The hotel business, and tourism business in general, has been severely impacted by the global pandemic. This is the best time for marketers to step back and analyze the customer behavior of the industry to seek innovation and bounce back strongly after the pandemic is over. Kotler et al. (2016) proposed an outline for the consumer and organization buyer behavior model using three main boxes: the environment, the buyer’s black box, and the buyer’s responses. Using the outline, this article will analyze luxury hotel customer behavior by analyzing consumer and organizational buyer in the industry.
Luxury Hotel Customer Behavior Model
The input for consumer behavior is the environment, which consists of things that can be controlled, such as marketing strategy, and things that can not be controlled, such as political situations. The input will enter the buyer’s black box, and based on the buyer’s characteristics, the buyer will make a decision about the choice. For luxury hotels, understanding their consumers’ characteristics and how it affects their decision-making is crucial, because their market segment is relatively small and focused on the upper class.
Grand Hyatt, for example, adopts the differentiation strategy to serve business destinations, large-scale meetings, and conventions (Chon & Cunill, 2006). The brand mainly targets businessmen and executives traveling for their businesses. This group of people has very distinct characteristics in both, demographics and psychology. They usually have a high income, live in a big urban city, are in a productive life stage, and are very busy. They don’t see the hotel as merely a place to spend the night, but also a place where a successful person like them deserves to be. The company understands its consumers’ needs and establishes the quality of its services around the need.
Kaura (n.d.) grouped the luxury consumer into three segments: Aspirationals (young professionals), Travelistas (professionals who have to travel often for work), and Alphas (director and above-level professionals). This grouping does not really provide a comprehensive distinction, aside from the age and profession stage. However, the survey provides great insight into the behavior of those three segments, including how the consumers conduct their research about luxury brands, what they are looking for, what they are spending on, and how to best reach them. Adopting this segmentation to luxury hotel consumers may require further research, but this survey can provide a decent image of luxury hotel consumers’ behavior.
Knowing the luxury hotel consumers behavior, marketers can analyze the decision process. Kotler et al. (2016) outlined the decision process into five stages: need recognition, information search, alternatives evaluation, purchase decision, and post-purchase behavior. The recognition of the need for a hotel, in general, is most likely caused by internal stimuli, where a person starts thinking that they need a place to stay for the night. Then, the consumers enter the information search phase which people may differ in the search method. Kaura (n.d.) suggests that all luxury consumer personas are active on social media in gathering information. This may be the reason why hotel-reviewer websites are so popular. Usually, the outcome for this phase is some alternatives that need more evaluation.
In assessing the luxury hotel alternatives, the consumers may not bother with the expensive price. Instead, they may see other factors, such as how close is the hotel to the place they need to visit, how is the reputation of the hotel, how prestigious is the hotel, or any hotel features and services that can support their main activity.
Luxury products are usually categorized into high-involvement consumers. If there are only a few differences among the luxury hotel brand to be evaluated, there may be a dissonance-reducing buying behavior (Kotler et al., 2016). The consumers may fall to buy only because of purchase convenience or good price and leave out the main consideration. This often is the case where consumers experience post-purchase dissonance or discomfort after purchasing a product, where they can quickly feel disappointed after finding something about the hotel or hearing something good about the other hotel they didn’t choose. Luxury hotels should counter such dissonance by helping their consumers feel good about their choice.
Luxury Hotel’s Organization Buyer
Luxury hotels, and all hotels in general, usually also target organization buyers. Organization buyers usually purchase in large volumes and so it is always a tempting market. In the Grand Hyatt example, when the hotel serves a large convention for an organization, the company is interacting with an organization instead of an individual. This will add another dimension, not only in the services but also in the purchasing process. Luxury hotels should not only assess the organization’s ability to purchase their premium services but actively engage on a personal level with the stakeholders in the organization. Luxury hotels should market their product to bigger bonafide companies or government institutions which can really afford to pay for their services.
Kotler’s (2016) model for buyer behavior can be applied to organization buyers as well. However, instead of the consumer’s characteristics, the decision process in the buyer’s black box will be done by a buying center. The buying center consists of individuals that have a role in purchasing decisions. Among these individuals are users who will use the hotel room, deciders, as well as gatekeepers.
Users are important as they are the main influencers for the decision-making, while deciders and approvers have the power to execute the purchase. Gatekeepers can keep information away and limit the choice. For example, if a hotel salesperson made a call to offer a discount package for conventions, the gatekeeper who accepts the call can easily block this information to reach the buying center.
This is why a business-to-business (B2B) process is prone to a business ethics violation. In many countries, business and government buyers not only expect perks but also actually demand bribes be paid if you want to do business with them (Principles of Marketing, 2015). The gatekeepers may demand bribes to only submit information and block the others. Deciders may demand bribes to use their power to make a purchase decision regardless of the recommendation from the users. The hotel management may also approve the bribe to be given to the buying center individuals to make the negotiation smoother.
The purchasing decision for an organizational buyer usually takes a considerable amount of time, but the value of the transaction is usually worth the time and effort for the hotels. Luxury hotels salesperson usually engage on a personal level with organizations’ buying centers and spend more marketing resources to influence purchase decision-making. While marketing for hotel consumers is usually done in form of a campaign for a large audience, marketing for organization buyers is usually done on a personal level targeting directly the stakeholder that played role in the purchase decision-making.
Conclusion on Luxury Hotel Customer Behavior
This article can be used by marketers to better understand the luxury hotel customer behavior. By dividing the process into several structured steps, marketers can have a solid framework in establishing their marketing strategy. Separating the discussion into individuals and organization buyers will also simplify the process while also generating insights that will be valuable in designing an effective marketing campaign and assigning marketing resources more efficiently.
References Chon, K. S., & Cunill, O. M. (2006). The Growth Strategies of Hotel Chains: Best Business Practices by Leading Companies. Routledge. Kaura, A. (n.d.). How to market to the various kinds of luxury consumers? Retail Dive. Retrieved June 27, 2021, from https://www.retaildive.com/ex/mobilecommercedaily/how-to-market-to-the-various-kinds-of-luxury-consumers Kotler, P., Bowen, J. T., Makens, J. C., & Baloglu, S. (2016). Marketing for Hospitality and Tourism. Pearson Education Limited. Principles of Marketing. (2015). University of Minnesota Libraries. https://open.lib.umn.edu/principlesmarketing/