What is value?…

What is value to our stakeholders?  How do we define it?  How does this relate to mutually beneficial partnerships?  Who is more important the customer or seller?

Trouble with the Curve
“Show ’em the curve.”

We think life is black and white. It isn’t. It has many shades of gray, and colors, we really can’t decipher. It’s all about curve balls, and how you handle them.  And therefore, trying to pinpoint an actual definition of value is varying shades of reality. McNeill and Crotts (Selling Hospitality: A Situational Approach, 2006:32-34) would have us believe in a simple equation: Value = Benefits – Costs.  Is it all that?  No, I don’t think so.

From which vantage point, point of reality, do we define it?  Can we really articulate value?  This ties back to tangibility and intangibility attributes of tourism.  Sure there are attributes of a product we can measure.  We can see something of quality.  Such as a hotel room.

Bedroom in Braid House, Gleneagles
Bedroom in Braid House, Gleneagles

Yet, value falls into that ‘curve ball’ functionality. We can calculate a room rate for this room based on a host of factors (i.e. how much it costs for FF&E, labor to clean the room, building the room, the hotel itself, marketing) and set a standard price. But what happens to that standard rate if a special event takes place. Well, this is a room in Gleneagles, and you know it will be booked this coming weekend, September 23-29, possibly longer for the 2014 Ryder Club. What happens to that rate now? Economics injects a healthy dose of optimism. As a revenue manager I want to obtain a healthy return, and will increase the rate to achieve maximum profit.

Value is created with a positive exchange between parties.  The management of that relationship is becoming even more important for both parties on either side of the table, than what it once was, given the nature and proliferation of technology and its use in today’s society.  What motivates a customer to make a decision?  Is it the money involved?  Is it the experience itself, regardless of the return on investment (aye, from both buyer and seller)?  Is it what you do?  What memories you bring home?  That relationship is hard to articulate, and therefore, communication is more than important.

It is about asking the right questions to understand what value means and having that conversation, to establish mutually beneficial partnerships.  We need to understand points of reality of each stakeholders.  What they need from the relationship, what are they looking for in terms of quality?  And so value has hooks in service execution.  And that is another conversation.

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