Factors Affecting Consumer Demands

SECTION 1 – INTRODUCTION

In the highly changeable hospitality world, there are different types of hospitality products which are based on different consumer needs and demands. Besides, any hospitality company must identify clearly about the factors which are affecting the needs and demands of consumer. After that, they can offer different types of products to fulfil consumers and make profit.

SECTION 2 – EVALUATE MAIN FACTORS AFFECTING CONSUMER DEMANDS & TYPES OF HOSPITALITY PRODUCTS

2.1 Seasonality

According to Butler (1994), “seasonality is a temporal imbalance in the phenomenon of tourism”. Seasonality affects the number of tourists, their willing to spend and demands. If company is looking for more profit, understanding consumers’ needs is an essential procedure. However, it may be a positive or negative impact for any hospitality company. For positive impact, it can receive more cash at peak season to cover the fixed cost for the entire year. Using the occupancy rate for hotel industry compare between peak season and low season as an example, based on the research statistics of hotel room occupancy report from Hong Kong Tourism Board, there is around 10% higher hotel occupancy rate than low season compared with peak season. (Appendix 1) On the other hand, for negative impact, it is hard to manage well for any hospitality company because of instable condition. It needs to recruit some part-time employees to serve the abrupt change of consumers at peak season. However, providing consistent service to consumer is extremely important to meet their expectation and generate experience which is differed to the other competitors according to the service delivery framework (SDF).

The occurrence of seasonality period and frequency may affected by weather. There are different consumer demands for different weather situations. According to K.Blazejczyk (2007), “weather is a factor that influences the possibility of outdoor recreation and tourism”. In summer, consumers may look for the facilities to enjoy sand and sea, such as Sanya in Mainland China and Male in Maldives. In winter, consumers may look for the facilities to enjoy ski and spa, such as Helsinki in Finland and Stockholm in Sweden. Using Maldives as an example, although the average temperature for the entire year is around 27-29°C, there is an obvious difference for the rainy days per month. (Appendix 2) Based on the statistics, from January to April and from May to December are the peak season and low season to travel Maldives respectively. Therefore, consumers may demand for different destinations and hospitality products when there are different seasons.

2.2 Price

“Buyers are more price sensitive when the expense accounts for a large percentage of buyers’ available income or budget.” According to Thomas Nagle and Reed Holden book (The strategy and Tactics of Pricing). That means why hospitality company must understand consumers’ expectation for the future. This expectation is not only include their desired hospitality products’ quality, but also hospitality products’ price too. If the product selling price is higher than consumers’ budget, they would not spend money on it. It is because hospitality industry is one of the most competitive industries. There are a thousand of competitors to compare lots of things by consumer, including price. For any industry, there is a price differentiation. That means there are different prices from the same provider. In hospitality industry, price differentiation mostly exists because of value difference. Hospitality company will offer higher price if more and more products or services are provided to consumer. On the other hand, “cheaper prices can evoke perceptions of lower quality”, which is mentioned in an article written by Terri Zwierzynski in 2005. Therefore, price can be adjusted by any consumer. It is because if they prefer more products and services, there is a higher price for that type of hospitality product for sure.

Using air ticket as an example, it is not a must for the same price if two consumers take the same flight from Hong Kong to Tokyo although they are seating at economic cabin too. It is because if one consumer does not prefer too much restrictions (e.g. Refund/Reroute) for his/er ticket, (s)he needs to pay more money to take the trip than another consumer. Using a consumer chooses two Hong Kong hotels (Hong Kong Gold Coast Hotel at Tuen Mun and Marco Polo Hongkong Hotel at Tsim Sha Tsui) as an example. Compared on the same reservation date, the lowest price is HKD $1,950 and HKD $4,200 respectively. At this situation, most consumers may consider Hong Kong Gold Coast Hotel as their final accommodation when they travel to Hong Kong since it provides an attractive price. Therefore, consumers may demand for higher or lower price in related to their required services.

2.3 Location

Actually, some consumers may put location and price factor as the same criteria to consider when they are choosing hospitality products. However, accessibility time is also important to be another consideration out of price since tourists travel to their destinations may only have a limited of time. Consequently, once a hospitality company provide such an attractive type of hospitality product, it will not have too many consumers if this company is situating at far away from tourist area. Since accessibility is one of the major considerations to enjoy the hospitality products and services for some of the consumers, they will not prefer to spend too much time for traffic. For the relationship of location and price, once the hospitality company which is situating at urban area must offer a higher price than the rural area hospitality company. That means if some of the consumers have a limited of budget to spend on hospitality product and they do not mind to traffic a long time, they may still choose for the lower price hospitality product.

Using the above Hong Kong hotels as an example too, consumer may consider Marco Polo Hongkong Hotel as their final accommodation when they travel to Hong Kong since it is more convenient than Tuen Mun as well after tourists shopping at Tsim Sha Tsui. They can spend more time on shopping instead of concerning traffic time to Tuen Mun to take rest. However, there is an inverse proportion for location and price compared with the above example. The following example is the nearer destination the lower price, the further destination the higher price. It is because the air ticket fares for travelling to long-haul destinations (e.g. London) must be more expensive than travelling to short-haul destinations (e.g. Taiwan) leaved from Hong Kong. Besides, assume that an airsick employee is awarded an incentive travel, (s)he will still choose Taiwan as the final destination although there is around HKD$4,000 difference compare between these two destinations. Therefore, if consumers do not want to spend too much time on traffic, they may choose the hospitality product with the nearer one.

2.4 Contemporary issue

Nowadays, global warming and climate change are the most concerning contemporary issues. They refer to an increase in average global temperatures. Being one of the murderers, start from today to protect the environment and safeguard human being’s health will never late. Therefore, consumers are beginning to concern environmental-friendly awareness and use recycle product, including hospitality industry. More and more consumers may start to enjoy “green” products and services, such as The Green Hotel. According to The Hotel Association of Zhejiang Province – Green Hotel Guidelines (2005), “The Green Hotel is necessary to adjust hotels’ mindsets, development strategies, management modes and service, to implement pure production, to supply products that are healthy and safe for human beings, to build up public consciousness of environmental protection, to change traditional notions of consumption and to encourage “green” consumption.” Choosing “Green Hotel” is an action to support environmental protection. For Hong Kong Hotel Industry, Hotel Nikko Hong Kong is one of the hospitality companies to awake consumers. It is the first hotel to implement energy and water conservation programmes in Hong Kong start from 1992. One of the initiatives is using energy-efficient equipment, such as energy-saving light bulbs. Moreover, joining ecotourism and green tourism is another example in hospitality industry.

Consumers must support the sustainable development if they want to use the same product or enjoy the same view. One of the definitions of ecotourism is “the practice of low-impact, educational, ecologically and culturally sensitive travel that benefits local communities and host countries”, mentioned by Honey (1999). However, this is only the guidelines without any legislation restriction. Who knows that how many hospitality companies can produce such an ecotourism product as same as the guidelines? Last but not least, the International Green Awards can recognize any corporate are having social-corporate responsibility that bringing sustainability concept when they are meeting consumer needs for services at the same time. Therefore, consumers may demand a hospitality company to provide more green products if they aware the environmental issues.

SECTION 3 – CONCLUSION

Different consumers may have different factors to influence their demand for international hospitality products. Besides, it depends on different criteria considered by consumers. For example, some consumers may focus on price or environmental issue. Therefore, hospitality company must continuously to know more about its target consumers’ expectation and their demands too. If they fail to meet consumers’ needs, they may face a loss situation.

REFERENCES

* Crystal Green. Factors affecting marketing in Travel & Tourism, from http://www.ehow.com/list_6698321_factors-affecting-marketing-travel-tourism.html * Hagmann, J, Connolly, M., Ficarelli, P., Ramaru, J.(2002). The service delivery framework, from http://www.picoteam.org/pdf1/SDF2.pdf * Rene T. Domingo. Consistency in service quality, from
http://rtdonline.com/BMA/CSM/9.html * Stephan Weidner (2006). Seasonality in tourism: A review of seasonality of hotel accomodation in New Zealand. Retrieved from: http://www.hausarbeiten.de/faecher/vorschau/122991.html * K. Blazejczyk (2007). Weather limitations for winter and summer tourism in Europe, 116-121. Retrieved from Developments in Tourism Climatology http://www.mif.uni-freiburg.de/isb/ws3/report/ * Hong Kong. Department for Hong Kong Tourism Board (2012). Monthly report on the average hotel room occupancy rate for all categories by month 2011-2012. Retrieved from: http://partnernet.hktb.com/pnweb/jsp/comm/index.jsp?charset=en&pageContent=%2Fjsp%2Frso%2Frso.jsp * Detailed monthly summary of the weather in the Maldives. From http://www.maldivesdivetravel.com/maldives-weather * Nagle, Thomas and Holden, Reed. (2002). The Strategy and Tactics of Pricing. Prentice Hall. (pp. 84-104).

* Terri Zwierzynski (2005). Differentiation — Smart Marketing Strategies for the Solo Entrepreneur. Retrieved from: http://www.powerhomebiz.com/vol150/differentiation.htm * The Hotels Association of Zhejiang Province (2005). Green Hotel Guidelines. Retrieved from Green Peace http://www.greenpeace.org/eastasia/Global/eastasia/publications/reports/others/2005/green-hotel-guidelines.pdf * Hotel Nikko Hongkong. Green Practice, from http://www.hotelnikko.com.hk/greenpractice/ * Honey, M. (1999) Ecotourism and Sustainable Development: Who Owns Paradise?. Washington D.C.: Island Press.