What is the meaning / definition of Demand Generators in the hospitality industry?
In hospitality, meeting demand for goods and services is not only about meeting customers’ needs, whenever required; sometimes, a hotel or other type of hospitality business can create demand.
The best way to do this is by using Demand Generators.
Yes, it sounds quite self-explanatory, doesn’t it! But let’s consider this in more detail…
Demand can be increased by hotels (or, in fact, decreased during busy group booking periods or when refurbishing, for example), depending upon when they need or want to do this. They don’t have to sit and wait to see what customers will do (and therefore are at the mercy of consumer behaviour all the time). No. There is another way. A better way. And that is Demand Generation. When there is not sufficient demand to reach a good revenue result or occupancy the hotel can take action to generate more demand (shift demand to his hotel)
Examples of demand drivers are:
- promotions (think via flash sales websites)
- packages (sold directly via the hotel, ota or other channels)
- discounts (stay 4 pay 3, stay 2 20% off)
Let’s look at this example:
A hotel in Portugal’s Algarve region does not have many bookings in the pre and after season, outside the main summer peak demand periods. So, the hotel management must find a way to attract customers during those times. The best thing they can do is create a Demand Generator, such as offering a reduced price deal, with lots of additional offers built into it.
‘Half-price rooms, with free breakfast!’ Now, that would be difficult to resist!
To make this even more appealing, the hotel could put a time limit on the offer: ‘This package is only available for the next fourteen days.’ This would encourage potential customers to book quickly, for fear of missing out on the promotion.
Psychology can also be used in Demand Generation by offering an Exclusive Package. That’s right; you don’t just have to cut prices to grow demand! Sometimes, by making people feel that they could become a member of a prestigious ‘elite club’ by joining other people on an exclusive holiday, that can result in increased (higher priced) bookings for a hotel, too.