Let’s take a look at how a successful last can be modified and changed in footwear and the footwear business to increase sales and reach a new audience.
We love the last. We had success with its sales, but we can’t make the same shoe we made last spring. So to continue using this last, we have to take and modify certain things about the footwear we’re producing on the last.

We know we have a successful last, we know that it sells well, we know it looks great. So we can change any number of design features. We can do something as simple as changing the top-line cut of the shoe. If it’s athletic, we can put a collar and change the shape of the collar, the height of the collar, the Achilles pen, so on and so forth.

If it’s a dress shoe, we can change the top line cut by putting a dip on one, an asymmetrical dip somewhere on the top line, or put some sort of embellishment on a top line that wasn’t used in the previous spring season.

We’re also going to be changing our materials and colors for the new season. Those are simple changes that help to make the same last we used last spring, look, have the shoe look completely different next spring, just by its color, it’s cut.

We can also do other things. We can take and change the component tree or the structure of the footwear. The structure is the way the bottoming is done: the heels and the soles.

Last spring we used just the very thin, a ladies shoe and we used a very thin sole and just a simple high heel, like a spike kick. Next spring, if we wanted to, we could do a platform. We could do a full platform, we could do a partial platform under the ball and a higher heel, which we may have marketed as a 10-centimeter heel last spring.

We put a two-centimeter platform under the front, we add two centimeters to the heel to maintain the balance, which is part of the last itself. Now we can market the thing next spring as a 12-centimeter heel. Same last, completely different footwear.

This is a way of taking a successful last and amortizing it out over time without looking like you’re repeating yourself.

In the hospitality industry, hotels are often described as two distinct businesses. One is the operating business, which involves the renting of the guest rooms and the provision of food and beverage. The other is the real estate business, owning the land and building which house the hotel property and operations. Those two distinct attributes, the fact that hotels are both an operating business and a real estate business, have been the cause of many of the major changes in the hotel industry over the past 30 years.

Going back to the 1990s, Marriott split into two companies, an operating company and a real estate company. The reason it did so was because investors felt that those two businesses were distinct and that the skill sets necessary to maximize both were different. There was inefficiency from having both under the same ownership structure. Due to increased online hospitality education on what works best, the hotel industry has largely moved in that direction of separating asset ownership from day to day operations.

One of the key concerns of hospitality and hotel investors is making sure the relationship with the manager of the property is on an even keel. Hotels often have a tension in that managers are compensated primarily on the basis of top line revenues while owners are compensated on the basis of bottom line profitability. Those two different attributes, as to how they are compensated, can lead to challenging relationships, especially as the business gets weaker during a economic downturn.

There is a whole field, in fact, of advisors and counselors that provide hospitality education and help hotel owners and managers work through these relationship issues. This affects everything from approving annual budgets to capital renovation plans as well as the day to day attributes that go into the hotel business.

Hotels often expand into what is called neighboring businesses. This concept is in addition to their core business of operating rooms for overnight guests.

Many hotels in resort destinations may feature a timeshare component. Overnight guests can buy weekly intervals of units.

It’s not uncommon for hotels to be a part of apartment buildings in urban areas. Residents who own apartments above or below the hotel property feel a unique sense of pride or value. They are happy having their units affiliated with a luxury hotel brand. As a result, hotels have expanded into businesses that are complementary to the hotel industry.

In resort markets, hotels have evolved into timeshares, residential condominiums, lot sales, and even community care facilities for the elderly.

Hotels need a large quantity of support space to ensure operations run properly. You might have basement sales offices, accounting offices, paint shops, upholstery repair shops, and more to assist the process. Yet, revenue is in selling guest rooms and food and the provision of food and drinks.

There is a lot of pressure in the hospitality industry to maximize the space in the hotel that generates money. Hotels must optimize efficiency with “facility programming.” It’s also essential to minimize the areas that are simply required for the support of the operation.

The hospitality industry offers a variety of rewarding roles. We encourage people to consider careers beyond servicing and managing rooms, food, and beverage. Completion of an appropriate hospitality education could lead to roles requiring managerial expertise to manage and control the operations in several departments.

There is a complexity of services and managerial effort that sits on top of the direct operating departments. We have an administrative and general department with a manager that oversees all the departments. These departments include marketing, maintenance, housekeeping, finance, human resources, and information and telecommunication services

The marketing department conducts sales and marketing activities to drive business for rooms, food, and beverage. Within this department are roles like marketing managers, marketing coordinators, sales managers, sales coordinators, and reservation agents.

Maintenance departments keep things working and looking their best. Responsibilities include keeping the hotel looking fresh and keeping the landscaping looking attractive. The energy department keeps ensures the air conditioning and heat work well.

The information and telecommunication services department manages a fair amount of hardware and software systems. They make sure charges from guests in the gift shop get properly transferred to their ledger to be paid when the guest checks out.

We hire for a lot of positions in the hotel. The housekeeping department requires room attendants and housemen. We hire public space attendants to look after our lobby, bar, hallways, and other public gathering areas. We also hire front desk agents, bell door attendants, cafeteria attendants, PBX operators, also called guest experience agents. There are roles that support our back-of-house spaces. Managers in food and beverage, front office, and guest experience supervise all staff. All of the openings are within our operations. The restaurant is a separate entity from the hotel, so we do not hire for these positions.

As a business, it’s important that you meet and exceed customer expectations. Consumers need to see value in the products that you offer.

There are two types of loyalty – attitudinal and behavioral.

Attitudinal loyalty is when a customer likes a brand but they don’t necessarily buy from them. Behavioral loyalty involves liking and buying from a brand.

So, how do loyalty programs generate loyalty towards a brand? They do so in two ways. The first is that you give them a reward for buying your products, such as points. The points can add up to provide discounts.

For example, after spending a certain number of nights in a hotel or taking a particular number of flights with an airline, a customer might earn enough points for a free weekend away or a free flight.

Rewards are important, but what’s more important now is recognition. Many customers enjoy surprise rewards, too. For example, if a customer is checking into your hotel and you offer a free wine as part of your loyalty program, it’s a nice surprise for the customer.

Every big hotel company, such as Marriott and Hilton, provide loyalty programs to their customers. Similarly, the big airlines, like United Airlines and American Airlines, also provide great programs.

Companies use something known as Customer Relations Management, shortened to CRM. These are huge databases that use sophisticated data mining, artificial intelligence, and deep learning to figure out the consumer behavior.

If you have lots of data about the purchasing behavior of a consumer across the course of the year, you can use this data to estimate when the consumer is likely to travel throughout the year. You can then adjust your prices and rewards to provide more attractive offers to customers to boost their loyality to your brand.

One of the biggest challenges for a service and hospitality business is intangibility. Another is disappearing inventory – if you don’t sell it tonight, it’s gone.

More importantly, you want your customers to dream about staying onboard your cruise and coming to your hotel. With social media and electronic marketing tools, you can actually cost-effectively reach more customers.

But, there’s an overabundance of information. How do you get your information across? When does the consumer use their cell phone? When are they on their desktop? When is the best time to reach them? When are they dreaming? When do they make decisions?

For example, March. January, February, March are the heavy booking times for summer cruises. That’s the time to promote and reach your customers. You can do this through traditional advertising too!

Carnival Cruise Line is involved with many TV shows. They use the old love boat method where consumers see a mini-series happening on a cruise ship. As a result, they get the desire to travel.

Many cruise lines still heavily rely on travel agents. Why?

Because the market penetration of cruise lines in the United States is 13%. Only 13% of the population has taken a cruise. Globally it’s 2% – only 2% of the global population has taken a cruise. In China, it’s only 1%. There is a lot that needs to be done in those markets to build awareness. In many cases, travel agents are still the best way to reach customers. But then if you look at airlines, nobody goes to a travel agent to book a flight.

Customers often use distribution channels, like Expedia and Kayak, which consolidate all the information from various websites. The distribution challenge for airlines is to make sure that if you check through Kayak, the best rate for a flight is on your own site.

If a person books through Expedia, the airline may have to pay 10% to 20% to Expedia. The same goes for hotels. They may have to pay 10% to 20% per booking to booking.com, hotels.com, or Expedia. So you want these customers to book directly with you on the Marriott site or the American Airlines site.

But if you are a small or independent hotel, then you don’t have the marketing power. You don’t have the budget. So often, you may need Expedia to build awareness. It’s a trade-off. You may pay 20% for Expedia to get the booking, but if you don’t do that, you might get no business.

But slowly and by going through consortiums, like Leading Hotels of the World, you can get distribution power behind your brand. You’ll also get access to the consumer. With the exception of grocery stores, many of the hospitality services – car rentals, airlines, hotels, restaurants, are all booked electronically. You can generate demand by taking advantage of these platforms.

The hospitality industry is part of the service industry. That makes it challenging since it’s an intangible service, and it isn’t easy to know what to expect beforehand. Also, if you don’t sell the room, the seat, or the berth on a cruise ship before it departs—it’s gone.

These are companies that have a high fixed cost. To make money, you must first establish a specific level of use and demand. For airlines, it may be that to make money, 85% of seats on a given customer flight or a particular type of plane must sell at specific prices. The occupancy rate for cruise ships is 105%. That means there are more than two people in every berth and cabin.

New York City’s hotels are in high demand. The occupancy rate is now hovering around 90%. In the United States, the average occupancy—the percentage of occupied rooms each night—is roughly 65%.

Another variable is the average daily rate. For example, New York City hotel rooms can range from $300 to $500, depending on the market. It could cost around $300 for select service or lifestyle hotels. The average daily charge for a luxury hotel room might be $1,000.

The same is true for airlines and cruise ships. The cruise ship’s average charge per seat determines the average cost of a five-day cruise. All of these businesses are in the business of managing yield. It’s referred to as “yield management.” You want to maximize revenue from a purchase made by a hotel guest, airline passenger, or cruise passenger.

Some of these companies have revenue-generating opportunities when customers use their services. For instance, hotels may sell guests food and beverages, wifi, and spa treatments. Cruise lines sell additional services like retail, restaurants, excursions, and various other onboard activities. Airlines have some limitations. Food is available for purchase onboard, but the selection is minimal. Tax-free purchasing is sometimes available on international flights.

To summarize, when a customer buys a ticket, you want to maximize the yield per ticket. Once they’re on board, you’ll want to maximize the revenue. This is called ticket net yield, or yield, followed by an onboard spending yield.

In terms of hospitality services — hotels, airlines, cruises — Google is a significant power, simply because so many people start their planning at the search engine. As a result, you need to have Google Ads.

In other words, you need to pay to get your brand in front of searching customers.

For example, search “Times Square hotel” in Google and see what comes up. First off, search engine optimization (SEO) plays a part in which brands appear in the first few pages of results. But there are hotel companies that have paid to have their name at the very top. You have to pay for Google Ads to get your name out there.

Say you’re a Moxy Hotel, a Marriott brand targeted at Millennials. You want to make sure that when a consumer in this demographic searches for ‘Moxy Hotel New York City,’ you’re at the top of the first Google page.

The advantage of sites like TripAdvisor, Expedia, and Booking.com is that they can compare rates for several hotels.

If you go directly to the website for a Moxy location, you’re not comparing rates with other properties. There’s more information comparison — and maybe transparency — happening on Expedia, Kayak, etc., than at the hotel’s specific site. But it’s more costly. For example, if the customer books on Expedia, they could pay 10-20% more.

Simply put, hotel brands want consumers to visit their sites directly. How do they do this? For starters, they offer price matching. If you find a lower price than on their site, they’ll match it.

Hotel brands also say that you won’t collect loyalty points if you book through external channels like Expedia or Booking.com. Booking directly gives you loyalty points, and you’ll also get preferred treatment at the hotel.

Finally, in some cases, inventory — not the desired rooms — shows up in search results of external booking sites. Instead of offering a garden or ocean view, these could be on a lower level, windowless, or facing a busy highway.

Ultimately, hotel brands show a preference for consumers who book directly on their site. Having your hospitality brand at the top of Google search results means you’re more likely to have direct bookings.

Suggested Image (if needed): https://unsplash.com/photos/cwr02zo0gP8

Professor Richie Karaburun is originally from Turkey and is currently a Clinical Assistant Professor at New York University’s School of Professional Studies Center of Hospitality.

Professor Karaburun has been in the hospitality industry about 25 years. He started as a management trainee in Los Angeles, then climbed up the ranks. When he left the company, he was the Vice President of Product Development and Contracting.

He was then recruited to be a president of Gulliver’s Travel, which was one of the largest wholesale travel business at the time. After they sold the company, Professor Karaburun joined The Radius, which was one of the largest corporate travel companies at the time.

Here, says Professor Karaburun, “I had my entrepreneurial ideas come up and we founded a company called Roomer Travel. And we raised money. Roomer was an online travel agency similar to Stop Hub.”

Currently, Karaburun is studying marketing and consumer behavior. His research interest is all about social connectedness and its impact on consumer behavior.

He is considered to be a hospitality guru. After 25 years in different aspects of hospitality, he is now proud to teach at NYU Tisch Center of Hospitality, predominantly business development, entrepreneurship, and hospitality marketing.

In this course, you will learn about entrepreneurship and innovation: what does it take to be an entrepreneur? You will also learn whether you are a true entrepreneur.

You will explore hospitality industry disruptors such as Airbnb, and what it takes to create a company from an idea. You will learn how to draft a proper business plan, get funding, hire a team, and manage the team.

Finally, you’ll examine how to create value for the industry you are in, and how you can plan an exit strategy for your business.

Today’s hotel industry
Over the years, the hotel industry has evolved into two basic organizational types:
* Hotel operating companies who run hotels but rarely have significant real estate holdings
* Privately or publicly held hospitality enterprises owning real estate
Many well-known hospitality companies like Hilton Worldwide, Marriott International, Hyatt Hotels and others may own few (if any) properties in terms of controlling the involved real estate. Similarly, many hotel ownership groups don’t take part in the day-to-day of hotel operations.
Only a few organizations work both sides of hotel operations. Some examples of publicly traded hotel groups include LaSalle Hotel investors and Pebblebrook Hotel Trust. Meanwhile, privately held companies, like Lubert-Adler or Colony Capital own various real estate groups, including some hotels.
Hotel perks make guests happy
In the hospitality business, we have this saying, “you don’t replace the carpet in the lobby when it wears out, you replace it when fashions change or when customer expectations change.” This adage is the definition of functional obsolescence (when hotels or other businesses no longer meet their customers’ expectations.)
Hotel managers are familiar with the constant pressure to keep properties fresh, and for facilities, services and other features to always meet customer expectations. We know that though a hotel may have adequate TVs, if they have only 12-inch screens—or other flaws—guests aren’t going to be incredibly happy.
Keep investing in customer satisfaction
Expect to make large annual reinvestments for room upgrades and to refresh hotel lobbies and restaurants.
It requires significant effort to manage daily hotel operations, particularly any investments needed to ensure a hospitality property’s image for years to come.

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