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Amadeus survey

The future of the hotel industry

If one message came through loud and clear from Amadeus survey, it is that we are in a period of unprecedented change. Customers are changing; technology is changing; markets are changing. This can feel overwhelming. But this is also a period of unprecedented opportunity. The new breed of customer can be catered for; new, futureproofed technology is available; new markets are an opportunity for growth. This surely feels exciting…

If one message came through loud and clear from Amadeus survey, it is that we are in a period of unprecedented change. Customers are changing; technology is changing; markets are changing. This can feel overwhelming. But this is also a period of unprecedented opportunity. The new breed of customer can be catered for; new, futureproofed technology is available; new markets are an opportunity for growth. This surely feels exciting.

The long-term picture

As part of the survey, interview subjects were asked to look into the next decade and beyond. The first one the survey would like to highlight is a shift from geographic to demographic and technographic markets. The influence of Generations X and Y has already been mentioned. But the so-called Millennials will be joining the workforce and visiting hotels before long, and some experts believe you should look beyond geography altogether when planning for the future.

Henry Harteveldt at Forrester Research is one such person. “New emerging markets will always be there but I believe that the emerging markets will shift from being geographically based to being demographically based,” he says. “The Gen X and Y generation are independent. Companies are going to have to establish relationships and prove to these customers why they are worth being considered. In the meantime, these younger generations of travellers will be doing their own research, will be more self-sufficient, will be more reliant on technology to learn about destinations, to learn about hotels, to plan their trips – they will be more reliant on using technologies that are mobile-based.”

Gen Ys will want to ask you a question via SMS and will expect an immediate response. This may mean that call centres will have to handle text communications as well as voice calls. Indeed that may not even be a long-term goal, but one worth aiming for in the near future. In some ways, the old demographic definitions will also need to be redrawn. There is an association in the United States which arranges travel discounts for its members, who are all over the age of 50. The generation which is now approaching that milestone do not consider 50 to be old, and in any case will not want to be reminded of their age. They may appreciate travel discounts, but they will want them based on who they are, not how old they are Another innovation that is likely to affect many in the industry is the appearance of more low-end hotels. This does not mean we shall see the rise of squalid, cramped, flea-ridden hotel rooms, but does mean new chains catering for the less affluent traveller will spring up.

As Ted Horner explains: “You are going to see the rise of more low-end hotels as the low cost carrier (LCC) model takes off… LCCs have allowed another class of traveller to travel for the first time and many of them don’t have a lot of money. So how are we going to accommodate their requirements? You are going to see more of these EZ hotels. I still see a great need for five-star hotels, but in sheer numbers you’re going to see the mid- and low-range marketplace start to become more significant.

“That will create challenges for hotels because they will not want to spend as much money on technology because the room rates will be so much lower than in a five-star hotel. This is where ASP and web-based solutions really come into their own.”

The second trend is to do with branding. This is an issue which is at the forefront of most of our respondents’ minds today, and will stay there for years to come. In a world of social media, brands are going to be crucial. Choice is one thing travellers are not short of; a known brand is a shortcut to a consistent quality of service and reduces the time it takes to book a room.

It has to be said that some industry commentators believe the brand will become irrelevant; having read what other guests have had to say about a hotel, and having seen their pictures and videos of it, would-be travellers will not care what name is hanging above the doors of the hotel in which they end up booking a room.

But if you subscribe to the former point of view – and most of our respondents do – the brand will have to engage with the target audience earlier in the decision-making process.

Cindy Estis Green has an interesting take on that subject: “It used to be that there were marketing campaigns designed to build awareness and then another set of campaigns designed to target the point of purchase. There is an interval between awareness and selection which includes the period of research and validation by the consumer and hotels have traditionally done little to engage the customer in that part of the purchase process.

Due to the transparency afforded by the consumer’s use of the new social media tools, hotels can now more easily interact at every point in the purchase process: before, during and after a hotel stay is experienced.” That is beginning to change, according to Estis Green, and will be hugely significant for all hotels in the future. She also makes the point that hotels have in the past not been great at what you might call ‘post-stay’ communication. They need to get better at keeping in touch with a guest with relevant communication. They need to work harder to get that repeat booking.

This post-stay period will become even more crucial as increasing numbers of people go home after their trip and write reviews and share their thoughts online. Brand differentiation will also be a major battleground of the future, according to Peter O’Connor, director of institute de management hotelier international of the Essec Business School in France. “I think one of the things that we are seeing already is the development of more niche products – that hotel companies which were trying to be the same before are trying to be different, trying to create some sort of brand
identity, both offline and online,”
he says. “For example, InterContinental Hotels & Resorts are trying to sell the experience idea, Novotel are trying to sell this whole idea of a sanctuary from the business world. They’re all trying to position themselves in the mind of the consumer as not just another chain hotel.”

This message has already hit home with Christine Brosnahan of Carlson Hotels Worldwide: “I would say that our biggest objective is brand value… [and] brand consistency. I believe that if the hotel companies do not continue to talk about their value propositions and how to differentiate themselves from each other, then we will become a commodity and if we become a commodity then the way you would distribute your inventory could be substantially different. “So to me the [big question when it comes to] achieving our business objective is how to keep ourselves and our industry from becoming a commodity? I don’t want to be an airline. I just don’t want to do that. And I think we are at risk of that happening.”

Consistency is a key word here. The brand has to communicate its values throughout the purchase cycle – and beyond. This cycle includes the first Google search, the consideration and short-listing process, the stay itself and then on into the post-trip period when reviews may be written and repeat bookings considered.

Bill Carroll at Cornell University sums this up nicely. “Your capability once you interact with the customer to protect your brand and engage them creates an opportunity to capture that customer for current and future bookings. How hotels do this is going to be essential to their success. In the case of brands or chains, they must protect their brand and engage the customer through all the distribution channels and touch points. This could include search engines or Facebook or a branded website. Hotels must engage the customer however they can.”

Another long-term threat to hotels is the risk of new entrants into their markets. Villa rental companies for example are often better than their hotel counterparts at marketing their portfolio of properties online. Their use of pictures, video and local information often outstrips that of hotels’, and as more and more people book online that could be a problem. They could also start buying up hotels of course. But it’s not all doom and gloom. There are likely to be new opportunities out there. For example, many in the industry believe that supplying some sort of provision to the elderly is a natural extension of hotel companies’ current business models.

Cindy Estis Green picks up on this theme. “There will be a blending where hospitality will start moving into hospital and senior care. It will not be clinical, but rather a recreational, pampering, spa and health-oriented direction.” That makes perfect sense. The Baby Boomers, and most certainly Generation X and Y and the Millennials, will have grown up valuing experiences. It is not just enough to travel in hope any more; what you do on arrival is the thing. This attitude is likely to extend into other areas of their lives, including retirement.

Co-Founder & Managing Director - Travel Media Applications | Website | + Posts

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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