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.

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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.

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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.

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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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