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Importance and Role of Demand Management in a Successful Hotel Establishment

Debiprasad Sarangi
Debiprasad Sarangi
When it comes to meeting and exceeding customers’ expectations in the hospitality industry, making available excellent accommodations and services is just not enough. Good demand management is one of the most important keys to achieving success in hotel business. It not only affects the hotel’s overall operation, vision and attitude, but reflects in finer details that go into making every guest’s experience a memorable one.


Demand management encompasses various aspects that need to be taken care of right at the time when hotel construction is still in the planning stage. The most important among these aspects is the target market of the hotel. It basically means the market segment which the hotel is expecting most business from. It is the tastes, likes and dislikes of this market segment which will determine how the hotel will feel and look – for example how will each room get furnished, what kind of furniture will be there in rooms etc. All these details will vary depending on the target market.


Market segmentation is not the only aspect to be looked at in demand management. The hotels also need to figure out the channels that clients use to obtain the product – which means, answering the question – how do the guests in the target market make reservations/book rooms? This will help in identification of most profitable channels, thereby leading to increase in profitability and booking rates.


Managing and maintaining relationships with previous guests also forms a part of demand management. This includes implementation of marketing strategies that are formulated specifically keeping in mind the potential return customers. Another method through which hotels can benefit from such relationship management is by word of mouth publicity. This can be achieved either by having them refer acquaintances/friends or by inviting them to write reviews on an online blog or feedback page. Many hotel establishments even employ management teams whose sole work is to reach out to previous customers by offering them loyalty incentives such as discounts and promotional offers.


Internet too has adopted a more important role in demand management in these past few years. The emerging trend of increasing numbers of online travel agents in the past one and a half decade has made the task of making reservations much easier for travelers. While some experts are critical of such trend, stating that these booking sites are taking business away from traditional brick-and-mortar establishments, a large number of experts feel that such online bookings makes demand management easier for the hotel establishments. Now the hotel managers have instant access to data and figures that play an instrumental role in identification of effective and profitable booking channels.


To conclude, demand management can play a key role in the success of all major large/small/mid size hotel establishments. It’s a process that begins at the time of ideating a hotel and continues even when the hotel has been around for more than a hundred years. Demand management is also one of the key determinants of success or failure of a hotel establishment. All this implies that running of a successful hotel establishment goes much beyond the room furnishings and fittings. There are many behind the scene tasks that need to be accomplished successfully to ensure a happy and satisfied guest, time after time!