BUSINESS MODELS & STRATEGIES FOR RESTAURANTS, HOTELS AND RESORTS
A business model is some structure that shows how the business organization operates. This can be presented in a graphical or worded format. It can also be a presentation. The bottom line is that it communicates the firm’s structure. It deals with the present and the future and what the organization is about in terms of operations and roles.
It shows marketing strategies and how the business plans to direct its efforts. A business model also shows how a business provides value in the social, economic and cultural sense. There are many types of business models:
Direct Sales Model
An example is the direct sales model where a business sells different things directly to the client without having an outlet. It is impossible for a hotel to have such a model because hotels rely on three facets which are food, ambiance, and service. For it to be called a hotel, it must be having a third party location.
Most businesses with this type of a model is a business where people sell things at home or out of their cars. This model focusses on ensuring that the transport is excellent because transport is the way that these businesses reach the audience. By improving the systems of transportation, this means that their sales are effective.
Freemium Model
Another main model is the freemium model where a business gives something for free. For example, they can have a sign-up button on the website. However, to make more people sign up for their services they must be offering something like a discount eg. 50% off on the first meal that a customer has at a hotel. Since a consumer will want something for free, they give their emails and numbers when signing up. What they do or do not know is that the hotel then builds a client list and then sends all the people in that email list newsletters and marketing material to them.
This is a very effective method of reaching people because they target the right market and prospective consumers. When a person gets a discount on a meal or a free thing, they will want to redeem it by visiting the restaurant and they ensure that they will know about the products that the hotel offers. This is a very effective way of marketing because they will expect to get new clients or repeat clients.
Franchising Model
Another business model is franchising which involves using what another firm has achieved and replicating it in another location. In the hotel industry, it is very common to see outlets having franchises. This is a good way to use the success of the first outlet to drive future sales for the business. The best thing is that the investors can ensure that they limit the liability because they only have to worry about the location.
Most outlets like KFC Chicken and McDonald’s are franchises. Another main model is the bricks and clicks method where firms have an offline and online presence. In this model, a hotel may be selling goods offline but it can also make sales online. Most of the businesses today operate with this model mind.
Add-on Model
Another model is the add-on model whereby there is one main thing that is highly priced but there are other things (add-ons) that add to the final price of the item. The consumer feels like they are getting an extra deal. A hotel can place an offer where a meal may be expensive but it comes with a free drink and something else and the consumers will feel like this is a deal of a lifetime. The next model is the affiliate model whereby an external party helps with the selling of goods and services of the hotels.
An affiliate company does not say that they own, and they may not be interested in owning part of the business. In the hotel industry, there are many affiliate companies that work hand in hand with the firm and they help promote the hotels products and offers. The affiliate company may get a percentage commission per every booking or depending on how they decide with a hotel. The low-cost model deals with volume and the aim is to get more people buying or subscribing to a product or service. Since people are very receptive to low prices, they will definitely buy or subscribe. With this method, the cost of acquiring customers is low and so there are more consumers. This also means that the sale of the hotel increases.
Conclusion
When investigating all these types of models, it is clear to see that these models are mutually exclusive. A hotel can use two or more models at the same the same time. For example, a hotel can be using franchising, and the freemium model. A hotel can be a franchise and it can be marketing itself online and offline while still giving freebies. It is very common for a hotel to have more than one model but every hotel must strategize to ensure what models it will use. Planning and strategy are very important for the success of any business because it helps them decide what to do and then follows through.
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thanks for sharing nice
Thanks for stopping by.
you're welcome
I would like to ask, how effective are these models in other part of the world especially in Africa. Nice work @jeanwandimi
They are very common but the Freemium model not so much. We have very many franchises like Java and Artcaffe which are coffee shops and cafes and fast food franchises. The Add-on Model is very common too especially with bars and lounges.
Yeah, I know the coffee shops and fast food franchise are almost every where but with your expertise, what business prospect do you think will be good with the freemium.
So for the Freemium model, I have seen some using landing pages to get signup to a deal or offer then using those emails to communicate to them. That is the most common way. However, even with booking and enquires, there should be a way to collect the information and use those emails. There is still so much to be done.
amazing I really like
Thankyou friend.
Is restaurant business in Kenya lucrative? This is something that that business owners in this area can greatly benefit. Thanks
It is very lucrative, especially for the big restaurants and hotels.
Great piece and very informative.
Thanks :)
There has been a huge growth in this industry in the past few years. Mellenials do love to travel. I have seen these models but I didn't know they had names.
I signed up once for a free meal and the hotel kept sending me issues of their publication, at some point I had to mark it spam.
Big ups for this post. Keep up
I also do not like those mails from hotels that are always about offers and nothing else. I spam them like crazy. :)
I think this is also true for most other industries. Good work 👏👏
Great Information. Thanks for sharing
Thankyou dear
Planning and strategising is definitely important for any business..
Agreed. Thanks for the comment love!