Investigating the Use of Advertising for Communicating a Hotel's Strategic Assets

Abstract

Advertising may have a significant impact on a hotel's competitive advantage and financial performance. There is, however, an ongoing debate as to the role of advertising. One view suggests that advertising yields market power, which then fosters brand loyalty. The opposing view suggests that advertising, among other roles, is a method to inform customers about products or services, which then increases price sensitivity. This article discusses the hypothesis that the hotel's ability to communicate strategic assets determines the use of advertising. Hotels can use advertising channels to communicate strategic assets, hence create market power and support a price differentiation strategy. On the other hand, if the channel restricts the ability to communicate strategic assets, it will be used primarily as an informative tool. This study presents a case in which hotel advertisements are presented in a restricted setting, allowing advertising to communicate location and corporate affiliation, which are considered to be among a firm's strategic assets. We demonstrate that corporate affiliation is a strategic asset that supports an advertised request for a price premium in the hotel industry. The study also presents the limitations in using location as a strategic asset.

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