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How Hotels Create or Capture Demand: Strategies for Evolving in the Tourism Industry
According to the article "Generated Demand vs. Demand Capture in the Hotel Industry", the hospitality industry often debates whether hotels can actively create demand or if they simply capture the existing demand more effectively than their competitors. While most hotels operate within the constraints of external factors, there are exceptions—hotels and tourism brands that have managed to shape demand rather than follow it.
Although most hotels don't directly create new demand, some hotels have managed to become demand creators themselves through strategies that include:
- Brand Identity and Virtual Signage
Some hotels, like Disney resorts, do not rely on the tourism of a city to fill their rooms. Instead, they create an entire tourism world where the hotel is an integral part of the experience. Disney has successfully created an ecosystem that includes its hotels, enhancing the overall tourism experience. - Creating Unique Destinations
Hotels like Atlantis in the Bahamas or Marina Bay Sands in Singapore become destinations in their own right. These resorts attract visitors who choose to travel solely for the experience offered by the hotel itself. - Demand Created through Events
Some hotels manage to generate demand by hosting international events, such as conferences, concerts, or sports events. For example, hotels in Las Vegas are linked with major casino tournaments, while luxury hotels in Paris and Milan host fashion weeks that attract travelers from around the world. - Extreme Niche Targeting
Certain hotels manage to create demand by targeting specialized markets. Examples include themed hotels, such as the Kakslauttanen Arctic Resort in Finland, where guests go specifically to experience the Northern Lights.
Creating and Capturing Demand: The Hotel Strategy
According to the same source, for most hotels, demand is not something they create. Instead, it’s something they compete to capture. Understanding the external factors that create demand allows hotels to adapt their strategies and maximize direct bookings.
Demand Creators: Who Influences Tourism?
- Media and Influencers: The Role of Mass Media and social media
The power of media in shaping tourism demand is undeniable. "Screen tourism" is a phenomenon where travelers choose destinations they have seen in movies, TV shows, or YouTube videos. A prime example is the Emily in Paris series, which led to an increase in tourism to Paris, particularly from younger travelers.
Additionally, viral content on social media is another powerful tool, with platforms like Instagram, TikTok, and YouTube acting as new "travel agencies," inspiring millions of users to visit destinations that go viral. - Destinations: The Core Value in Tourism
The choice of destination is the most decisive factor in tourism demand. Industry data indicates that about 80% of travel decisions are influenced by the destination's attractiveness, which includes attractions, special events, and other unique experiences on offer. - Airlines and Travel Agents: The Traffic Regulators
Airlines and travel agents play a critical role in determining demand, influencing where and when tourists travel. Their decisions regarding new flights and package offerings can directly affect hotel occupancy in specific destinations.
Capturing Demand: How Hotels Compete for Bookings
Once demand is created, it enters the capture phase, where hotels and other tourism entities compete to convert the contested demand into bookings.
Metasearch Platforms and OTAs are critical fields for capturing demand. However, to succeed, hotels must optimize their presence, offer competitive pricing, and utilize strategies such as geo-targeted ads and presence optimization on these platforms.
By doing so, hotels can enhance their competitiveness and attract more visitors, improving direct bookings and reducing their dependency on third-party distributors.
This article highlights the need to understand demand creation and capture strategies in the hospitality sector. With the right moves, hotel businesses can leverage these trends to their advantage and strengthen their market presence.