketing, email marketing, and emphasizing hotel SEO would be helpful for the company to spreading information and attain more extensive attention from customers. After reviewing the Maslow theory and reciprocity theory, it is also acknowledged that the needs of the customers need to be preferred by the company wherein they should be valued in a greater extends. This will help them to get attracted to the company and attain higher customer engagement. Marketing is one of the effective strategies to improve the occupancy of the room and also enhance customers satisfaction. It can thus be concluded after reviewing the whole study that ibis company needs to work on its marketing strategy to increase the rate of room occupancy.

Recommendation

It is acknowledged that ibis should add links to Facebook on the website and emails. The company should also ensure that links are functional and correct, especially to the potential guests. The company should offer incentives and host contests. They should look at the posts and should like the pages. Ibis company is also recommended to post good quality content in a consistent manner. The company should follow 80/20 rules wherein a maximum of the posts should be in local areas, and only the least number of positions needs to be regarding the hotel itself. One should use Facebook insights to review content types to enjoy and make posts between three to 10 times per week. The company should also crossly promote its page on various social networks. The company is recommended to post frequent call-to-action for users and like Facebook pages. The company is even recommended to add more information on their social media network and should add relevant categories on its different pages. The report would help customers to attain the required data in various ways. It is even recommended that the company should also make usage of various relevant keywords in its search engine optimization. It is also recommended that the company should thank customers for staying in touch with the local tour guide or filling the contact forms. Hotel companies should also thank them, like the comments, and even join those local businesses or organizations that mention the hotels in their posts. The company should even set up a page like a campaign and should introduce paid Facebook advertising. In addition to that, hotel companies should also add buttons on social media sites like Facebook or Instagram such as Book, Get Tickets, Reserve as well as Start Order. Lastly, it is also recommended that hotel companies should also boost the urban image of the property and should confirm hotels as a peaceful retreat. The highlighting of the facilities could help in keeping contents attractive and entertaining.

References

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Armstrong, G., Adam, S., Denize, S., & Kotler, P., 2014. Principles of marketing. Pearson Australia.

Gozaly, J., 2015. Consumer analysis for increasing occupancy rates of tourism hotel, Proceedings of Abstracts and Papers of the 16th Asia Pacific Indus-trial Engineering & Management Systems Conference (APIEMS 2015), VNU-HCMC Press and Authors, 1567-1572.

Lengkoan, M., 2015. Proposal of Marketing Strategy Based on Customer Satisfaction to Increase Occupancy Rate. Department of Industrial Engineering, Maranatha Christian University.