In a world that never stands still, the hospitality sector needs to keep moving fast to keep up with the latest trends. Whether it is demographics, technology, tastes, incomes or the emergence of more international travellers from countries with fast-growing economies, the kinds of propositions offered by hotels, the levels of service, the methods of booking and the strategies adopted in marketing must all adjust. All that may seem obvious enough, but the key for the hospitality issue is to know exactly what the issues are, and also how best to respond.
Doing so effectively is the key to success, while a further openness to change will help ensure more adjustments can be made in the future. Writing for Hospitality Net, former chief executive officer of Luxury Hospitality Consultants Nick Frangos identified several specific issues that must be addressed.
Technology and social media
The role of social media is a critical one in keeping hotels on their toes. These days the expectations of guests are, on the whole, higher than they used to be, and any failure to meet them is less likely to be tolerated. This is particularly true of Millennials, who are keen to have their needs and desires met as a matter of urgency. Indeed, the industry has been challenged heavily by growing expectations and lower satisfaction levels in recent years. Access to facilities like WiFi and other internet services is central to this, with high-tech amenities being important all the way from the hotel booking system to ensuring guests can get a good connection in their rooms. The internet has certainly created plenty of opportunities for good marketing, but it also creates more potential for reputational damage to spread further than might otherwise have been the case. At the heart of this situation lies a range of customer review websites such as TripAdvisor, which provide a chance to praise or criticise hotels. Hospitality Net noted that research has shown this to be very important.
A survey by TripAdvisor found 93 per cent of people regard positive online reviews as an important factor in determining where they stay, while 53 per cent would not make a booking without having first read a review. Of course, a caveat to these figures is they may constitute a biased sample, since those taking part would be those who interact with TripAdvisor in the first place. Even so, as such sites do get a lot of hits it is safe to assume that a tech-savvy generation will use these frequently enough for good or bad reviews to make a difference.
The cost challenge
Meeting higher expectations is not easy. Not only does it require a higher level of staff training, but it can impose some extra costs and thus squeeze margins. The challenge, Mr Frangos noted, is to meet fixed costs such as salaries, bill payments and maintaining existing facilities while adding the new features, technology and extra beds required to meet increases in both qualitative and quantitative demand. Naturally enough, this kind of cost challenge is far harder for smaller operators to meet. But putting up prices may not necessarily be the answer, not least at a time when many countries in the west have very low inflation. There is no easy answer, except to ensure that investment brings the maximum value by genuinely improving the offering for customers. After all, nothing boosts the bottom line more than a higher occupancy rate.
Growing competition
The need to invest is also related to growing competition. With more hotels out there, there is less opportunity most of the time for hotels to fill up just because there is a shortage of accommodation. More choice increases the danger that some will fall behind and fail as new players enter the market and existing ones expand. And with competition comes the increased need for hotels to compete in terms of quality and price. Reflecting on this, Mr Frangos commented: “Today, hotel customers are more discerning, circumspect and aware and could distinguish the wheat from the chaff in no time. A high level of competition is a contemporary issue that cannot be looked down upon.” He suggested pricing and branding are among the issues that need to be considered in response to this situation, remarking: “It is important that hotels always put their best foot forward and use their innate and acquired strengths to overcome weaknesses and resolve threats. Human Capital investments need to be wisely used and fully optimised for short, medium and long-term advantages and rewards.”
The rewards
Today’s hospitality sector challenges may seem daunting, not least at a time when the world economy is still a bit shaky. However, in such circumstances it is clear enough that many weaker hotels may find they need to improve fast or fold. All this helps create a better deal for customers, but what is also important to consider is that the effort of better marketing, maintaining a reputation through high standards and smart investment will bring some great rewards.
