The year of 2015 marked a great year for the hospitality and tourism industry.
According to the Lodging Industry Trends 2015 report released by the American Hotel & Lodging Association, the average occupancy for hotels reached 64.4 percent. In addition, travelers were spending more for their stays, paying $115.02 per room a night in June 2015.
Likewise, the hotel supply continued to grow, with additional 180,000 hotel rooms added to the market. The industry created over 30,000 hotel jobs and more than 100,000 travel-related jobs in the past year.
Heading to 2016, the industry is expecting another successful year ahead. For the most part, I also feel optimistic about 2016. But at the same time, I must urge the industry to be cautious for uncertainties and make proper preparations, including the following:
1. Have a good succession plan
The pipeline for hotel supply seems to be "healthy" across the universe, according to Smith Travel Research. Many new hotels are currently under construction. New hotels need to hire new managers and staff, and the fastest way to recruit managerial talents is to hunt the managers who are currently working for the competitors.
We all know it takes a long time to train and develop a good manager. As a result, I would like to remind hoteliers that they must treat their staff well to prevent them from leaving. Meanwhile, hotels should also have a good succession plan in place to develop future managers.
2. Build a strong relationship with local businesses
The Paris terror attacks will have a big and negative impact on world tourism. For example, both Paris and Brussels ceased the fireworks displays on New Year's Eve due to a terror alert.
Today, the war on terrorism is still going on. While hotels are taking measures to improve security (to prevent terrorist attacks), I also suggest hotels to build a strong relationship with local businesses. Why?
It is always good to have a strong relationship with local businesses. In the case when people are not traveling as often due to the threats of possible terrorist attacks, hotels can possibly fill their empty rooms and meeting space with local businesses.
Hopefully, when people do not travel often, they will still spend money in local hotels. To some extent, the revenue from local residents and businesses could offset the decrease demand from other travelers.
3. Prepare to welcome a more diverse group of travelers
Starting 2016, the U.S. dollar is likely to remain strong against other currencies. For years, Canada and Mexico were the top two countries with the most tourist arrivals to the U.S., but recent signs have shown fewer Canadians are traveling to the U.S. because of the strong dollar.
Meanwhile, travelers from China, India, Taiwan, South Korea and Australia are predicted to have substantial growth through 2020. Hotels need to get ready to welcome a more diverse group of travelers.
4. Optimize efficiency in operations
Another reason why 2015 was a good year is the industry enjoyed the benefits of low fuel costs. Entering 2016, we have already seen an increase of gas price in gas stations. The lodging industry will likely have to run their business with higher fuel and electronic costs in 2016.
Moreover, minimum wage will rise across the country. In Los Angeles, for example, the minimum wage will increase from $9 to $10 an hour as of Jan. 1, and then to $10.50 an hour on July 1. Hoteliers must come up with more creative ways to optimize their operations. One possible solution may be putting machines/robots to work.
What else would you recommend? Please share your suggestions. For now, let's wish 2016 an even better year than 2015.
