Deloitte recently examined the status of the travel and hospitality industry in their annual outlook, reflecting on big data from 2016 and forecasting expectations for this upcoming year. 2016 shaped the current landscape with a game-changing U.S. election, geopolitical tumult, natural disasters, rising consumer demand, new technologies and the continued rise of hospitality aggregators like Airbnb. The report outlines four catalysts of change that could impact the industry in 2017: the economy, consumer mindsets, technological innovations and platforms. Let’s take a look at Deloitte’s most important takeaways for hoteliers.
The outlook explores the economy’s effect on the industry, as it is particularly vulnerable to consumer shifts caused by economic rise and falls. The forecast for consumer spending in 2017 is optimistic as the labor market strengthens, disposable income increases and housing prices and key equity indices hit highs. The effect of the U.S. election, however, is yet to be seen and difficult to predict. A solid economy is a catalyst for the success of companies that rely on the kind of consumer confidence that makes the average person more likely to spend money on travel.
As expected, travel and hospitality companies will stay susceptible to external factors beyond their control, like cyber attacks or food safety threats. As mentioned, private accommodation aggregators tied to the sharing economy have further changed the space, bringing new inventory and appealing options to travellers. As the marketplace deals with this continued influx of new inventory, hotels will have to find new ways to sustain growth.
Consumers have now become accustomed to the flexibility, on-demand options and personalized services that companies like Amazon have made customary. Hilton is an example of a brand that responded to changing consumer preferences and expectations by creating Tru, a boutique hotel line that provides amenities like creative food options and attractive shared spaces. Hoteliers must strive to stay afloat with changing consumer preferences to create an experience that drives loyalty, positive reviews, social likes, shares and word-of-mouth recommendations. These are what will drive revenue in 2017.
The travel and hospitality industry will likely continue to struggle with personalization in a way other industries haven’t for a few reasons. For starters, infrequent travel makes capturing data difficult, and consumers may also choose to browse online anonymously. Also, travellers may behave as “different travellers on different trips”—meaning their behaviour and preferences can change drastically depending on the context of their travels (e.g. business or leisure). Leveraging the personal information that consumers reveal about their preferences on social media can prove a valuable way to fill in these gaps and create fuller customer profiles.
In 2017, as greater technological innovations emerge, hoteliers are warned that keeping up with the changing expectations of guests will be vital to remaining competitive. The Deloitte report also urges hoteliers to remember that not all technological innovations will suit their hotel’s mission and style. For example, check in kiosks were a success with airlines but did not have the same success in hotels. Hoteliers will need to decide which innovations add true value to the guest experience.
We should also expect to see mobile functions play a greater role in the guest experience. Through apps like Virgin’s Lucy, guests will be able to control room temperature, order room service, book spa appointments and even communicate with hotel staff and fellow guests. Artificial intelligence will further penetrate the industry with developments like virtual travel agents that can, as per the report, “recommend and book the perfect vacation at the best price.” As technological barriers come down, the Internet of Things will cause all devices to become more connected. AI driven sensors will anticipate guest needs even before they do. For example, travellers identified by their mobile phone’s GPS might check into a hotel and find their room temperature pre-set to their preference.
All Service Platforms
Travellers often do business with many companies, from car rental to tourist activities to cruise ships. The report encouraged hotels to bridge the fragmented travel experience for guests by becoming a platform that offers services that span the entire trip. This can be done through strategic partnerships with retailers, restaurants and activity providers. Airbnb has done this quite well with their “Trips” feature, and hotels would be wise to follow suit.
According to Deloitte, hoteliers should look forward to a promising year as they pay careful attention to our changing times. By adapting to shifting guest preferences and expectations, utilizing the right technology, differentiating offerings and conceptualizing their hotel as a platform, hotels can expect to experience notable growth throughout the remainder of 2017.
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