Sector Overview
Research on this sector conducted by ASIGMA brought to light the fact that online booking portals have played a major role in increasing visibility of hotels in the country. On Jumia travel for example, a user can book from a portfolio of about 600 of the 3800 hotels in the country.
“…about 80% of hotel occupants in mostly tourist hotspots are foreigners”
An interview with a leading hotel owner revealed that though the target market for this sector mainly consists of tourists, business travellers, and leisure travellers, about 80% of hotel occupants in mostly tourist hotspots are foreigners. To that end, an upward surge the number of international has made a big impact on the performance of hotels.
Why The Growing Need to Differentiate?
Emergence of a Digitally Connected Consumer
The dawn of the internet and associated technologies has created a new breed of customers who are very social media savvy. Today’s customers are always airing their thoughts on twitter and posting pictures on Instagram. Sites like Trip Advisor have also made it possible for opinions to be posted where potential hotel clients can find them.
Today’s customers are much more informed than they were a decade ago. There are so many touch points that a customer will go through before making a decision on where to stay. If previous clients have left mostly negative reviews, prospective clients will probably be turned off and search for the next alternative.
Intense Rivalry Amongst Competitors
For the hotel sector, standing out is very hard because hotels of similar scale not only appeal to the same group of customers but also offer more or less the same range of services. Taking a look at high end hotels such as Kampala Serena Hotel, Imperial Hotel Royale, and Sheraton Hotel, services like bar/lounge, restaurant, airport shuttle, luxury rooms and air conditioning can be found at all locations. How then should a competitor stand out? Our research found that although services are mostly the same, going an extra mile and delivering on the small details gets noticed by customers.
“…standing out is very hard because hotels of similar scale not only appeal to the same group of customers but also offer more or less the same range of services.”
Emerging Threat of Substitutes
Previously, the Hotel Industry was not threatened so much by substitutes because of lack of alternatives. This however is likely to change due to an industry disruption being brought about by Airbnb. Airbnb’s business model involves private homeowners renting out their homes to lodgers. Hosts can choose to rent out spare rooms or the whole accommodation for a specific period of time.
Living in a home is particularly appealing to tourists who are more interested in getting a complete experience of the local culture.
Differentiating Strategies: It’s the Small Details that Count
The intense industry rivalry brought about by an ever increasing number of hotels has prompted the need for hotels to come up with strategies that set them apart from competitors. Long gone are the days when most hotels merely offered a bed.
Discussed in the following sub sections are some of the captivating and creative ways that hotels in Uganda are differentiating themselves and trying to stand out among a sea of rivals.
Local Content Promotion
Some hotels have decided to capitalise on the tourist market segment to offer locally tailored products and services. The reason behind this is that tourists coming into the country are interested in having a complete Ugandan experience. By offering this kind of experience, such hotels believe that they can get better reviews and prompt future tourists interested in having similar experiences to stay with them.
Serena Hotel Kampala for example was designed with a tourist and foreign client in mind. The architecture of the buildings and layout of the grounds take a lot of inspiration from Uganda’s natural resources. For example, the ground is inhabited by several bird and plant species, the design of the water gardens were similarly inspired by the abundant lakes and rivers. Additionally, Serena brings designs and collections from several Ugandan designers into its gift shop. Reading through reviews of the hotel on Trip Advisor, the general impression felt is that tourists feel like they are in Uganda. One individual who stayed at the hotel was so captivated by the local inspiration embedded in the interior design that they left a remark on trip advisor saying- “they draw heavily on the local tribal skills and the hotel abounds in statues from the regions.”
Ability to Capitalise on Location Advantages
Uganda was recently named as one of fastest growing destinations for tourists. Increase in the number of foreign visitors coming into the country means that hotels located in tourist hot spots have a lot to gain. Some of these have realized this and ensured that their range of services include linking tourists to other services through partnerships with the owners of these places. Some of Jinja’s high end tourist destinations like Jinja Nile Resort and Nile Village Hotel and Spa arrange for guests to experience services like Kayaking on the Nile, Nile Horseback Safaris, guided safaris beside the River Nile using easy to use ATVs (All Terrain Vehicles)/ Quad bikes, Nalubaale Rafting, White water rafting and Bungee jumping.
Corporate Social Responsibility
Ugandan Hotels are increasingly introducing community outreach programs and expanding the CSR reach. The BON hotels group Uganda for example has embarked on carrying out community and charity drives. Overall staff and guests are being encouraged to increase outreach of these programs by utilising social media platforms. The idea is to create a growing community that is very socially aware and involved in the community.
With guests and tourists alike sharing these events on social media, the hotel gets to increase reach and social media mentions.
