The hospitality industry is suffering from an identity crisis. Walk into a mid-tier hotel in Chicago, and it feels remarkably similar to one in Manchester or Melbourne. We often call these properties “vanilla” – hotels that try so hard to be everything to everyone that they end up meaningful to no one.
NB: This is an article from Demand Calendar
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This is the “Generic Hotel” model, and it is a dangerous trap. When a hotel defines itself strictly by its hardware – a king-sized bed, a hot shower, and fast Wi-Fi – it voluntarily enters the commodity market. In 2024, these amenities are not differentiators; they are table stakes.
When your product is perceived as identical to the property next door, you are forced to compete solely on price. You become shackled to your “Comp Set,” obsessing over whether your neighbor dropped their rate by $10, and terrified that if you don’t match them, you’ll lose the occupancy war. This is a race to the bottom where the only winner is the budget-conscious traveler.
But there is an exit strategy. True differentiation isn’t about buying better furniture or offering more expensive soap. It is about better understanding.
To escape rate sensitivity, hotels must pivot from being a replaceable commodity to becoming an irreplaceable solution. This transformation starts by ignoring the “what” (the room) and focusing entirely on the “why” – the deep, underlying purpose behind the guest’s journey.
The Generic Trap (The “Heads in Beds” Fallacy)
The most glaring symptom of a generic hotel is its obsession with the “Comp Set.”
Suppose your Revenue Manager starts every morning by checking what the hotel across the street is charging, and your immediate reaction is to adjust your rates to match or slightly undercut them. In that case, you have already lost the strategic battle. By reacting to your neighbor entirely, you tacitly admit that your product is identical to theirs. You are telling the market, “We offer nothing unique, so we must rely on price to win.”
This behavior stems from the “Heads in Beds” fallacy – the belief that occupancy is the ultimate metric of success. Generic hotels cast the widest net possible, trying to attract families, business travelers, honeymooners, and backpackers simultaneously. They dilute their brand identity in a desperate attempt to appeal to everyone.
But here is the reality check: When you try to appeal to everyone, you become the second-best choice for everyone.
You are too noisy for the business traveler, too corporate for the honeymooner, and too expensive for the backpacker. Because you are never the perfect fit for any specific guest, you have no leverage. You cannot charge a premium because you aren’t solving a particular problem better than anyone else. You are simply “available.” And when availability is your only value proposition, you will always be price-sensitive.
Strategy Starts with “The Why” (Purpose-Based Segmentation)
To break free from this cycle, you must stop defining your hotel by its star rating, location, or brand flag. Instead, define it by the guest’s intent.
