2017, Year of Uncertainty

(GA, Dec. 2016)

(Overview & Practical guidance facing evolving trends)  

By Giovanni Angelini, Dec. 2016    

With the overall weakness in global growth and the decline in business investment, all indications are that as we enter the 2017, the hotel industry may be faced with some deal of “uncertainty” and pressure.  

Many destinations are experiencing an oversupplied situation and in some cases are also faced with a stagnant or declining economy in particular in oil-driven markets around the world. Very few markets and destinations are anticipating growth and hotel operators will be challenged to perform.  

Opportunity out of uncertainty, Normally changes are healthy and they present opportunity to do better and stand out. The digital revolution has created the perfect storm of change. Do you buy into this and embrace those opportunities with objective to prosper?  

The concept of disruption is becoming a leading, accepted term and the view is that there are new disruptive models emerging at all times within the hospitality industry and changes are no longer gradual but happening at a very fast pace.  

As technology rapidly evolves, hotel brands will need to find unique and innovative ways to engage with their consumers. A one-size-fits-all approach simply won’t cut it anymore. Hotel/brands that better understand their consumers are more capable of providing value to them. Importance of customer relationship management (CRM).  

Every customer is different and they want to be communicated to in different ways. Also, different aspects of the same offer or same feature in an hotel appeals to different people and hotels must understand this in order to be effective in their communication.   

In the past, the hospitality industry had a good track record on overcoming all sorts of problems and was able to come-up with positive solutions without losing much business. However with so much happening within the “digital world”, at present the industry is finding itself at a disadvantage on responding to the fast changing trends.

2017 has to be the year of clean data base (not only accuracy of e-mail addresses but also guest preference) and of practical and efficient loyalty programs recognized and accepted by the consumers.  

Competition within the OTA’s market is increasing in particular within their own loyalty programs and, in most cases, this will be at the expenses of the hotels as those programs are mainly targeted at the corporate accounts/clients that are the “bread and butter” business of the hotels.  

Plus of course have to face and handle the very popular Google Trips/TripIt APP, a travel planner where travellers can view their entire travel journey including airlines and hotels bookings, tours, itinerary etc…   And let’s not forgot the TripAdvisor Instant booking product, the Airbnb’s Trips platform, the Amazon’s travel platform and of course the Kayak and Trivago metasearch sites with their huge advertising budgets. Expedia (Trivago) is filing for IPO and they will have to be even more aggressive to generate returns for the investors. Hotels have to be ready…..  

Is your organization and/or your hotel anticipating and planning for all this? Are you aware that your management team need to change their thinking and mind set? Are you investing in the development of your team?  

In line with the status of the economy, your source of business may change and you are forced to look at other sources/new business that may not be prepared to pay for your rates and in most cases require specific needs. Have you prepared to respond to this?  

Is there a clear vision for the future at both the corporate offices and at the hotels? And supported by focused strategies, culture and an aligned/professional team to handle the challenges that the industry will be facing in 2017 and after? Are you crystal clear of the stakeholders’ expectations and of what to do?  

Is there diversity, agility and functionality in leadership? Have you eliminated bureaucracy-laziness-arrogance-ignorance? And are you aware that fast response to trends and to consumer behavior with innovations is the greatest challenge facing our industry? Do you think ahead?  

Innovations should be every hotelier’s mantra. Period.  

In the interest of efficiency in competing and in responding to consumers and to industry trends, hotel groups needs to get out of their “comfort zone” and take their organizations to next level. Innovative programs/activities such as accelerator and others should be taken seriously, implemented and supported in full (look at the success of the Expedia accelerator).  

Is there transparency and authenticity in your brand/s, in your products and on handling of your customers? How do you compare on the quality of your offering?  

Do you realize and manage to the fact that pricing is market driven and not property driven? And increasing the RevPAR is simply skillful management of the rates and volume?  

2017 will be a demanding year. A year for the whole management team, revenue managers in particular, to excel on generating new business. Are you up-to-it? Or you need a major reengineering/transformation?  

Remember that in this competitive environment, an efficient Director of Revenue is not less important than the General Manager in a dynamic hotel organization.  

Do hotel General Managers and hotel Executives fully realize that achieving 100 points in RGI is simply the very minimum of own personal and professional capability? Is simply doing the job…..  

Have hoteliers become smarter or have they retained the traditional damaging approach on cutting into maintenance, marketing and training expenses to meet the operational bottom line?  Cutting on those critical areas is pure stupidity and idiocy. Manage by revenue and not by cost cutting.  

Have hoteliers learned to accept and respond to reality-facts of life and are they up-to the task? Or simply full of “dreams and hopes” that business will automatically come? And then…..miss-the-boat….Where do you stand on this?  

In one side the industry is faced with unrealistic financial expectations from developers and on the other side, the industry is also faced with higher development costs, higher operating costs, higher costs of acquiring a customer and automatically with declining ROI’s. Are hoteliers equipped to handle this?  

Is there balance on true-effective marketing? or too much of digital, social media etc.? at the expenses of basics like PR, Trade shows, top travel agents, corporate accounts   

In principle, a hotel should be anything but a commodity. After all, the service provided involves intimate and private moments for the guests and those should be of very high value. One way out of commoditization is offering something special, something that the competition does not offer and making your hotel or group stand-out. Brand differentiation and brand value comes into play.  

Are you aware that wellness in hotels (wellness economy) is becoming a major travel trend for 2017 and onward? Not only the traditional-old concept SPA-Fitness-swimming pool but consumers are looking at others from; holiday for a healthy mind and emotional healing, stop smoking retreats, optimal health, recovery  from surgery and from major medical treatments, preventive health and fitness lifestyle, eat-well detox holidays, breathing exercise-healing, healthier sleep and many others. (Those can also be provided in urban hotels). “Wellness becomes wellbeing.”  

Are mega mergers good or bad for the hotel industry? Can one group manages 25-30 brands? Or have to accept that there will be operational messiness, brand confusion, additional bureaucracy and increased corporate expenses? Will the small operator’s benefits from the Mega Merger? There is a clear opportunity here……Those mergers may continue during 2017. Customers response to mega mergers? Not happy as it will be very difficult to understand how the many brands are different from each other.  

Will a fancy and erratic developer of hotels-condominiums-golf resorts at the White House in the USA, for next 4 years, helps the industry? Most probably not.  

What the millennials wants in 2017?  Lot of talks here but at the end they want the very same things as the so-called “baby boomers”; fast connectivity, positive experiences, convenience, comfort, a good night sleep, a strong shower, security, value…..  

A bit out of box at this stage but it may come soon; some hotels, destination resorts in particular, will gradually change their role over the coming years and they’ll become places of energetic, emotional and well-being restoration and healing, which also provide accommodation and food. In these cases, the concept of hospitality is transformed and becomes more spiritual and energetic.  

As you plan for 2017 and onward, you must take into consideration that CSR activities and the physical status of your hotel/s have direct impact on your business;  

– A recent survey done in Europe and in the US, shows that over 90% of MICE organizers, up to 58% of global commercial firms and close to 25% of individual travelers interviewed will not book an hotel unless there is a clear proof that the hotel has in place a strong CSR that addresses the environment, the level of hygiene and of safety & security.  

– Remember that best way to address CSR is to be certified on yearly basis by the most recognized international quality organizations like the ISO’s (leaders), LEED AP, NFPA, AH&LA and few others certifying that the building/s comply with all safety measures in particular fire and life safety, that products and services are safe, are reliable, are of good quality and that there is an effective crisis management program in place.  

– Also note that hotels are seen as “soft targets” by terrorists and must be prepared and vigilant at all times.  

Hope that all this is of assistance and wish you success in the future.