Parallels in evolving business dynamics unite two unlikely industries
- The U.S. beer industry has been experiencing a reshuffle in consumerism
- This revolution represents the consumer’s call for innovation & change
- The craft beer industry offers hotels inspiration for business strategies
We talk a lot about the evolution of hospitality and revenue management as a whole. Changing industry dynamics and newly-tapped data sources have more so turned this evolution of ours into a revolution—shaking up hotel technology, profit performance and organizational structures in the process.
But there’s been another revolution passionately bubbling up over the past few years. And, much to the chagrin of several of us in the industry, it’s one that seems to be getting little, if any, attention.
So I have to ask, “Is anyone going to stop and talk about what we can learn from the craft beer industry?”
Over the past few years, the U.S. beer industry has experienced quite the reshuffle in consumerism. Across the nation, craft breweries of all shapes and sizes have emerged from the shadows of Big Beer to bask in a light of newly-found reverence.
Now accounting for 12% of all beer brewed in the U.S., the craft beer industry represents more than shifting economics and steady business growth. Craft beer, at its core, is a representation of the consumer’s call for innovation and change, and it’s one of the largest drivers in the insurrection against mass beer production.
Hoppy pale ales, vanilla porters and southern-style breakfast stouts all rank high on the modern beer drinker’s list of must-drink-now brews. The popularity of craft beer even supersedes top spots on neighborhood liquor store shelves, often acting as a spotlight for hotel restaurants as shiny, locally-sourced drink menu attractions.
But craft beers, as a whole, offer more than a conversation starter with the hotel bartender, or an attractive complement to a thirsty guest’s dinner. They offer hotels inspiration within their own business strategies.
Here are four distinct messages from the craft beer industry worth the buzz for hotels:
The experience is worth the price
One of the most appealing characteristics of craft beer is the story each bottle represents. From the often-humble beginnings of the brew master to artsy bottle labels to multi-layered dimensions of flavor, craft beers are more than just a cold beverage. They offer consumers an experience—and it’s one they’re willing to pay more to get.
Craft beers command a higher price than that of domestic beer. Some breweries even leverage their reputation to make a name for themselves as an attractive destination, providing visitors with tasting menus and tours.
In a similar vein, hotels can infuse their business strategies to capitalize on their own unique reputation in the market. After all, reputation—and the guest experience—matters. It has been reported that for every point increase in ratings, hotel bookings increase by 14.1% and average daily rate by 11.2%.
Mastering flavors leads to success
Every single beer has four necessary ingredients: hops, barley, yeast and water. However, what makes each beer so unique is how the brewer mixes it, and the combination of flavors they blend with it.
Today’s craft beers have no shortage of flavor combinations: Peanut butter porters, coffee-brewed milk stouts, Irish red ales and bourbon-aged imperials catch both the eye and the taste buds of beer aficionados everywhere. The flavorful combinations offer a unique selling point that other labels do not.
Hotels face a similar competitive calling to distinguish their own identity through the right blend of loyalty incentives, marketing promotions and guest amenities. When it comes to setting themselves apart in a dynamic market, mastering this art is a key business differentiator.
Large organizations sleep with both eyes open
Whenever an industry disruptor is hovering at bay, people quickly perk up and take notice. Craft breweries, a market segment of a more macro beer industry, are no exception to this.
As the popularity of craft beers began to explode and sales started shifting, Big Beer corporations strategized action through industry acquisitions.
(Anheuser-Busch, as an example, made headlines by swooping up several popular craft breweries to blur the lines between craft beer and “mass craft.”)
The hospitality industry is no stranger to acquisitions, with some of our recent headlines including Expedia, the Marriott-Starwood merger and the IHG-Kimpton acquisition.
As industry dynamics continue to evolve, and new generations of consumers shape future business strategies, we can continue to keep an eye out for even more mergers, collaborations and unlikely partnerships.
Distribution strategy has financial implications
Recent reports indicate that booming craft beer sales are seeing a significant slow-down in growth. However, there are several factors that could be impacting these results, with distribution contracts landing at the top of the list.
With Big Beer organizations controlling roughly 80% of the beer market, they have a significant influence over product placement—often edging out independent craft breweries in favor of their own varieties.
What’s more, some craft brewers don’t distribute their product via conventional methods and only sell direct or local. For some, this limits profit potential. For others, such as Russian River Brewery Company and its highly-coveted Pliny the Elder, it only adds to the exclusivity and popularity of the brew, leading many enthusiasts more than eager to travel to the brewery to snag a bottle.
Hotels that thoughtfully leverage their distribution contracts and temper acquisition costs with ideal channel strategies can significantly increase their profit potential.
Using various strategies to encourage online shoppers to book directly on the brand.com website, rather than through OTAs, is another business initiative hotels can focus on for further exposure.
A hospitality industry veteran, Anna Marie Miller has held management roles in sales & revenue, marketing and meetings & events for hotel brands IHG and Hilton.
She holds a Bachelor of Science in Hospitality & Tourism from UW-Stout, and a Master of Arts in Strategic Communication Management from Concordia-St. Paul.
She's an enthusiastic advocate of dark coffee, dark beer & light humor.