My friend Stjani was watching Seth Godin talk about our obsession in the Race to the bottom, i.e. continuously seeking cheaper products and services is coming true in 2012. His emphasis was if price is your only marketing strategy for your product or service, there is always going to be someone willing to do the same for cheaper. This got me thinking about Hotels and Hospitality. I have been invited to give a talk on January 25th in a Conference on Investment and Tourism here in Iceland and I think I will focus on talking about the Race to the Top instead of the Bottom.

I have been meeting a lot of people in Iceland who want to build a hotel. I think that is not a bad idea given that Tourism is a growing industry in Iceland and there has been a pent up demand for Hotel rooms as the last proper hotel was built in 2007. The financial collapse in 2008 has made a number of building standing empty and it seems logical to think of ways to utilize them. I have written about what a tourists spends on a trip to Iceland. They spend a big portion of their wallet in Air ticket and other miscellaneous retail not Hotel and Accommodation, so starting an airline is not such a bad idea.

When I ask the question what kind of customer segment that the Hotel should cater to… I get blank stares! Nobody is thinking about who they are building the hotel for! This is an epic fail in the new world of tourism and travel. You don’t believe me, check out Google Insight, under the category Hotel & Accommodation the word “unique” is trending up and “cheap” is trending down. What does this mean? well, people show their intent based on the search words and when majority of the travelers are looking for Hotels or Accommodation, they are looking less for Cheap hotels and more for Unique, Boutique, Different experiences.

I think Hospitality development in Iceland needs to focus more on defining who their customers are and targeting the development catered to their taste. Maybe, that is being done by focusing on the traveler who does not want to spend any money when they visit Iceland should that be the customer Iceland should focus on? I think not… we should focus on providing excellent service to travelers who can afford to pay for the service, they get the Icelandic experience for free and pay exorbitant price for everything else so they want to cut spending money on Hotels. I would say don’t focus on that cohort, target the affluent traveler looking for unique experiences and Iceland has many.

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