SERVICE

CHARACTERISTI
CS OF
HOSPITALITY
AND TRAVEL
MARKETING
Chapter two

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LEARNING OUTCOME
 Upon completion of this chapter, you will be
able to:
1. Describe a service culture
2. Identify four service characteristics that affect
the marketing of a hospitality & travel product
3. Explain marketing strategies for service
business
4. Explain the meaning of service marketing
5. Explain the generic and contextual differences
of marketing services and products
6. Explain the specific differences affecting the
marketing of hospitality and travel services
7. Explain the unique approaches required in HTI.
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INTRODUCTION
 Marketing initially developed in connection with
selling physical products, such as tooth-paste,
clothing, cars, steel, and other tangible equipment.
 But, today one of the major trends in many parts
of the world is the phenomenal growth of services,
or products with little or no physical content.
 In most developed countries, services account for
a majority of the GDP, in developing countries as
well the non-agricultural economies work force is
often employed in the hospitality and travel
industries.
 These industries are part of this growing service
sector.
 In this regard, what the trend looks like in
our case, Ethiopia?

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WHAT IS SERVICE
MARKETING
 Around the world, the service industries
are growing rapidly. By the service
industry in 2007:
 USA ……………………… 79%
 Canada ………… ….. 69.1%
 United Kingdom .. 75.7%
 Australia ………… 70.6% of the GDP of
respective countries is created.
 Increasing affluence(wealth) and more
leisure time are two of the reasons for the
growing economic importance of services.
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Quick facts about the Hospitality & Tourism
industry
 Technology has been driving the growth of the industry
today.
 More people are travelling, more hotel rooms are being
added, and more airlines and cruises are operating now.
 We can safely say that we are witnessing the best phase
of the hospitality and tourism industry at least in terms of
growth.
 The Hospitality and Tourism industry contributed close to
$ 8 Trillion to the Global Economy in 2017. It is expected
to cross $10 Trillion by 2025 (officially).
 Approximately 1460 Million is the number of international
tourists in 2019 based on the figures presented by the
World Tourism Organisation and reported by statistics.
 The number took a huge dip in 2020 and 2021 before
showing a rebound. The number in 2022 was 962 million.

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 CONTINUED….
 The hospitality and travel industry (a
group of interrelated organizations providing
personal services to customers who are
away from homes) is just one part of the
service industries (organizations primarily
involved in the provision of personal
services).
 Service marketing is a concept based on
the recognition of the uniqueness of all
services. It is a branch of marketing that
specifically applies to the service industries.

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2.1. THE SERVICE
CULTURE
 Some managers think of
their operations only in
terms of tangible goods.
Behind it there are
intangible services.
 One of the most important
tasks of a hospitality
business is to develop the
service side of the business,
specifically, a strong
service culture.
 The Service Culture focuses
on serving and satisfying
the customer.
 Creation of a service culture
has to start with top
management and flow
down.
 An organization should hire
employees with a customer
service attitude.
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 2.2. CHARACTERISTICS
OF SERVICE MARKETING
 Service marketers
must understand the
four characteristics
of services:
1. Intangibility
2. Inseparability
3. Variability
4. Perish ability

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1. INTANGIBILITY
 Unlike physical products, intangible products
cannot be seen, tasted, felt, heard, or
smelled before they are purchased.
 Hospitality and travel industry products are
experiential only, and we do not know the
quality of the product until or before we
have experienced it.
 A restaurant customer will not know how
good/testy the meal is until or before he or
she has consumed it.
 One implication of experiential products is
that we take away only the memories
of our experiences.
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CONTINUED….
 Because guests will not know the
service they will receive, service
marketers should take steps to provide
their prospective customers with
evidence that will help them
evaluate the service.
 This process is called providing
tangible services and it includes the
following:
a. Promotional material
b. employees’ appearance and
c. The service firms’
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physical
10
2. INSEPARABILITY
 Physical goods are produced, then stored,
later sold, and still later consumed.
 Hence, it is in the process of transaction that
the buyer can evaluate price, quality,
design, form etc of the physical product.
 In contrast, hospitality products are first
sold then produced and consumed at the
same time.
 Therefore, in most hospitality services, both
the service provider and the customer must
be present for the transaction to occur.
 Inseparability means both the employee
and the customer are often part of the
product.
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CONTINUED…
 Another implication of inseparability is
that customers and employees must
understand the service delivery
system because they are co-producing
the service.
 Customers must understand the menu
items in a restaurant so that they get
the dish they expect (train the
customers).

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3. VARIABILITY
 Services are highly variable. Their
quality depends on who provides them and
when and where they are provided.
 There are several causes of service
variability.
 Services are produced and consumed
simultaneously, which limits quality
control.
 Fluctuating demand makes it difficult to
deliver consistent products during period of
peak demand.
 Product consistency depends on the
service provider’s skills and
performance at the time of the exchange.
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CONTINUED….
 Lack of communication and
heterogeneity of guest expectation
also leads to service variability.
 Hence, when variability is absent, we
have consistency, which is one of the key
factors in success of a service business.
 Consistency means that customers
receive the expected product without
unwanted surprises.
 For example, consistency is one of the
major reasons for the worldwide success of
McDonald’s.
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CONTINUED…
 There are three steps hospitality firms can
take to reduce variability and create
consistency:
1. Invest in good hiring and training
procedure: Better trained personnel
exhibit six characteristics : competence:
possess the required skill and knowledge.
Courtesy: they are friendly, respectful and
considerate. Credibility: they are trust
worthy. Reliability: perform consistently &
accurately. Responsiveness: respond
quickly. Communication: understand
easily.
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CONTINUED…
2. Standardize the service performance
process throughout the organization.
Diagramming the service delivery
system in a service blueprint to map
out the process.
3. Monitor customer satisfaction.
Use suggestions and complaint
systems, customer surveys and
comparison shopping.

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4. PERISHABILITY
 Services can not be stored. A hotel
room which is not sold today can not be
sold forever.
 Because of service perish ability, airlines
and some hotels charge guests holding
guaranteed reservations when they fail
to arrive.
 Restaurants are also starting to charge a
fee to customers who do not show up
for a reservation.

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2.3. SERVICE MANAGEMENT
CONCEPTS FOR THE HI
A. The Service Profit Chain:
 In a service business, the customer and
the frontline service employee interact
to create the service.
 Effective interaction depends on the
skills of frontline service employees
and on the support processes backing
these employees.
 Hence, the Service Profit Chain links
service firm profits with employee and
customer satisfaction. This chain
consists of five links.
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THE LINKS ARE:
1. Internal service quality: superior
employee selection and training, a quality
work environment, and strong support for
those dealing with customers, which result
in….
2. Satisfied and productive service
employees: more satisfied, loyal, and
hardworking, which result in….
3. Greater service value: More effective and
efficient customer value creation and service
delivery, which results in….
4. Satisfied and loyal customer: satisfied
customer who remain loyal, repeat purchase,
and refer other customers, which results in….
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CONTINUED…..
5. Healthy service profits and
growth: superior service firms
performance.
 Therefore, reaching service profits and
growth goals begins with taking
care of those who take care of
customers.
B. Three types of Marketing:
 Service marketing requires more than
just traditional external marketing
using the 4ps. It requires also both
internal marketing and interactive
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CONTINUED….
 Internal Marketing: means that the service
firm must effectively train and motivate its
customer-contact employees and all the
supporting service people to work as a team to
provide customer satisfaction.
 Interactive Marketing: means that perceived
service quality depends heavily on the quality of
the buyer-seller interaction during the service
encounter.
 In product marketing, product quality often
depends little on how the product is
obtained. But in service marketing, service
quality depends in both the service
deliverer and the quality of the delivery.
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CONTINUED….
 Which means, the customer judges
service quality not just on technical
quality (the quality of the food) but
also on its functional quality (the
service provided in the restaurant).
 Hence, service employees have to
master interactive marketing skills or
functions as well.

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2.4. MANAGEMENT STRATEGIES
FOR SERVICE BUSINESS
 Hospitality marketing face the task of
increasing three major marketing areas:
their service differentiations, service
quality and service productivity.
a) Managing service differentiation: service
marketers often complain about the
difficulty of differentiating their services
than the competitors. The solution to
price competition is to develop a
differentiated offering. The offer can
include innovative features that set one
company’s offer apart from that of its
competitors.
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CONTINUED….
 Service companies can differentiate
their service delivery in three ways:
through people; physical
environment; and process.
 Finally, service companies can also
differentiate their images through
symbols and brandings. For
example, a familiar symbol would be
McDonald’s golden arch, KFC and
familiar brands include Hilton, Sheraton
and others.

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CONTINUED….
SERVICE INDUSTRY
HOW DO YOU MANAGE QUALITY IN

b. Managing Service Quality: one of the major

ways that a service firm can differentiate itself
is by delivering consistently higher quality
than its competitors.
 One can have a number of objective criteria
for evaluating a tangible product such as an
automobile. With hospitality products, quality
is measured by how well customer
expectations are met. The key is to exceed
the customers’ service quality expectations.
 As the chief executive at American Express
puts it, “Promise only what you can deliver
and deliver more than you promise”. If
so, customers are apt to use the service again.
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CONTINUED….
 Studies of well-managed service companies
show that they share a number of common
virtues regarding service quality: (four in this
regard)
 First, top service companies are “customer
obsessed.” they have a philosophy of
satisfying customer needs, which wins
enduring customer loyalty.
 Second, well managed service companies
have a history of top management
commitment to quality.
 Third, the best service providers set high
service quality standards, they aim for 100%
defect free services.
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CONTINUED….
 Fourth, the top service firms watch service performance
closely, both their own and that of their competitors. They
used method such as comparison shopping, customer
surveys, suggestions, and complaint forms.
c. Managing Service Productivity: with their costs
rising rapidly, service firms are under great pressure to
increase service productivity. However, they can do so in
several ways.
1. Train current employees better or hire new ones who work
harder and more skillfully.
2. Or increase the quantity of their service by giving up some
quality.
 Anyhow do not push so hard to quality to get productivity,
rather “industrialize the service” by adding equipment and
standardizing production.
Ex. McDonald’s assembly-line approach to fast-food
retailing.
Be careful not to take service out of service for productivity.
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04/25/2025 28
2.5. WHY IS SERVICE
MARKETING DIFFERENT/UNIQUE
 The marketing of hospitality and travel
services has several unique
characteristics.
 Some are shared with all service
organizations (generic differences).
 Others exist because of the ways in
which service organizations are
managed and regulated (contextual
differences).
 Generic differences affect all
organizations in the service industries
and never be eliminated.
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CONTINUED….
 Contextual differences are also
unique to service organizations, but
they may eventually disappear through
changes in management, laws and
government regulations.
 Generic differences are common to all
service organizations.
 Contextual differences vary by type of
service organization.
 There are six generic and six
contextual differences.
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DIFFERENCES

Generic Contextual Hospitality and Travel

Differences Differences
Differences • Shorter exposure to
• Intangibility • Narrow definition of
services
• Production Methods marketing • More emotional buying
• Lack of appreciation appeals
• Perish ability
of marketing skills • Greater importance on
• Distribution channels
• Different managing experience
• Cost determination clues
organizational
• Relationships of structure
• Greater emphasis on
services to providers stature and imagery
• Lack of data on • More variety and types of
competitive distribution channels
performance • More dependence on
• Impact of government complementary
regulation and organizations
deregulation • Easier copying of services
• More emphasis on off-
• Constraints and
peak promotions
opportunities for non-
profit marketers

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GENERIC DIFFERENCES
1. Intangibility: before you buy products you can
evaluate it in various ways. In grocery stores, you
can feel, shake, smell and taste many products.
In a clothing store, you can try for fit and size.
Products like automobile, desktop, laptop etc. can
be tested before buying. However, services can
not be tested and evaluated in the same
way. They are intangible and you have to
experience them to know how they work. Since
customers cannot physically evaluate or sample
them, they tend to rely on other people
experiences. This is usually referred to us word-
of-mouth information and is of importance to
this industry. The advices of the industry’s
experts, such as travel agents and tour
wholesalers is very important.
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CONTINUED….
2. Production Methods: products are
manufactured, assembled, and physically
transported to the point of sale. Most
services are produced and consumed in
the same location and are not mass
produced. The manufacturing process
can be precisely and comprehensively
controlled. Quality control of services is
neither as precise nor as easy to achieve
because of the human factors that are
involved in supplying them. Variability of
service levels is a fact of life. Getting
standardized service is unrealistic.
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CONTINUED….
3. Perishability: Products can be stored for
future sale—services can not. A product
such as laptop computer can be purchased
any day the store is open, now, next week,
next month etc. Services are subject to
perishability. They are ephemeral, which
means they are transitory/temporary and
perishable. The unsold inventory of services
is just like water dawn the drain. Time can
not be saved. Services and time available to
experience them, can not be stored. Their
shelf lives are only one day or less. There
are no warehouses for service experiences.

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CONTINUED….
4. Distribution Channels: marketing managers in
manufacturing have to devise distribution
strategies for the most efficient movement of
products. There is no physical distribution system
in hospitality and travel industry. Customers, in
fact, have to come to the service factory to buy,
rather than vise versa. There are few exceptions
to this rule, including home delivery of pizza and
other prepared foods. There are many
intermediaries in this industry. Online travel
co., travel agents, tour wholesalers and operators,
corporate travel managers, etc. The items being
purchased are not physically shipped from
producers through the intermediaries to
customers. They cannot be because they are
intangible.
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CONTINUED….
5. Cost determination: fixed and variable
costs can be precisely estimated for most
manufactured goods. Services are both
variable and intangible. Some
customers may require more attention
than others, and the nature of the service
needed may not always be known exactly.
6. Relationship of services to providers:
services are inseparable from the
individuals who provide them. Such
individuals are the major attractions,
without them, the services would not have
the same appeal.
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CONTEXTUAL
DIFFERENCES
 Generic differences b/n products and
services exist because of their inherent
natures, production processes,
distribution and consumption.
 Contextual differences are caused by
variations of organizations’
management philosophies and
practices, and in external environment.
 Let us take a close look at six contextual
differences that affect the marketing of
services.

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CONTINUED….
1. Narrow definition of marketing:
Now is the time of social-media
marketing and online marketing.
Some hospitality and travel
organizations have not progressed this
far. They haven't fully adopt
marketing department orientation.
There is less emphasis on marketing
research in the hospitality and travel
industry than there should be. Its
value to marketing decisions is not yet
fully appreciated.
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CONTINUED….
2. Lack of appreciation for marketing skill:
marketing skills are not yet valued in this industry
as they are in manufacturing. Other skills such as
food preparation, inn-keeping and
destination/supplier knowledge are still held in
higher regard. Marketing skills and talent are not
seen as unique and they are not fully appreciated.
3. Different organizational structure: many
marketing management positions are named
differently from organization to organization
within the service industry. But manufacturing
companies use a different organizational model
with all marketing activities assigned to one
executive and dep’t both at corporate and field
level.
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CONTINUED….
4. Lack of data on competitive performance: a
large amount of sales data on competitive brands
is available for most consumer goods to be
accessed through various research services. This
is not the case in most parts of the hospitality and
travel industry—except for airlines.
5. Impact of government regulation and
deregulation: hospitality and travel industries
have been highly regulated by gov’t agencies.
High gov’t control has tended to limit the
marketing flexibility of many organizations
including airlines, bus companies, travel agencies
and tour wholesalers, require gov’t approval. But
manufacturing not been as comprehensively
controlled.
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CONTINUED….
6. Constraints and opportunities for
non-profit marketers: N-POs including
DMOs have a unique set of marketing
constraints imposed upon them. Politics
tend to influence their marketing decisions
that would be unacceptable for PMOs. For
example, featuring only one state or
province owned tourist attraction by gov’t
DMO in its promotional campaigns and
ignoring other provinces or states is
unacceptable. Favoritism is not tolerated,
all regions and attractions must be
promoted. The opposite is true in PMOs.
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2.6. WHY IS HOSPITALITY AND TRAVEL
SERVICES MARKETING DIFFERENT?
 Hospitality and travel services have
specific characteristics that are not found
in other services.
 It is also true all hospitality and travel
services are not the same.
 There are eight specific differences in
hospitality and travel services.
1. Shorter Exposure to Services:
customers are exposed to, and can use,
most products and many services that they
buy for weeks, months, and sometimes
years. But, the customers’ exposure to
most hospitality and
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CONTINUED…
travel services is usually shorter. In many cases our
services, including trips to fast-food restaurants, short
commuter flights, and visits to travel agencies, are
consumed within an hour or less. There is less time to
make a good or bad impression on customers.
2. More Emotional Buying Appeals: You buy products
knowing that they will perform a specific function for
you, using rational (logical or fact-based) rather than
emotional (feeling-based) reasoning. However, there
are a few exceptions where some people form close
emotional bonds with specific products and brands.
This emotional bonding happens more frequently with
hospitality and travel services because, above all else,
it is a people industry. People provide and receive our
services. People also tend to buy hospitality and travel
services that match their self-image.

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CONTINUED….
3. Greater Importance on Managing
Experience Clues: Whereas a product
is basically a tangible object, a service is
in essence a performance. Customers
cannot see, sample, or self-evaluate
services because of their intangibility,
but they can see and sense various
experience clues associated with these
services that helps to determine the
service’s quality and how well it will
meet their needs.

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CONTINUED….
 What experience clues do you think are
available to hospitality and travel
customers when they are deciding what to
buy? The evidence falls into four
categories of experience clues:
a. Physical environment
b. Price
c. Communications
d. Types of Customers
Service marketers must manage these four
types of experience clues to ensure that
customers make the right decision.
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CONTINUED….
4. Greater Emphasis on Stature and
Imagery: because the services provided are
mainly intangible and customers frequently
have emotional reasons for buying them,
organizations put great effort into creating the
desired mental association.
5. More Variety and Types of Distribution
Channels: There is no physical distribution
system for hospitality and travel services.
Instead of distribution system, this industry has
a unique set of travel intermediaries, including
travel agents, online travel companies, and
companies that put together holiday or
vacation packages (tour wholesalers).
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CONTINUED….
6. More Dependence on Complementary
organizations: a travel service can be
extremely complex, beginning when
customers notice the ad for a particular
destination funded by DMO. Then
customers may visit travel agencies or go
online for detailed information and advice.
Travel agents may recommend a
destination package. The experience
suppliers are interdependent and
complementary. Travelers evaluate
overall quality based on the performance
of every organization involved.
47
CONTINUED….
7. Easier Copying of Services: Most
hospitality and travel services are easy
to copy. However, products are usually
patented or difficult to replicate
without detailed knowledge of
production process and materials.
Most services industry provides cannot
be patented. Services are provided by
people and can be imitated by other
people.

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CONTINUED….
8. More Emphasis on Off-Peak
Promotion: Products are promoted
most aggressively when there is peak
demand. With few exceptions , there
is a need for an entirely different
schedule of promotions in service
industry. There are three reasons for
this. (1) customers make a large
emotional investment in their vacation
or holidays. (2) the capacity to
produce is usually fixed not possible to
expand. (3) there is more pressure to
use available capacity in off-peak
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2.7. DIFFERENT MARKETING
APPROACHES NEEDED FOR HOSPITALITY
AND TRAVEL
 Basically, products and services cannot
be marketed in exactly the same way.
 Many of the contextual differences b/n
products and services should disappear
in the future.
 However, the generic and specific
hospitality and travel service differences
will remain for ever. Time can not
change them.
 It is due to these ever-present
differences that unique marketing
approaches are required in this
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CONTINUED….
 They include the following five
approaches in this hospitality and
travel marketing.
1. Use of more than 4 Ps
2. Greater significance of word-of-
mouth information
3. More use of emotional appeals in
promotions
4. Greater difficulties with new-
concept testing
5. Increased importance of
relationships with complementary
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CONTINUED….
1. Use of more than 4 Ps: marketing
mix elements 4 Ps are product, place,
promotion and price. There are also
other 4 Ps in hospitality and travel
industry names as People, Packaging,
programming, and partnership.
a. People: hospitality and travel is a
people industry. It is a business of
people (staff or hosts) providing
services to people (guests or
customers), who share these services
with other people (other customers)
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CONTINUED….
b. Packaging and (c)Programming:
these two techniques—are significant
for two reasons: first, they are very
customer-oriented concepts. They
satisfy a variety customer needs.
Second, they help businesses cope with
the problems of matching demand with
supply or reducing unsold inventory. In
general, both can help to stimulate
demand. Marketing creativity is at a
premium(best) in hospitality and travel
industry because of the perishable
nature of the services.
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CONTINUED….
d) Partnership: cooperative marketing efforts
among complementary hospitality and travel
organizations are referred to as partnership. It
is suggested as the eighth P because of the
interdependence of many organizations in
satisfying customer’s needs and wants.
2. Greater significance of word-of-mouth
information: customers cannot sample
services prior to purchasing in HTI. The rule
is, “You have to buy to try.” This places a
premium on word-of-mouth or W-O-M
(information about a service experience
passed from past to potential customer).

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CONTINUED….
3. More use of emotional appeals in
promotions: because of the intangible
nature of services, customers tend to
make more use of emotional appeals
when they buy. This means that it is
often more effective to emphasize
emotional appeals in promotional
campaigns. In order to appeal the
hospitality services to customers,
talking about it is not enough, a
dash/drop of color and distinctive
personality must be added.
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CONTINUED….
4. Greater difficulties with new-concept
Testing: Services can be copied more easily
than products, and this makes it essential for
hospitality and travel organizations to be alert
for new and innovative customer services, i.e.
new-concept testing. With the increasing
dynamics of global society, it is unwise to
stand still in this business.
5. Increased importance of relationships
with complementary organizations: there
are three unique relationships among
organizations in the hospitality and travel
industry having an impact on marketing of
hospitality and travel services.
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CONTINUED….
 The relationships are:
1. Industry organization relationship
2. The destination mix relationship
3. Visitor-resident interaction/relationship

D
IO M
VRI

Relationships

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CONTINUED….
 A) Industry Organizations: include
suppliers, carriers, travel trade
intermediaries and destination market
organizations.
 Suppliers are organizations that operate
facilities, attractions and events, ground
transportation, and other support
service within or b/n travel destination.
 Facilities include the lodging, food and
beverage, and support services (retail
shopping, tour guiding, and recreation).

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CONTINUED….
 Attraction and events are divided into six
categories: natural resources, climate,
cultural, historical, ethnic, and accessible.
 Ground transportation organizations provide
car rental, taxi and limousine, bus etc.
 Carriers are those companies providing
transportation to the destinations, like
airlines and railways, bus and others.
 The travel trade contains the intermediaries
that supplies and carriers use to get their
services to customers, i.e. retail travel
agents and tour wholesalers.
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CONTINUED….
 Destination marketing organization
(DMOs) market their cities, areas,
regions, counties, states or provinces,
and countries to travel trade
intermeddlers and individual and group
travelers.
 B) The Destination Mix Concept:
another unique relationship concept
with five components: attraction and
events, facilities, infrastructure,
transportation, and hospitality
resources.
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CONTINUED….
 C) Visitors and Residents: a third
unique and important relationship exists
between visitors and local residents.
Positive residents attitudes are a major
plus for the hospitality and travel
industry.

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End Of Chapter

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REFLECTION QUESTIONS
1. The service profit chain consists of five
links. Identify and explain.
2. There are three major tasks in
marketing area of hospitality industry.
Identify and discuss.
3. Why service marketing
different/unique? Explain.
4. Why is hospitality and travel service
marketing different? Explain.
5. Explain the three major
complementary organizational
relationships in HTI?
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