Challenges ahead for hotel businesses
Monday, January 29, 2018
Government regulations, global unrest, natural disasters and economic upheavals made 2017 an interesting year for the travel and hospitality industry. Nevertheless, tourism is one of the fastest-growing sectors in the world, and bookings in 2017 hit close to $1.6 trillion globally.
CBRE Hotels' Americas Research throws light on the state of the U.S. lodging industry. The September 2017 edition of Hotel Horizons projects a slight year-over-year increase in occupancy (about 0.1 percent) and a 2.3 percent average rise in the daily room rate (ADR) for 2018. The net result is a projected 2.4 percent boost to RevPAR.
But businesses must prepare for more disruptions in 2018.
Challenges in tech
One of the major focus areas is technology trends in hospitality. Businesses must prepare for another year of disruptive marketing and digital transformation.
The Internet of Things and big data will continue to be game-changers. Technology products that started out as frills and luxury have become necessities. Understanding customer behavior is key to providing great service and acquiring a loyal customer base. Hotels must step up their games, and interpret and leverage data efficiently to offer more personalized services.
We will also see increased use of artificial intelligence (AI) and virtual reality (VR) in marketing campaigns. Storytelling via these interactive technologies will be big. A 360-degree VR experience and getting the user "in the room" before they book will become essential for marketing. No business can afford to be left out of the tech race.
Customer service will see new changes and challenges in the era of chatbots. Providing outstanding customer service is a crucial success factor for hotels. Now they can ensure a 24x7 service that seems human without the need for human resources.
Modern-day guests have high expectations and are increasingly discerning. Pre-empting customer needs and offering impeccable customized service has become imperative. Easy and interactive conversations, responding to commonly asked questions and directing audiences to the right people will take precedence.
Businesses must be mobile-ready, but they cannot stop there. They need to create high-performing mobile websites that are scalable. This is the only way to increase revenue and profits.
Mobile will also be the integrating platform for future hotel business, beyond guest acquisitions and excellent customer experience. The mobile app will pave the way for seamless use of near-field technology, keyless entry or check-ins, ordering room service, controlling room functions and greater personalization using big data.
We can't ignore the elephant in the room. Airbnb has obviously changed the nature of the hotel industry forever. Hotels must keep in mind that home-sharing sites will be rivals along with other hotels.
Many hospitality brands are trying to overcome this challenge by acquiring or investing in home-sharing companies. By combining varied resources and diverse properties, they hope to offer guests more extensive options.
Today's travelers like the concept of co-sharing and co-working, soaking in the experiences of a local neighborhood with more freedom and less formality. The extended-stay segment, with its room revenue of approximately $11 billion, will continue to grow as well.
The nature of marketing
Millennials value experiences over material goods and possessions. They travel more and do not segregate leisure and business travel like the older generations. They also appreciate and promote a hotel/travel experience when they feel it's worthy of social sharing.
Banal and boring marketing spiels are no longer going to work. Expert storytelling will take its place.
Instead of listing property features and benefits, brands must delve a little deeper into themselves. Tell a story about the property, the history and unique experiences that shape each brand. Add the local experience to it, and this will sell the rooms.
Marketing and promotions should reflect efficiency and emotion. Service should reflect speed and convenience. Investing in the right tools is the right way to proceed.
The U.S. Travel Association reported that 2016 saw more than 75 million international traveler footfalls. This number is set to grow in the next three years.
An increase in international travelers means that businesses must train in cultural and regional differences. They need to overcome language barriers and offer an enriching experience for these travelers. In light of recent events where international visitors have started feeling unwelcome, these efforts are of paramount importance.
Technology can help here as well. The Google Pixel Buds that automatically translate 40 languages in real time may soon be necessary resources for every business in this sector.
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