And thanks to Professor Dori Davari for her kind invitation for me to spend some time with you and share some of my experience and knowledge.
I know that professor Davari has very high expectations and she expects you to succeed in whatever you decide to do in life.
For me, it is a pleasure and an honor to address this fine group of talented people and I hope my comments are useful and of interest.
You are the future of our industry and we rely on your vision and mission to further grow this demanding business into a more intelligent and profitable venture.
Guess that by now you have decided what you want to do in life as this is very important. And let’s make this session a two ways conversation and please prepare the questions that you like to address.
Some of you may have read my book, “Winning Hospitality”, it is a pre-pandemic publication, self-published, but it contains many good points and can be taken as a reference point for a number of tasks.
At this stage of your life, an important question that you have to ask is how you judge yourself, are you a “leader” or are you a “manager”? This is very important in shaping your working life.
Are you able to foresee the future? Are you able to change your “mindset” and be agile in embracing changes, innovations, and new market trends? This is a critical question that you have to ask yourself very often.
Today, I will focus on some of the challenges faced by the hospitality industry and on some of the traditional weaknesses.
But first, let’s have a recap of what is hospitality and hotel business. Most probably nothing new to you but let me recap and share a few important elements of this business.
- It is an industry managed by people providing service to people. Basically, it is a people’s business. This has to be very clear.
- A service industry operating 24/7, 365 days per year, and never closes its door including holidays and special occasions.
- It is a labor-intensive industry providing personalized services to global travelers. It is a people business with humane elements selling the two most basic needs of the human body; sleep and food.
- Finding and retaining good talent has become one of the most challenging tasks for any operator. Often a question arises: Who is more important, a good guest or a good employee? You need to be able to answer this important question.
- Location, brand, value perception, customer recognition and loyalty, and of course security, have been and will remain the most critical factors for success. (if you can do all those well and it is recognized by your clientele, you are set for life).
- Providing the basic comforts and positive, long-lasting, and memorable guest experiences is and will remain a top priority of the operator. Also delivering a positive employee experience has equal importance.
- It is a very competitive industry exposed to external factors like the economy, inflation, politics, disasters, and terrorism, and a business exposed to market cycles and seasonality. And this is worldwide wherever you are.
- Also a type of business where everyone is copying everyone…. cannot escape, we all have done it and it will be done in the future. But…… value-based management is hard to copy and this is what you need to create in your organization/business. (What do we value the most?).
- Must have clarity on competitive advantages, what the brand stands for, and delivering the brand promise at all times. Those are among the most important elements of this business.
- It is a fragmented industry (too many brands/owners) without a single voice; in most cases, competitors are not collaborating. Everyone on his own way. A fact seen all over the world.
- A business where it is practically impossible to please everyone every day as quality perception differs from generation to generation, and from country to country. Each customer has his/her own likes and dislikes.
- Ours is a perishable business as we cannot store our inventory, we must sell what we have every single day. To achieve this, we must have an efficient revenue management process, accurate forecasting, and know/manage the business segmentation.
- A fast-evolving industry. The market is evolving fast and travelers are much more discerning when selecting how to travel and where to stay.
- An industry where operating costs will continue to increase year after year (cost of labor, utilities, supplies & others, inflation is here to stay…..). Operators are faced with the task of managing revenue and offsetting costs by increasing the top and the bottom lines at the end we are in business to generate profits and ROI, and this will not go away.
I would like to state that hospitality is an industry with enormous potential, people around the world need and want to travel, “Need and Want”. This goes back to the start of civilization and it will continue forever, not so many industries out there have so much potential like the travel and hospitality business.
Travel and tourism have become the world’s largest export industry and the world’s 2nd largest employer after the government. FYI, it is anticipated that the Asian Middle Class will soon make up the largest share of international travel, a huge potential from this large market.
Many people have started viewing travel as a right than a luxury and considering it an important part of life. Most people of all ages will always find time and money to travel.
Ours has also been referred to as a “sitting duck industry” (sitting duck stands for easy to shoot at) as far too many other organizations are trying to disrupt our business; the OTA’s the Sharing Economy, the Alternate Accommodation, the Shifting Trends, the Inflation, the Shortage of Personnel and many others.
The industry has undergone a massive shift during the pandemic, perhaps the most significant change ever. We are seeing unprecedented changes in the way business has to be conducted in order to create growth and value.
In this situation, it becomes a must to embrace evolution and avoid stagnancy, create unique selling points that generate emotion, and enhance guests’ experience. Do not rely on past successes as those are gone.
Looking at new trends in the market, we see that health safety hygiene privacy remains a priority. Travelers are looking for hassle-free experiences and want control over decisions that affect their sense of comfort and security.
Demand for fully integrated wellness facilities is is coming very strong and must-have. This is a non-pricing-resistant service and there are a lot of opportunities in this area.
The work-from-anywhere policies will continue influencing preferred travel dates and destinations.
There is a much stronger desire for local experiences in authentic local products, food, culture, entertainment, and others.
Addressing the need of the younger generations is also a priority for all organizations in the hospitality business.
With the continuous increase in operating costs, organizations need to find the most efficient and practical balance between technology and the human touch. Between customers’ expectations and what you can provide creating unique customer experiences. And of course, properly addressing sustainability has become a social-business-personal responsibility.
There is an urgent need to address much more efficient automation processes, the use of robotics, the importance of cybersecurity, the increase of productivity by reducing/eliminating inefficient and outdated processes, the reduction of wastage, and many more.
It is noted that the hospitality business has traditionally lacked behind in introducing new technology and this has to change. Organizations need to invest in new systems and in people who understand their applications.
Consumer spending continues to be directed toward experiences and perceived value for money. Travelers in general are prepared to pay for quality therefore there is no need to discount or reduce services provide that you produce the best available.
In a world moving more and more towards globalization, the hospitality industry has to communicate more quickly, operate more productively, and offer their employees greater opportunities.
On the investment side, despite the high cost of capital and skyrocketing development costs (inflation), we are seeing an increasing interest from investors to develop new products and facilities to meet the new demand of the future. The functionality and efficiency of the new buildings are more important than “nice to have”. In short, we are looking at more of an added-value investment.
Yes, opportunities are there and at this stage of your life, most of you have to decide if you want to go for a career in hospitality or start your own business activity, both have potential, the decision is only yours and I wish you good luck and great success.