Risk of Experience

“The Risk of Experience”

We know that in our business, the product is sold and consumed at the same time, (unlike retail business, the customer pays for the food and pays for it at the same time)

However, regardless of a hotel’s class or category, it is evidently common that the room rates, yields and Gross Operating Profits constantly fluctuate. This fluctuation if not controlled forces the management to reconsider service levels and cut corners to achieve targeted profits. This so called “repositioning” results into inconsistency of service standards, food production and leads to increase in service errors, widening the discrepancy in the promised and actual product quality.

Repositioning of service levels change the customer’s value perception and thus gives the market an opportunity to seek discounts.

This process of declining value can be found in almost all class of hotels, regardless of their affiliation. When the hotels either chain affiliated o...