Future Watch

(Written by G. Angelini for the TTG-Asia Anniversary Issue, July 2009)

 

MarketsTraditional market sources, i.e. North America, Japan and Europe, will remain available, but we will see strong growth from emerging markets, especially China, India and, to some extent, the Middle East. As a result of new markets, and a trend by travelers to combine business with holiday, double occupancies at hotels will grow. We may see city hotels running with 1.7 or 1.8 guests per room compared with 1.3 to 1.5 now. City resorts with a large choice of facilities may have an advantage over other hotel concepts.

Leisure travel is expected to grow faster than business travel in most parts of the world. We must also pay attention to the silver market from North America and Europe.

Hotel Development

Most cities/countries are overbuilt with five-star hotels. In future, there will be stronger demand for three- and four-star hotels that cost less to develop and operate, and generate higher ROI as consumers will be more price-sensitive than in the past.

We will also see more multi-complex developments, i.e. a combination of office, residential, retail and hotels. Properly located, these can generate a better ROI than an individual hotel.

Branding

Strong hotels brands will improve their process further, achieve better consistency in their delivery and be in a position to command higher rates.

Companies that have concentrated their brands in one country or region will have difficulties in growing their business concept internationally. The consumer comes from all over the world now and brands must have recognition in the source market.

We are going to see further development of niche brands, although “boutique” is an overused word. Delivering the brand promise becomes critical and much more difficult to accomplish. It all goes back to getting people who are “engaged” with the brand values and who are qualified to deliver.

People

Labour costs will continue to increase in line with a war for talent.

The value of setting aggressive but achievable goals with higher incentives for staff will become more important. In general, people are prepared to work hard but also expect adequate incentives, especially when the company is doing well. As an example, does the Chief of a successful restaurant deserve three to four percent of the outlet’s profit on top of his normal compensation?

The hotel General Manager of the future has to be more of a leader than a manager in terms of driving his team, setting proper business priorities and being committed to the short-term and long-term success of the company.

Distribution

There will be greater investment in technology, particularly in customer relationship processes, to influence customer behavior and generate direct sales. Specialized travel agents will continue to play a major role in booking hotels rooms/ packages, especially for resort hotels and MICE business.

Changing consumers

The primary focus of hotels will be on consumer needs and less on the physical asset. Customer lifestyle changes means customers demand more memorable stays each time. Research for customer needs will intensify and the traditional comment cards or in-house survey may become a thing of the past. The industry will have to rely more on third-party researchers in order to get a better understanding of the real situation.

The current trend towards increasing globalization continues to change customer profiles and needs in terms of design, distribution system, online service, etc. It becomes imperative to plan how to adapt to the diverse and changing needs of customers from around the world.

RevPar (revenue per available room) has been the traditional way to measure the performance month on month and/or year on year. However, it will be important to measure revenue per available customer (RevPaC). Hotels need to attract the right customer for the right brand and of course the right revenue per customer.

F&B / MICE

There will be more demand for themed restaurants in hotels and more restaurants in hotels will be leased out. Demand for health food and vegetarian food will also increase. Customers want to stay away from products with trans fat, MSG, etc.

Banquet/function space with the latest technology remains important and will continue to be the major profit generator within the F&B division.

Demand for top-of-the-line electronic teleconferencing will gradually increase, but not for the most important company meetings because of the human relation and face-to-face factor. The event management role at hotels will become more important and hotels have to raise the profile of the position.

Wellness

Will become more important for both business and leisure travel. Concern over wellness is expected to increase and hotels have to respond accordingly.