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Why our competitors have a higher occupancy rate?

Cliente:  Self owned city hotel

Problem Description:

Although the unfavorable economic situation is a cause of the general decline in the occupancy rate and RevPAR in the hotel industry, our client felt that their indicators were below its closest competitors.

The managing team analyzed the reasons and took some decisions to correct but it remained bearish. This fact deepened doubts about the reasons for this situation because their value proposition was similar or higher to competitors in many cases, and prices, while not the lowest in its segment were average, and anyway they preferred to avoid entering into a price war.
Seeking answers to these questions they turned to Mr. Wat to plan and implement a joint project.


Project Scope:

We began analyzing the initial information available and the fact was that the differences in service provided between our client and its competitors were few, even, these were below in some attributes. Also the guests in all segments belonged to similar profiles. However, the rate of repeat customers at our hotel was below average and some comments about the prices of some services expressed at customer satisfaction questionnaires raise the alarms.

We recommended an evaluation of the experience at the closest competitors establishments and compare to their own assessment to identify the gaps or differences.

We selected four competitor hotels according to the preferences of managers and several criteria such as location, category, price and services offered.

The assessors team of Mr. Wat conducted fieldwork for the evaluation of the customer experience at the four competitors and also our own client using the technique of mystery shopping during which the evaluator works undercover as a hotel guest.
In a week we investigate observing and analyzing over 800 attributes ranked by criticality and phases of the service chain.



The report reflected the comparison between our customer and their competitors, and identified the gaps founded in the attributes and processes.
Among all, several critical attributes were notable for the wide negative gap. In addition, generally were attributes related to loyalty and customer repeat rate. It was found that the reasons for which were losing occupancy and RevPAR could be:

Crosselling: our customer billing for crosselling was minimal despite the training that employees received in sales techniques. When comparing prices with competitors found that the services had a higher rate close to 100%. In fact, some services such as WIFI were free at some hotels and in this case in particular our customer was the highest price. Regardless of the low sales relevance of these services they were acting as a major barrier to the repetition.
Cafeteria and catering: although breakfast and restaurant service of our client was correct and functional, however, was equally impersonal. Three of the competitors had made reforms in recent years and two of them endowed their restaurants an ambience with character and style. Also, the cuisine was carefully adapted  and selected to each season and that were valued attributes by repeating customers.


In view of the research results the following was proposed and designed:

Re-price ancillary services considering costs and competitors prices. Since currently the billing for these items was low they could risk vary its pricing strategy in these services and even increase direct billing by volume growing and indirectly through customer loyalty consolidation.
Renew the physical image of cafeteria and restaurant (shared space) as well as gastronomic offer: seasonal products, careful elaboration, differentiation of spaces and needs (fast food, business, snack, etc.) depending of the moment. With the first changes in lighting and painting of the cafeteria / restaurant and being incorporated several improvements in the menu was found that customers spent more time in this space, increasing spending and also growing the number of requests for room service.

Success Indicators:

In the fist six months our client RevPar grew in a 25% rate and the occupancy rate improved by 10%. In one year and the rate of repeating clients had increased by 60%.