Emotional Engagement: The Future of Hospitality?

Many of the world’s largest hotel brands will run mystery guest programs either internally or with an inspection company. Traditionally these programs have been designed to monitor factors such as standards service, cleanliness and general condition of the hotel. In many ways mystery programs still include these measures but recently a new factor has been added which is most commonly described as ‘emotional engagement’.

Hotel brands have always understood that 4 walls do not make a hotel and the human element is often what brings success and repeat business through the doors. Standards are still important and play a key role in the ‘guest journey’, however, ‘emotional engagement’ is becoming far more important to the overall guest experience and what makes brands standout from the competition.

So what is emotional engagement?

The dictionary defines emotion as ‘something that causes a reaction’ and is pretty much what hotel brands are trying to achieve through ‘emotional engagement’. In theory a guest should enter your property in a neutral state of mind and the experience should change this in either a positive or negative way. Now, we all know that humans are different and will all enter your hotel with different states of mind. What is important is that your colleagues make every possible effort to improve the state of mind in a positive way through ‘emotional engagement’.

How can it be measured?

Hotel inspectors/mystery guests will always measure ‘emotional engagement’ from a neutral point of view and provide a score based on a professional opinion.Questions such as ‘did the colleague smile and greet you in a friendly manner’, ‘did the colleague engagement in personalised conversation?’, ‘did the colleague make eye contact’ and ‘did the colleague bid a fond farewell and welcome you back’ will be used to measure ‘emotional engagement’.

These questions, along with other factors such as ambiance, the flow of service and the general environment will determine the ‘emotional engagement’ score which will either improve or reduce the experience for a guest. This should give you a good idea of how a normal guest would feel in the given situation. Your guests will obviously not be measuring you using the same system but many of the suggestions below will help to improve the ‘emotional’ experience of your guests in a positive way.

So how can you help your colleagues improve ‘emotional engagement’ in your hotel?

Where does it start?

Remember that in theory your guests should enter your hotel in a neutral state of mind and we know that this may not always be the case. So do everything you can before the guest arrives at your property to make sure that they are in a great state of mind. Your reservations and sales teams should ensure that your guest is comfortable from every angle before arriving at your hotel. Do they have directions? Do you know the flight time? Will someone meet the guest? Can you book dinner on the first night in advance? Can you offer any other service which are personal to your hotel and will you give a courtesy call prior to arrival?

Colleague awareness and understanding

Are your colleagues aware of what ‘emotional engagement’ means and more importantly do they understand how to demonstrate this to guests? Some would argue that this should start with your recruitment to ensure that you have emotionally intelligent colleagues entering your place of work. There is much more to this though, as you have the responsibility to train and coach your colleagues on how to be ‘emotionally engaged’ with your guests. In most cases, leading by example is absolutely key as often your colleagues will replicate your actions with guests. Show your colleagues how it is done, training them on the subject and coach them to always be on top of their game.               

Pampering the guest

We talk about pampering the guests often and this literally means ‘pampering’ the guest. As we have mentioned above, do everything you can to make your guests feel comfortable while at your property. Do everything you can to fix any potential issues which may arise and most importantly check the satisfaction before checkout while you still have a chance.

Technology: good or bad?

Technology is becoming an increasingly significant part (and often an expectation) of the guest experience. Technology helps in many ways to improve the guest experience but do not let it become a barrier to ‘emotional engagement’. Your colleagues should be aware of this when interacting with the guests. Do they make eye contact and not focus on the computer screen? Do they smile and greet the guest when passing and do they make conversation while taking an order on a handheld device? Technology will always be key to your operation but be sure that your colleagues do not leave out the human touch.

Reward your colleagues for being ‘emotional engaged’

There is no better way to encourage ‘emotional engagement’ than rewarding your colleagues who demonstrate it. Interestingly, well known travel websites have are now starting to introduce programs which allow guests to highlight colleagues who have made a great impact to their experience for awards. You should also ensure that your colleagues are rewarded for proving great guest experiences and make sure this is made public throughout your property.

There are many angles to ‘emotional engagement’ and this will clearly be a key part in gaining an advantage in an increasing competitive market. Hotel brands will rely more on loyalty and this comes through an ‘emotional’ connection which your brand. Take some time to think about how you can help your colleagues to become more engaged on an emotional level.

Please note: This article is published for information only and any recommendations given are the opinion of the author and therefore, should only be used if the reader feels they are applicable.

 

Success through Successful Leadership

Successful hospitality teams have successful hospitality leaders – no surprise! But what does it take to be a successful hospitality leader who can consistently drive team results?

Be in the right place, at the right time

Successful leaders know which place to be at which time. Is it the breakfast rush in the restaurant or the early morning checkout in the lobby? Is it the afternoon check-in or the busy valet parking around dinner time? Colleagues respond when leaders ‘lead by example’ and successful leaders know just when to do this..

Coaching after training, training before coaching 

Coaching and training are key to the success of teams and from my experience this has been proven time and time again. Training should always come first and successful leaders will take part in training the team and passing on experiences. Coaching is the fine tuning of training and a successful leader will understand the importance of this to the success of the team. Coaching can take place at anytime and can last for any length of time.

Communication, communication, communication 

Communication will be in any text book but in reality can be tough to master. Successful leaders know that communication must take place on different levels and use different tools. Emails, notice board, briefings, posters, pictures can all be used to communication messages to your team. Without communication you do not have a team. A successful leader will master strategic communication to get the message across.

Team building builds a team 

The old classic team building is always a great way to bring your team together outside the work environment. Successful leaders will not see team building as an annual event to tick the box. They see team building as a daily, weekly, monthly or quarterly activity as an effective way to bring different elements of the team together away from the work environment. Hospitality environments can become hectic – take your team away…

Be motivated to have a motivation plan

Successful leaders have a colleague motivation plan which will be structured in such a way that the team will continuously have sometime to look forward to – more information can be found in the ‘Do you have a colleague motivation plan’ blog post.

Listen before you expect your colleagues listen to you

Great leaders have mastered the art of listening before speaking – from experience a colleague who feels like they have been listened too (even tough they may not be 100% correct) is a colleague that feels respected in the team. Listen then seek to be listened too..

Inspiration is most powerful if you are inspired yourself 

Leaders who are inspired have inspired teams – you as a leader should look up to other leaders and I can guarantee you that your colleagues will follow you. But be sure to show your inspiration and seek to gain inspiration from your team. Who are you inspired by and do your colleagues know about it?

Please note: This article is published for information only and any recommendations given are the opinion of the author and therefore, should only be used if the reader feels they are applicable.

 

Do you have a Colleague Motivation Plan?

It is a well-known fact that motivated colleagues are happy colleagues, and happy colleagues make happy guests. It can be all too easy to become too involved in the day to day operation forgetting that colleagues need motivation to continually create memorable experiences for guests.

Take some time to have a think about what you can include in your colleague motivation plan and in the long run it will bring great benefits to your area of responsibility.

What can be included in a motivation plan?

1. Monthly/Quarterly teambuilding activities – in house or off premises
2. Communication meeting schedule and communication plan
3. Recognition scheme – colleague of the month, contribution to social media, guest ambassador
4. Incentive schemes – upselling, add on, commission based
5. Training and development
6. Succession planning
7. Communication of department goals
8. Celebrating success
9. 1 minute feedback/coaching
10. Monthly 1-2-1 and appraisal management

The list above are examples which are commonly used to enhance colleague motivation and it is certainly not exhaustive. Through experience, the introduction of a structured motivation plan brings many benefits to the guest experience and this should be on top of the list of planning for future success. Motivated colleagues really are happy colleagues, and happy colleagues will always make happy guests.

 

The Power of Guest Engagement

Engagement is one of the big ‘buzz’ words in the hospitality world and could prove to be one of the most important for future success.

In recent years guests would simply be happy with a great product and a high level of service and many hospitality business have become very good in these areas.

Now with the availability of information and significant increase in choice, guests are seeking experiences where they feel a connection with your brand and will most certainly enjoy high levels of guest engagement. Hospitality businesses who are engaged with guests are said to receive significant revenue benefits and experience much higher levels of guest loyalty.

Successful hospitality businesses will already have an engagement program in place and will be training colleagues in guest engagement. These businesses will also recognise engaged colleagues and actively seek feedback from guests. There are a number of key steps that can be implemented to improve guest engagement:

1. Have a solid recruitment strategy

Ensure that your recruitment strategy is one of your key focuses in achieving high guest engagement. Look for candidates that not only have the right skills for the job, but also will add value in guest engagement. Focus your questions around the key behaviours that you and your guests are looking for.

2. Engage with your employees

If you want your employees to be engaged, you must first be engaged with them. The old phrase ‘information is power’ is key to success. Give your employees the training and knowledge they require to confidently perform their role and engage with guests.

3. Give your employees something to talk about

Offer topics, phrases and words that your employees can use when engaging with guests. Giving your employees ideas of what to say helps to give them confidence to engage with your guests.

4. Reward ‘engaged’ employees

Do you reward your employees for being engaged? Do you reward employees for being recognised on travel review websites? Do you reward your employees for being named on guest feedback cards? Reward and recognition has traditionally been based around financial targets such as ‘upselling’. Think about recognising employees for being engaged with your guests. Did an employee get named on a travel website or get a high guest feedback score? Recognising your employees creates a buzz for being engaged with guests.

5. Lead by example

You have to show your employees how to be engaged. Spend time talking to your guests and seeking feedback. Show your employees how to approach guests (and when not to) and engage in conversation. Your employees will be far more confident and committed if you are engaged as a manager.

6. Activity seek feedback

Be sure to seek feedback from your guests through in-house programs and international travel websites. If you are not actively seeking feedback, it is difficult to track your progress. Feedback is perhaps the best tool for improvement and be sure to respond to feedback (positive or negative) to acknowledge that you have taking it seriously.

7. Focus your mystery guest program around behavioural standards

If you are accustomed to international mystery guest programs, you will recognise that in recent years the questions which have been added are now focused on behavioural standards as well as traditional service standards. If you have in-house mystery guest programs that do not include behavioural standards, consider changing them. Although it can be difficult to measure behavioural standards, questions such as “Did the employee make eye contact?” or “Did the employee engage in polite conversation?” will be useful to measure how engaged your employees are.

 

 

 

Going for Gold: Preparing Hospitality Businesses for London 2012

The Final Countdown….

The London 2012 Olympic Games are just over 100 days away and final preparations are taking place to host ‘the greatest show on earth’. Approximately 4 million visitors from across the globe are expected to descend on the capital during the Games.

There is no doubt that this is a much-needed boost to the UK economy, and more importantly, a chance to shine and leave a legacy for the future.

Hospitality businesses have an incredibly important role to play during the games as they will act as the ‘host’ to the multitude of guests. It is not only the record breakers that will be remembered by the visitors, it will also be the hospitality received in airports, hotels and restaurants. There are a number of areas that Hospitality businesses should consider in preparation for the Olympics.

1. Spreading the Word

Marketing will be important for Hospitality businesses who wish to thrive from the games. Promotions, advertising and even dedicating a page on your website are all options. Is the touch relay passing through your town?  Is the marathon passing your property? What venues and events are in your area? How can your business play a part in the build up to the games? These are just a few questions which should be considered in a marketing campaign

2. Building Robust Relationships

The success of Hospitality businesses often relies on building robust and sustainable relationships. This will be as important, and if not more important during the Olympic Games. Businesses should consider building relationships that will enhance the service offered to customers and ultimately build an experience to remember. Potential options for building relationships include:

• Pooling your resources to allow for increased efficiency and higher margins
• Joint marketing activities to share costs and increase awareness through multiple outlets (e.g. advertising on each others websites)
• Building experiences through cooperation such as hotel and meal or attraction packages. This creates a sense of value for money and improves the overall experience for your customers.

3. Creating Positive Experiences

Many people will visit the games for a once in a life time experience. It is important that this experience is managed by Hospitality businesses. Experiences can be broken down into a three stages:

• The pre-experience which involves marketing activities, initial communication with potential customers, website design and interactions such as a reservation call. The pre-experience provides an opportunity for businesses to manage the expectations of potential customers and set the scene.
• The live-experience which is when the customer is actually on site. This allows businesses to deliver the experience to a customer.
• The post-experience which is after the customer has left. This allows businesses to carry out further marketing, offer promotions, gather feedback and create a sense of loyalty to ensure that the customer returns.

All three areas should be considered carefully and aligned to one common goal – unique and memorable experiences.

4. People are Key

It is a known fact that the people employed on the front line and in direct contact with the customer are vital for Hospitality businesses. In preparation for the games, businesses should consider a detailed labour plan. This should include; if any additional skills needed for your business during the games, where your labour will come from and how those people will travel to the place of work. This should be organised sooner rather than later as it is likely that ‘skilled’ labour will be scarce during the games.

5. Not in London?

10 major venues around the UK will give plenty of opportunities for Hospitality businesses outside of London. Consider how your business can benefit from events in your area and what part it can play in the wider success of the games.

6. Keeping the Flame Alight

There has been much talk about the legacy of the Olympics and how London and the UK will benefit in the future. The Hospitality industry must also consider its own legacy as a result of the games. Businesses must take advantage of the many opportunities to create memorable experiences to the abundance of visitors that will visit London and the UK during the games. Keeping the flame alight will be vital to the recovery of the economy and future growth of the Hospitality industry.

 

Creating Experiences through Cooperation

It is clear as we look around…….the experience economy is upon us. The Tourism and Hospitality industry in particular is striving to grasp the concept of creating experiences for its consumers. You only have to look at business such as Yo Sushi, Dinner in the Sky, Virgin Galactic and many of the hotels being built in the UAE to realise that ‘experiences’ are number one for future competitive advantage.   

But what about smaller business and the destinations they operate in? It is a fact, that although we talk about large multinational companies, it is the smaller businesses that make up the majority of the Tourism and Hospitality industry. So, how can these small businesses strive to create ‘memorable experience’ to their customers? I believe the answer is co-operation. This method of business has been around for years in the form of ‘package holidays’ and has proven extremely successful. This can be implemented on a much smaller scale to draw a number of smaller experiences into a ‘memorable experience’.Virgin Galactic and many of the hotels being built in the UEA to realise that ‘experiences’ are number one for future competitive advantage.

Examples of Co-operation

Co-operation can be as small as holding a leaflet on a local attraction, but here are a few (and only a few) examples of businesses that co-operate to enhance the experience for their customers:

Rail and 2for1 London provide travel, plus discount on many of London’s top attractions

Premier Inn and Beefeater provide comfortable accommodation with great food

Alton Towers and Local Hotels/B&B’s provide a day out to remember with a comfortable nights sleep

London Hotels and Theatre Companies provide accommodation in the heart of London with a great night at the theatre

Las Vegas Attraction Passes provides tourists with an array of experiences for a single price

What are the Benefits?

Co-operation provides a number of benefits for Tourism and Hospitality businesses, and the wider community that they operate in:

1. Small businesses with limited scope are able to combine a number of experiences into a ‘memorable experience’ through effective co-operation with other local businesses. An example of this would be a small hotel co-operating with a restaurant or local attractive by providing a discount.

2. Business can take advantage of ‘free’ marketing and visa versa. This is great for smaller businesses who rely on ‘free’ advertising.

3. Destinations become more appealing to tourists, supporting the notion of sustainable tourism. This allows smaller businesses to make a difference to the destination they operate in by increasing tourism.

4. Transport links and the final destination can co-operate to create experiences. Such as Rail and London 2for1. This idea gives tourists a reason to visit a destination (which are usually made up of small businesses) due to the discounts they will receive.

5. A single transaction cost, such as the Las Vegas attraction pass can create the perception of value for money. Also this reducing the negative feelings associated with payment, as an experience can be paid for in a single transaction. This idea allows an array of small businesses to work together to create a ‘memorable experience’.

Are there any drawbacks?

Although co-operation can create a number of fantastic benefits for Tourism and Hospitality Business, there are a number of potential drawbacks:

1. Co-operation often depends on the management of a mutual relationship. Each party places trust on others to create a positive experience for customers.

2. Similar to the first point, to some extent, co-operation places your reputation in someone else’s hands. A poor experience in any part of the wider experience could have a negative impact on your business.

3. Managing money can also be an issue, especially if the customer is paying for the experience as a whole. Who receives the payment? How long do they hold it for? What percentage do you receive? And when?

4. Maintaining the experience in the long-term can also be an issue. Businesses change their management and strategic direction. Will you ‘fit’ or be part of this?

The key to survival?

Having considered the idea of co-operation in creating experiences, it is clear that it holds many benefits for Tourism and Hospitality businesses. As we continue to develop and become more intelligent consumers, it is clear that ‘experiences’ are the key to creating sustainable competitive advantage. As many small businesses have limited scope, co-operation may become increasingly important as a key to survival and profitability. Co-operation should be considered as a potential way for small businesses to create ‘memorable experiences’ in the future.

 

The Art of Hospitality Leadership

The Art of Leadership: A shift in thinking?

The Oxford Dictionary defines leadership as ‘the action of leading a group of people or an organisation, or the ability to do this’ (Oxford, 2011). However, it can be argued that hospitality leadership expands much further than this. In years gone by, when economies moved at a much slower pace, man management was required for the success of organisations. However, in recent years, economies have become increasingly fast paced, more diverse and turbulent than ever. It is these circumstances call for a new type of individual, with ability to ‘perfect the art of leadership’.

Successful hospitality organisations, who maintain competitive advantage must seek individuals who understand the difference between management and leadership. Peter Drucker (1980), one of the most influential writers in management, highlighted many years ago this difference by explaining that ‘management is doing things right; leadership is doing the right things’. Other management professionals such as Nick Obolensky (1997) highlight the different between management and leadership by giving examples such as:

1. The manager drives people; the leader coaches them.
2. The manager says ‘I’; the leader says ‘we.’
3. The manager knows how it is done; the leader shows how.
4. The manager says ‘Go’; the leader says ‘Let’s go.’”

Although there are many elements which make an effective leader, in hospitality, there are two which really stand out:

Being in the right place at the right time

‘Leading by example’ is a phrase which is often exhausted in the hospitality industry. It appears in text books, articles, magazines, job adverts and is given as some form of question or answer at every interview I have been too. So why is this? Well it is the single most important element of effective leadership in the industry. The hospitality industry requires its leaders to ‘be in the thick of it’, ‘hands on’ and always ‘leading by example’.

At University, I read a book called 100 Tips for Hoteliers and the tip which really stood out for me was ‘Be in the Right Place at the Right Time’. Every leader which I consider to be successful has worked out how to master this. They seem to have a fine art for being there when you need them. They are parking cars, checking in guests, answering telephones, serving drinks at the very time when you need help, all while maintaining a consistent standard.

These leaders work with the team when it really needs support and set a standard for teamwork and consistency. However, caution should be taken here to find a balance between ‘leading by example’ and letting your team shine. Work with your team but don’t interfere too much. I have witnessed times and been in the situation myself when I should have perhaps taken more of a ‘back seat’ and allowed my team to shine.

Inspiring others to be better than you

Effective leadership is also about creating and maintaining a solid foundation for success. A leader must understand the importance of those around him/her and neuter them to meet their full potential. Coaching and mentoring is the key to this and has somewhat taken over the notion of training in recent years.

Leaders with the ability to coach and mentor have a clear advantage over others. here it is all about empowerment and allowing freedom for innovation. The leader must allow for this to happen and offer guidance, advice and corrective actions when necessary. Essentially a leader’s role is to inject energy in the team and inspire others to perform.

Throughout my ten years in the hospitality industry I can only really remember a small number of leaders who had an ability to coach and mentor others in a way which inspired the entire team. I was able to learn a great deal from these people and take away the following examples:

1. Allow others to be innovative
2. Know when to help others and when to let others help themselves
3. Training is telling and showing, coaching and mentoring is allowing others to show and tell you
4. Coaching and mentoring is ongoing and never stops
5. Don’t be scared of people who can potentially be better than you
6. Find a mentor yourself, otherwise how do you know how to do it?

Summing it up

Effective hospitality leaders allow the team to thrive and take responsibility for providing exceptional experiences to their guests. A leader should ‘lead by example’ but know when to allow team to shine. A leader should work on coaching and mentoring the team to create a foundation for success. These methods will allow for a culture of empowerment and belonging.  In essence, effective leadership is ‘the art of getting someone else to do something you want done because he/she wants to do it’ (Dwight D. Eisenhower). This is the art of hospitality leadership.

Please note: This article is published for information only and any recommendations given are the opinion of the author and therefore, should only be used if the reader feels they are applicable.

 

10 Rules for Creating Memorable Experiences

As we move from the ‘service economy’ to the ‘experience economy’, Tourism and Hospitality businesses can no longer rely on ‘great service’ as a source of sustainable competitive advantage. Businesses must understand the key fundamentals in creating ‘memorable experiences’ to their customers.

Virgin Galactic, The Burj Al Arab (or Dubai as a whole for that matter), Las Vegas and Macau to name a few, have all found innovative ways of creating ‘experiences’. So how have these businesses been successful? Well after some research I have created 10 rules from creating ‘memorable experiences’:

1. Cooperation is key – in today’s economy businesses should strongly consider cooperation as a form of creating experiences. Hotels, attractions, transport links, restaurants and bars combined into some form of package can create memorable experiences to consumers. In addition this can also give the consumer a perception of ‘value for money’ and reduce the number of transaction costs associated with an ‘experience’. In many cases this exists today, however, businesses should consider this carefully.

2. Keep it current – one word…………..technology! Consumers have considerable power and choice with the internet and access to information. You must take advantage of this and use technology to promote the experience. In many cases businesses can allow the consumer to ‘taste’ the experience before even arriving through video, virtual walk through, pictures and even sounds.. You need to carefully consider the possible uses of technology (including social media) as a vehicle in promoting the experience.     

3. Create an ‘experience culture’ – business must promote an ‘experience culture’. Successful delivery of experiences is very much dependant on the culture of your business. Therefore, businesses should ‘win’ over internal customers (your staff) in order to deliver successful experiences. How to do this? Create an ‘experience culture’ and allow your internal customers to experience the experience and most importantly, provide feedback.

4. Have a system for innovation – ideas will always fly around and come from a variety of sources. Make sure you have a system to capture, collate and identify potential winners. Allow your internal customers to generate ideas and reward them for doing so….your next big idea could be hiding somewhere.

5. Training…..and more training – words can not express how important training is in the delivery of an experience. Every business claims to have a great training program but does your training program concentrate on the experience you wish to provide to your customers? Do your staff deliver memorable experiences to your customers? Of course, every business will be different but training should also be focused on the experience. I like to call this ‘experience focused training’, an area which should not be considered lightly.

6. Know your customers – know your different types of customers, know when to change your experience according to their needs, know your internal customers and know anyone that has input into your experience (including your suppliers). All of these groups are important in providing feedback, ideas and innovations to your overall experience.

7. Take advantage of feedback – feedback is absolutely essential in creating and fine tuning memorable experiences. The important point to note here is that feedback comes from your internal and external customers. Businesses must find way to capture feedback from both parties and use it to fine tune experiences.

8. Learn from the best – if a business is getting it right, be sure to find out why. I named a few in the introduction to these rules, which should give you a start. Now, I don’t mean copy everything that business does, but learn what is good and find ways to implement similar ideas into your business.

9. Create a lasting experience – successful experiences last forever! Find methods to creating lasting experiences which people will talk about and tell their friends. This could include something to take away (physical), something to talk (mental) about or something to show. You need to ensure that your customers go away, talk about the experience you offer and return with an army of followers.

10. Break it down – linking a number of rules together is the ability to break the experience down in to sections. Use technology to create a ‘pre experience’, use your internal customers and cooperation in the ‘live experience’ and give your customers something to take away for the ‘post experience’. Bring these three together to form a coherent and powerful experience and watch your customers grow.

Please note: This article is published for information only and any recommendations given are the opinion of the author and therefore, should only be used if the reader feels they are applicable.

 

Is Las Vegas Still Competitive as a Tourism Destination?

Article: Adam Beck discusses Las Vegas and its competitiveness as a tourism destination in the future.

Welcome to Las Vegas!

Las Vegas, Nevada ‘the gambling capital of the world’ has an interesting and lucrative history stretching back over 100 years. The city has grown dramatically in population over the past 50 years, in fact over 1000% from 54,405 residents in 1960 to 583,756 in 2010 (LVCVA 2011). Over this time large multi-national companies such as MGM Mirage, Wynn, Hilton and Marriott have shaped the skies of the Las Vegas with unique and eye-catching ‘mega’ hotels – some with over 5000 rooms.

Las Vegas currently has 148,935 hotel rooms across the city and despite talk of over capacity, various projects have been completed in recent years and others are planned for the future. MGM City Center, the most expensive privately funded project in USA history opened in late 2010 adding some 7800 rooms to Las Vegas. Other future projects include a replica of the famous Plaza Hotel in New York and an entire hotel themed on Elvis.

Las Vegas has enjoyed significant tourism growth in the past 50 years from 5 million visitors in 1970 to 37 million visitors in 2010 – an extraordinary statistic for any tourism destination. However, in recent years it can be argued that Las Vegas has began to suffer. The city is experiencing little growth in the number of visitors and the amount they spend (Las Vegas Convention and Visitors Authority Statistics 2011).

This article presents an investigation of the external environment, the internal operating environment and a SWOT analysis of Las Vegas. These findings can be used to identify potential issues which may affect the competitiveness of Las Vegas as a tourism destination in the future.

External Environment: PESTEL Analysis

Johnson et al (2008) state that a PESTEL Analysis ‘categorises environment influences into six main types : Political, Economical, Social, Technological, Environmental and Legal’ Therefore, this tends to provide a detailed view of the external environment which could potentially have an effect on the competitiveness of Las Vegas as a destination :

Political – Negative impact

1. Threat of terrorism attacks
2. Threat of war in areas of the world
3. Loss of trust in financial institutions

Economical – Negative impact

1. Global recession and recovery?
2. Rising oil prices – increasing airline fairs
3. Unemployment rates and lack of disposable income
4. Luxury commodities such a tourism falling

Social – Positive impact

1. Younger population looking for experiences
2. Population (all ages) able to travel

Technological – Positive impact

1. Access to the internet growing
2. Increasing in technology improve experiences
3. Mobile internet and GPS – seeing before you go
4. Travel websites such a trip advisor to share experiences

Environmental – Negative impact

1. Increased awareness of natural environment
2. Access to natural resources
3. Climate change – affecting airfares and opinions

Legal – Positive impact

1. Increases in minimum wage allowing more disposable income
2. Changes in government policies

Internal Environment: Five Forces Analysis

Johnson et al (2008) describes that a Five Forces Analysis ‘helps indentify the attractiveness/success of an industry in terms of competitive forces : buyer power, supplier power, threat of new entrants, substitutes and inter-firm rivalry’. This framework also tends to be useful when analysing the competitiveness of a destination.

Inter-firm rivalry (High)

Competition between firms in Las Vegas tends to be very high creating great choice for consumers. Las Vegas has over 113 hotels with 38 large (over 100 rooms) on the strip itself. The destination also holds a wealth of restaurants, retail outlets, attractions, wedding chapels, conferences centres and casinos. High levels of competition often create greater choice for consumers, improved quality and perhaps more importantly lower prices. Hotels on the strip continually have discounts on rooms and often a nights stay in a strip hotel can be as low as $20. The high number of firms ought to suggest that unemployment is relatively low in Las Vegas.

Threat of potential entrants (Low – Medium)

Threat of potential entrants to Las Vegas tends to be medium to high. The Las Vegas strip is very limited for space which pushes prices to over $34 million per acre (Hotel Interactive, 2007). Often hotels are bought and imploded to allow space for new developments on the strip. Due to these high entry costs firms wishing to enter the Las Vegas market would need high levels of capital. Therefore, this creates large barriers to entry which would deter many firms.

Bargaining power of buyers (High)

Bargaining power of buyers to Las Vegas as a destination is quite high. The introduction of internet and increases in technology now makes it easier for more people to travel. However, Las Vegas benefits from domestic tourism and has a repeat guest’s average of 81%. Although, as other destinations such as Macau in Chine become more popular, Las Vegas will need to continue to adapt in attracting visitors.

Bargaining power of suppliers (Low)

Las Vegas is a well established destination therefore this would assume that it has a well-integrated supply chain for its needs as a competitive destination. One example of this is the Hoover Dam which supplies enough energy for over 500,000 homes each year. This is not only efficient and sustainable but is considerably cheaper than other forms of power supply. However, it is important to understand that energy sources such as the Hoover Dam will not be sufficient if Las Vegas continues to grow in the future.

Threat of substitutes (High)

Threat of substitutes occur both internally in Las Vegas and external between different destinations. It has already been mentioned that competition in Las Vegas tends to be very high and the destination offers many forms of entertainment. Therefore, on experience such as the theatre can be substituted for shopping or dining out. This forces firms in Las Vegas to be very competitive in terms of price and quality which makes the destination more competitive.

Las Vegas is also in competition with many other destinations throughout the world. However, Las Vegas does hold a benefit of being one of the only places in the world where gambling is legal. Although, area such as the Middle East and China are beginning to compete more seriously with Las Vegas as desirable destinations for entertainment.

Internal Environment: SWOT Analysis

Planning, development and management of Las Vegas will continue to be important in the future. The Financial Times (2008) have already reported plans for officials to encourage more visitors to Las Vegas with increased marketing. It is possible to use a SWOT Analysis to identify potential areas which could be exploited in order to increase and maintain a competitive position.

Strengths                                                                                     

• Image of Destination
• Good infrastructure
• Well established organisations
• 81% annual repeat visitors
• High USD contribution.
• High domestic tourism from close by states in America (50%).
• Loyalty to the destination (81% repeat visitors)
• Ability to provide a wealth of experiences
• Little elements of seasonality on tourism
• High competitive forces which encourage lower prices and greater quality

Weaknesses

• Location of Las Vegas and natural resources to support the city’s growth
• ‘Gambling’ image restricted to limited market segments
• Difficulty in travelling from locations such as Europe (as Las Vegas is in far west of USA)
• Only 19% annual new visitors
• Over 21 alcohol laws deter 18-20 year old travellers
• Low threat of potential entrants could make the market stagnant or even decline.

Opportunities                                                                             

• Appealing to wider markets by adding attractions and changing image
• Maintaining repeat visitors and increasing new visitors
• Holidays which appeal to family audiences
• Taking advantage of new forms of technology to improve hotel design etc.

Threats

• Development of other destinations around the world such as Dubai, Abu Dhabi and the East
• Development of alternative ‘gambling’ capitals such as Macau, China.
• Credit Crunch and rising oil prices may reduce visitors from abroad.
• Possible reduction in visitor volume
• Global terrorism and war
• Access to natural resources (water)

Assessing the Competitiveness of Las Vegas as a Destination

This article has provided an analysis of the competitive position and success of Las Vegas as a destination. Initial analysis into key trends demonstrates that Las Vegas has been a successful and growing destination for many years. The destination continues to attract vast numbers of visitors, however, figures of visitor volume and a number of reports show that Las Vegas may have started to suffer in terms of competitiveness.

A number of factors which are uncontrollable have been considered in a PESTEL analysis. Results show that economical, political and environmental factors will all potentially affect Las Vegas in the future. However, social and technological factors seem to benefit the destination in its competitiveness. A Five Forces Analysis shows that the operating environment of Las Vegas is highly competitive. These competitive forces create high levels of competition between firms in Las Vegas which are ultimately passed onto the consumer through low prices, increased choice and greater quality. All factors which make Las Vegas more attractive as a destination and therefore more competitive.

Finally, a SWOT analysis highlights a number factors which should be considered for the future. Las Vegas holds a great number of strengths, however, there are a number of weaknesses and threats which currently affect its competitiveness and will continue to so in the future. A number of opportunities, some of which are already being exploited will allow Las Vegas to increase its long-term competitiveness.

Although Las Vegas appears to have been successful and has held a strong competitive position for many years, it will be increasingly important in the future to monitor this position. However, a number of issues which are outside of the destinations control such as the recovery of the recession, rising oil prices and access to natural resources may control the direction of Las Vegas in the future.

Please note: This article is published for information only and any recommendations given are the opinion of the author and therefore, should only be used if the reader feels they are applicable. A full reference list is available on request via email.

 

The Experience Economy: Is your Hotel Business Ready?

Article: Adam Beck discusses the ‘experience economy’ and what Tourism and Hospitality businesses should think about for the future.

Welcome to the Experience Economy

Over the past two decades, academics and industry professionals have encouraged the notion of creating ‘memorable experiences’, and argue that it is these experiences that ultimately sell the product or service (Morgan et al, 2010). Pine and Gilmore first highlighted the importance of the ‘experience economy’ in a famous article released in 1991, which stated ‘Work is Theatre and Every Business a Stage’ (Pine and Gilmore, 1991).

The main driving force of this is undoubtedly the growth of internet (Pine & Gilmore 1991). Although consumers have always had a choice over products and services, the internet has considerably shifted the balance of power (Pantelidis, 2010). Therefore, it is more important than ever for Hospitality and Tourism businesses to find innovative ways of creating and consistently delivering unique ‘memorable experiences’ to gain long-term competitive advantage (Hemmington, 2007).

Forward Thinking Organisations: Who is Leading the Way?

Forward thinking and revolutionary organisations are already leading the way in providing ‘memorable experiences’ that add value to consumers lives (Hemmington, 2007):

• A major contributor in food service is Michelin star and celebrity chef Heston Blumenthal. His unique and unconventional style of preparing, presenting and serving food at The Fat Duck has caught the attention of consumers (Harris, 2003; The Fat Duck, 2011). The Fat Duck also incorporate smells and sounds to engage the five senses
• Other examples included Naked Sushi (eating sushi from models) and Inamo Restaurant (where you can order on an interactive tale).
• Las Vegas themed hotels such as the Venetian (Venice) and Treasure Island (Pirate) attempt to capture consumers through unique experiences. Many of these hotels also have themed rooms, pools, restaurants and bars which help to define the experience (Pine and Gilmore, 1991).
• Hotels such as the Atlantis and Burj Al Arab (United Arab Emirates) have a unique ability of using the internet to build ‘experiences’ through interactivity, pictures, videos and sounds (Burj Al Arab 2011; Atlantis the Palm 2011).
• Theme parks such as Alton Towers now cooperate with local accommodation providers to create ‘packaged experiences’. Also, many London attractions cooperate with other attractions and transport links providing deals and packages to consumers.
• Disney has been successful due to the culture of its employees in promoting genuine ‘experiences’. Staff are considered the ‘cast’ and they are either ‘onstage’ or ‘’backstage’, they are trained using scripts and rewarded for creating exceptional ‘experiences’ (Morgan et al, 2008; Pine & Gilmore 1991).

Recommendations for Tourism and Hospitality Businesses

Keeping it Current: Using Technology as a Vehicle

Currently over 27% of the world population have access to the internet (see appendices) which equates to some 2 billion people (IWS, 2011). Although, these statistics present great opportunities, the Tourism and Hospitality industry is notorious for ‘falling behind’ with technology in general (Law & Jogaratnam, 2005; Buhalis & Law, 2008; Daniel Thomas, 2010). To remain competitive organisations should consider the following:

1. Using virtual walk through to create a sense of ‘already being there’ (Cho et al., 2002)
2. Adding music and sounds to create atmosphere
3. Using words which are connected to the type of feelings to expect (Law & Hsu, 2006)
4. Have quality pictures to build the experience
5. Adding videos to allow the consumers to ‘see’ what they are likely to experience (Pantelidis, 2010)
6. Designing interactive websites which is key to keeping the interest of consumers (Pantelidis, 2010)
7. Managing social media and online advertising which will become increasingly important (Pantelidis, 2010)

Working Together: Cooperation in Building Experiences

One method which will become increasingly important, particularly in the case of small businesses, is generating ‘experiences’ through cooperation. This contemporary practice creates an ‘experience’ and has proven popular in recent years under the ‘all inclusive’ package. Tourism and Hospitality businesses of the future will need to build ‘experiences’ by cooperating with other local businesses such as hotels, restaurants, attractions and transport links. Not only can this reduce the number transactions a guest pays during the ‘experience’ (Hemmington, 2008; Tisch, 2007), it can also add a perception of value for money which is so important in today’s economy. This strategy also supports the notion of sustainable tourism which is so vital for many destinations today. Organisations should consider:

1. Cooperating with others to build ‘memorable experiences’
2. Building ‘packages’ with other organisations to create an ‘overall’ experience
3. Marketing ‘experiences’ by cooperating with other organisations
4. Reducing the number of transaction costs to give a perception of ‘value for money’

Making it Happen: Building a Solid Infrastructure for Success

Organisations should also understand that the most important factor is building a solid infrastructure around the delivery of the ‘experience’. Organisations should consider:

1. Deliberately designing experiences using core competencies (strengths) as a basis (Pine and Gilmore, 1991; Lugosi, 2008).
2. Thinking of the transaction as an ‘admission charge’ and how this would change the way things are done (Pine and Gilmore 1991).
3. Creating ‘roles’ for key members of staff in the delivery of an ‘experience’ (Lugosi, 2008).
4. Carefully considering staff as they are ultimately the individuals and teams that will be delivering the ‘experience’. Continual training, guidance and coaching are all important for success (Morgan et al, 2008; Shaw & Ivens, 2002).

Conclusions

It is clear from this report that a number Tourism and Hospitality organisations have already taken measures to adapt to the ‘experience economy’. Technology, cooperation and a solid infrastructure are key to designing, delivering and maintaining quality and consistency. Organisations must learn from these forward thinking ideas in or risk being left behind in rapidly changing global economy.

Please note: This article is published for information only and any recommendations given are the opinion of the author and therefore, should only be used if the reader feels they are applicable. A full reference list is available on request via email.