Case History Raffaello
Pioniere del pricing e dell'ospitalità.
via Leonardo Da Vinci, 21
47042 Cesenatico (FC)
Tel. +39.0547675424

Gabriele Balducci
The case history of Hotel Raffaello
by Aureliano Bonini

I met Gabriele Balducci as far back as 1987, a year before the alga bloom in July 1988 and the tragic blooming of mucilage in 1989. In those years tourism was going so well that it never crossed hoteliers’ minds to listen to consultants. They felt they knew everything, were secure and were even ready to teach us what to do and what not to do. So we were surprised by the sensitivity and dynamism shown by Balducci who immediately won our friendship and advice. Those were the years in which the Riviera Romagnola used to offer standard prices, practically identical from Comacchio to Cattolica, differentiated only by the season. Increases were triggered on the basis of dates and not on the basis of the level of comfort of the accommodation. Low season ended on 29 June, the Feast Day of Saint Peter and Saint Paul, July was a difficult month because prices were very similar to those in August, while from 5 to 25 August hoteliers used to “milk” their customers by requiring them to pay for the 3rd and 4th bed even when it was a holidaying couple. Golden times! Trademark Italia was the first in Italy to try and make operators aware of a new pricing method. We had tested price differentiation at the Tiberius hotel in Rimini, a small structure open all year round and managed by the brilliant Pierpaolo Bernardi, but we needed a pioneer, someone who could successfully implement that type of approach on the Romagna coast in the holiday season. The start-up of the system of differentiated prices, “different customers, different prices”, was not easy to get over to those who had already made an excellent return on their hotel, and at the end of the 80s price differentiation on the basis of the quality of the services was unpopular because, in the view of hoteliers, it complicated dealings with customers. Although tourists were self-evidently different from one another and had different expectations and inclinations in terms of spending, the rule was that of standardisation: “customers are all the same and to avoid arguments ... identical prices. No one accepted the idea that tourists, since they did differ, would be willing to
- pay extra for superior accommodation,
- pay less for standard accommodation.

Everyone thought: “customers talk to each other and when they find out that they are paying more than the person sitting next to them at dinner they’ll be angry with us ... they’ll complain and won’t come back. Even if the rooms are different, it is better if they pay the same price. It’s a question of honesty!”.

Balducci was looking to the future, he was different from the other hoteliers, and he had original ideas and quickly saw that by differentiating prices he would obtain numerous benefits. He wanted to be innovative, at the cutting edge, marketing-oriented, ready to offer different prices. And so he organised things so as to create an honest and understandable differentiation in terms of comfort and services and hence prices. We worked together on a price list that matched the offer of the Hotel Raffaello to the propensity to spend of potential customers and that consolidated the sales procedure.

Not just a single price but three prices to choose from, no longer just one type of room, but similar rooms furnished in different ways. Everything had to be organised to satisfy customers and to match their real spending propensity; we had met the dynamic pioneer of applied marketing we had been looking for.

Hotel Raffaello, the first leisure hotel to offer differentiated prices, in other words prices established not on the basis of averages and traditions in Romagna, but on the real value of the room, the service, the product and … the customer’s propensity to spend. Offering three room types (Tiepolo, Giotto and Rembrandt), would, as the years passed, become popular and tend towards the American definition (classic - superior – deluxe) which is now used by over 2,000 Italian hotels. The first Raffaello price-list went all around Italy. We presented it at Bocconi University, at the School of Management of LUISS University and for 5 years it was an exam subject at the Faculty of Tourism Economics at Assisi (University of Perugia). Balducci also tried to explain to his fellow hoteliers that there was nothing risky about discriminating among customers, and that his price-list worked, but no one took up the challenge. Taken aback by the 4 types of season: low, middle, high and peak (the hotelier used to decide the changeover dates at the last minute) and by the language of the price-list, they preferred to continue on their well-trodden path. Balducci in the meantime redecorated some rooms, changed the beds, bought new TVs, updated the service and enjoyed tremendous success. The colour price-list of the summer of 1989 (the year of the mucilage) printed in 4 languages (for every nationality their own language) was an extraordinary development for the whole Romagna coast. It was probably Balducci’s masterpiece, with that rosette that recalls the Italian flag and national pride. It was published in magazines, newspapers and tourism books. It contained the “active principles of differentiation”, a type of procedure which now is standard practice, used by everyone, including the Four Seasons.

Balducci was 10 years ahead of his time, a volcano of ideas. He was never still, he was tormented by his employees’ limited appreciation as they obviously did not understand the phenomenon that they were a part of.

The clarity, transparency, the magic words children free, appeared for the first time at the Hotel Raffaello in Cesenatico – Valverde, together with the description of the three types of room available. The price differences were highlighted. The tone of the price-list which was cheerful and reassuring made an impact and Hotel Raffaello was almost unaffected by the arrival of the mucilage which caused a frightening fall in arrivals that summer.

The printed material prepared by Balducci ranged from best wishes for Easter to those for people’s birthdays, from the welcome letter to name tags for the chamber maids, from the directory to the customer satisfaction questionnaire. He also published a newsletter, a first for the Romagna coast.

He offered customers Rembrandt rooms with two queen-size beds which made history. Although more expensive, the rooms, which were more fully and better furnished, were always booked out. Balducci also offered a type of all-inclusive package which marked him out from all his colleagues.

We can confidentially state that even today there are few Italian hoteliers who can rival Balducci. In those days, even the marketing director of Costa Crociere took his price-list as an example in order to explain to employees how to differentiate cabins, customers and prices. It was a forerunner.

The rest was plain sailing and amidst envy, admiration, boldness and pride, Raffaello opened the way to differentiated prices and gradually imitators emerged who, although they copied him, failed to understand the marketing logic which underpinned that type of promotion. The imitators offered ugly rooms at low prices, good rooms at high prices, the exact opposite of Balducci’s strategy. The system of differentiated prices, due to these mistakes, spread much later, almost in parallel with the rise of the Internet.

Hotel Raffaello also enhanced its printed material and communications which others considered a waste of time; the welcome plates at breakfast, the menu on display in the room, the weather forecasts and the promotions of products and holidays directly in the room ... things that had never been seen in Cesenatico.

Over time, also the graphic and print quality improved. The graphic standard of 2011 was convincing.

So Balducci went on improving and innovating, until he became self-sufficient and no longer need consultants. We spoke by phone for emergencies and on those occasions he told me of hoteliers who came to his hotel in disguise to copy his secrets. Pride was to the fore. The range of prices from 14,000 – 72,000 lira is still one of the global tenets of hotel pricing.

Besides being visionary, Balducci was like a restless colt, never at peace, he wanted to run, he had to change, adjust, innovate, even when there was no need. He was at least 5 years ahead of his competitors:
- soundproof rooms and doors;
- queen-size beds;
- larger televisions than those in 4-star hotels;
- copious bathroom linen;
- a breakfast designed to amaze.
Even if it was not right on the front and close to the sea, the growth of Hotel Raffaello can perhaps be described through its prices and means of communication.

(Example of price-list without year of issue and with “children free” up to age 6 and a price range of 19,000 – 88,000 lira)

This case history is meaningful only by thinking about how we came into being, what we were and the prehistory of tourism communication, in the times when paper was used and not the web.

The Cesenatico Hoteliers Association in those years was averse to innovations, including those on union issues. Balducci did not like being like the others, he hated mediocrity and above all the presence of unions which did not sit well with his volcanic desire to act differently also from an organisational viewpoint. The conflicts with and the resistance from his employees were proverbial, but he had an extra gear compared to his colleagues and having put a new hospitality model into practice, he wanted to obtain real benefits from his diversity. Although he was willing and ready to share everything, even the excesses, besieged by organisational problems and by the reluctance of the staff and by the promotion of union safeguards, Balducci dived into an extraordinary, even “extreme” adventure, to obtain from Rome a personalised national labour contract, just for him. At that time hotel operators adopted the national contract with the addition of a cost supplement for the additional seasonal contract. The addition was advantageous for operators because it kept the unions at a distance and allowed “fiddling” on times, rest breaks and duties.

But Balducci, exasperated by the conflicts and resistance from his staff and with his intention of having a free hand to run things, came back to Rimini to discuss it with me. He had in mind an audacious idea. He told me that he didn’t like messy situations and that he couldn’t stand the conflicts with his staff any more. He’d already donned his battle gear. He tried to explain to me that “since ’Hotel Raffaello is generous to its customers and its staff, it didn’t serve contractual inflexibility”. He wanted to dictate his terms to the unions, to pay for these terms, and to be treated differently from the others. I tried to explain to him that the job market was not marketing oriented but labour oriented and that what he wanted to do wouldn’t work because the contract, since by law it had to “be an improvement on the sector’s national collective labour contract”, would have caused continuous reprisals, summer inspections that would upset him, a general inflexibility on the part of the institutions, and finally excessive costs.

Balducci promised: I’ll think about it, but in reality he had stopped listening to me a half hour previously, and so he went to war with the national and provincial unions and the Hoteliers Association of Cesenatico, which since it was signatory to the additional seasonal contract felt it had been ignored and ended up hindering that strange agreement.

But he wanted a special work contract that took account off his needs in terms of working hours and salary. He made such a fuss that he got it and with the contract had a shocking season. He recognised that fact and took a step back to a more regular situation.

We continued to help him for a number of years in an institutional role: a few hours a year to try and help him avoid daily fights. We became friends.

Gabriele was special and tended, in order to be different from everyone else, to support theories, pass judgments, and assess his customers and love them so much that he sent them packing.

It was part of his character to feel that he was a “good hotelier”, an authentic pioneer, a manager that rose above the mediocre. During our meetings he spent a lot of time describing the inappropriate conduct of others and condemning those who did not wish to follow his rules.

Then the innovator par excellence and founder of flexible prices, after 10 years of rowing against the current, changed direction. He dedicated himself to strengthening the rules that he had created and standardising the marketing procedure of the 1960s. At a certain point he decided to let out the hotel, but he insisted on being involved as if he was still the manager … and he was right to do so as the lessees were not up to the task and Gabriele had to retake control. When he took over again, maybe for fear that I would tell him off (something which I have always done with affection), he preferred to tell my son Stefano, who I had told to treat Gabriele with kid gloves.

A new association, a new newsletter, price-lists, operating methods, but by now the web was riding roughshod over the tailored approach of Gabriele Balducci, a pioneer of pricing and hospitality.


Il 22/10/2012 alle 08:58:58, Edgar Rücker ha scritto:
Auch wir fühlten uns bei Familie Balducci wie in einer großen Familie, voller Herzlichkeit.Die selbstgebackenen Kuchen von der Chefin und der unermüdliche Einsatz der beiden und die Bemühungen um ein gutes Betriebsklima waren bewundernswert. Leider haben die Gastarbeiter nicht für Ihren Chef, sondern nur für Ihre Faulheit gearbeitet. Und das Personal ist nun einmal das A und O eines Jeden Betriebes.So ein schlechtes Personal wie in den letzten Jahren hat Familie Balducci NICHT verdient. Wir werden Sie stets in guter und hochachtungsvoller Erinnerung behalten. PS.Bitte für uns deutsche doch auch etwas deutsch schreiben. Die Translation ist grammatikalisch eine Katastrophe.

Il 21/09/2012 alle 17:37:37, Hotel Habhof ha scritto:
Auch von uns ein Lob an Herrn Balducci!! Nicht nur in Italien hat sich durch seine Inovationen die saisonale Preispolitik durchgesetzt. Auch wir im Tiroler Tourismus arbeiten mit saisonal gerichteten Preisen bei unterschiedlichen Zimmerkategorien. Herr Balducci ist selbst Gast in unserem Hotel und schätzt ein saisonales Preisangebot sehr!! Wir wünschen Ihm alles Gute und hoffen, Ihn noch lange als Gast in unserem Hotel begrüssen zu dürfen. Wir können noch immer sehr viel von Ihm lernen. Ein Pionier der Tourismusbranche!!

Il 12/09/2012 alle 18:32:34, Alessandra ha scritto:
...Credo che per Gabriele Balducci l'Hotel Raffaello sia stata una vera passione, un modo di vivere. Con passione e dedizione ha saputo creare un ambiente confortevole e famigliare. Molti sono gli albergatori che guardano esclusivamente il lato economico della loro attività: i clienti intesi solo come numero, guadagno; Balducci, come pochi professionisti san fare, ha saputo instaurare dialogo con le persone, ha cercato di capirne le esigenze. Un uomo certamente dalle idee originali, pronto a cogliere novità e nel contempo fedele al concetto di famiglia (il vero valore della vita). Grazie al suo costante lavoro, alla sua grinta ha fatto si che molte famiglie, e molti singoli, riuscissero a trascorrere delle liete vacanze.

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