Vision and mission
A strategy and business plan do not need to be complicated – it is about how you see your business in the future, what do you want to achieve and how to get there. It can be an informal, few pages document. However, if you are to seek funding from commercial bank or other sources (i.e. government support, EU funds) you will need a formal plan. In such case, it is likely that you will be using a help of professionals/consultants. Even then, you need to know the main stages of the process in order to guide consultants and be able to engage in a search of meaningful solutions and proposal with them.
Developing a vision statement
Put simply, vision is about what you want to achieve by operating your private accommodation. It is a mental picture of what you want to achieve or an ideal future state. It provides guidance and inspiration for all your decision and action, it is a dream that is shared with your family members and staff to give them a clear meaning and purpose and it keeps focusing you on what is important.
A good, motivating, powerful vision needs to be expressed in a few words or one to three sentences. It must be easy to remember.
Most people struggle when they have to be short and up to the point. The same is in vision articulation, when many things seem important and it might be difficult to formulate it in a couple of words or short sentences.
The good way to start is to focus on what is unique about your accommodation, or the way your run it, or about parts of yourself/your family that you project into your business.
A few examples of vision:
Hilton hotels: “To fill the earth with the light and warmth of hospitality –by delivering exceptional experiences – every hotel, every guest, every time.”
Ritz-Carlton: “The Ritz-Carlton inspires life's most meaningful journeys.”
Valamar hotels and resorts: “Unforgettable memories, every day, for every guest!”
Defining your mission
While vision is a mental picture of your business in the future, mission is the reason for doing it and its guiding principle. In running your private accommodation your mission for business is closely aligned with your personal mission. It has to inspire and energise you. It tells clearly what do you want for yourself, your guests, people that work for you, what do you stand for and why you do what you do. It has to answers three questions about why your business exists:
WHAT it does
WHO it does it for
HOW it does what it does
There are three basic elements of good mission according to the Laurie Beth Jones, an “The Path: Creating your mission statement for work and for life” published in 2001 by Hachette Books (New York)
• No more than a single sentence long
• Easy to understand by a twelve year old
• Can be recited by memory at any time
The mission of any hospitality organization is clear at the beginning but it may fade over time.
According to Peter Drucker, you need to ask yourself some fundamental question like: What is your business? Who is the customer? What is the value of the customer? What will our business be? What should our business be?
Identification of market and customer needs
To be successful you must pay attention to your market. This should be done so you can see shifting requirements of customers, be able to evaluate change in competitive position, and recognize opportunities for new products and services. Through market research, we group tourists with similar needs or behaviors into market segment. Target market identification looks at characteristics including disposable income, age, and level of education. The type of customers that you can attract depends a lot on where you are (i.e. seasonal seaside destination, major city, and countryside) and the destination marketing strategy.
Here are some basic market segments in the tourism industry:
• Geographic – domestic (from which part of the country), foreign (from which countries)
• Demographic – gender, age, nationality, occupation, education, income, household size, family situation
• Psychographic – group people based on how they live, their priorities, attitudes and interests
• Socio-cultural – religion, social class, status, family lifestyle
• Motivation – rest and relaxation, adventure, hedonism, escape, spirituality, socialization
• Activities – swimming, sightseeing, hiking, sailing, diving, learning/education.
While type of segments remain relatively stable, the needs and want of each segment change through time. For example, the classical summer tourist that a few decades ago wanted to simply lay on the beach and rest is now more active, engaging in a range of activities and seeking many different experiences.
Markets usually change for four reasons:
1. the shifts in customer needs
2. new technologies
3. Socio-economic forces
4. competitive action
To understand better changes in the market you need to understand the customer's needs. The objective of any business is to satisfy the needs and desires of customers. There are some basic needs like food, clothing or safety, as well as social needs for belonging, affection or fun. There are also esteem needs for prestige, recognition and fame. If one of these needs is not satisfied by your service, that person will look for another option which will satisfy it.
Developing a marketing plan
A marketing is about defining your product (ie. peaceful apartments at the edge of the national park), defining how you are going to presenting it to your target market (i.e. nature lovers, hiker, families with small children) and how will you sell it. Promotion (see Module 6) is part of the selling process. It guides the way you design your logo, present your property, set up your web-site, design your stationary (business card, letterheads, memos, menus, house order), describe you accommodation and services on booking sites. It keeps you focused on your target markets, it guides you in setting up your prices, choosing the ways in which you will distribute (sell) your accommodation and how will you promote your accommodation. It does not have to be complicated – a few pages revised every six to 12 months is usually sufficient for small accommodation.
Business strategy for pricing
Pricing strategies are critical for the survival and profitability of the business. The pricing must take into consideration the cost structure (fixed and variable costs) of the business and allow for a desirable profit. It fits in with the strategy discussed above. When you are thinking about which price to choose it is recommended that you first examine the prices of your competitors who are offering similar services as you do.
A low cost strategy includes a steady effort to lower costs and pass on the savings to customers. It might mean offering lower prices to attract customers for a short period of time. Business who are new on the market often choose this strategy to 'penetrate' the market quickly. Opposite of that, you can choose a high cost strategy but then you need to offer to your customers high quality and some luxurious elements in your service.
Your price is depending on the amount of the services you offer. The basic service is the apartment, additional services might be a garden, a pool, a view from the room etc. and supporting elements are further information about the location, trips, activities etc. Take that into account when thinking about prices.
Also, you are likely to have different prices at different times of the year with higher prices during the season and holidays and lower during the slow season.
There are also few tricks, such as the Even-Odd Pricing also known as the “nine and zero effect”:
• Even-numbered pricing, or setting selling prices in whole numbers conveys a higher-quality image.
• Odd-numbered prices give consumers the impression that they are getting a great value.
It works because customers are not perfectly rational. Emotion plays a much larger role in consumer behaviour than rationality. It is a psychological effect with no basis in logic. But it does work.
Sales forecasting is also useful tool in business planning. Simply, it is about estimating future sales, so that you can plan your staff, inventories, anticipate trends and make timely adjustment. The forecast is based on your past sales, tourism performance of your destination, level of competition and anticipated market changes. It is of help to consult tourism strategies and plans to get an idea of where the entire destination is heading and such documents usually contain a section on long term market trends.