Hotel Sector – Future Growth Trends

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Hotel Sector – Future Growth Trends

The hotel sector is experiencing a rapid expansion which is forecast to continue for the coming decade. According to a PWC report (Growth beds in UK hotels forecast 2015) at the end of June 2014 there were 23,000 rooms in the UK development pipeline expected to open by the end of 2015. Of this total over 10,000 new rooms are expected to open in London, a 5.3% growth rate for the capital. The budget hotel sector makes up 23% of the current supply, but they account for 50% of the pipeline. The mid-market hotel sector (2 Star and 3 Star) accounts for 42% of the current supply, but only make up 3% of the pipeline. The up market hotel sector (4 Star and 5 Star) accounts for 40% of the pipeline. Figure 1 below shows the expected growth rates in Revenue Per Available Room (RevPAR) for Europe.

Figure 1: European Hotel Growth forecast 2014 - 2015.

Figure 1: European Hotel Growth forecast 2014 – 2015.

Source: http://www.pwc.com/en_GX/gx/hospitality-leisure/pdf/pwc-european-cities-hotel-forecast-2014-and-2015.pdf/

While the growth statistics look encouraging there is an undercurrent of change in the way customers are choosing their hotel of choice. This is being driven by the grand scale use of on-line search engines and peer review social media web sites. Over the past few decades commoditization within the hotel sector has led customers to see less differentiation between the offerings from one hotel chain to another. An IBM Global Business Services research article (Hotel 2020: The personalization paradox) reported the results of a survey of travelers 68% of travelers saw little to no noticeable difference between hotel chains. The research indicates that price is the most important factor for a hotel sector consumer when making a choice about where to stay. In fact, the IBM research found that 55% of leisure travelers spent at least two hours searching for the various components of their travel plan. A little over 10% spent over eight hours searching for the best deal. See figure 2 below for a graphical representation of the time travelers spend searching on line. This significant change in the way the hotel consumer is making decisions will inevitably drive down the operating margins within the industry.

IBM Global Time Customers Spend Searching Online

IBM Global Time Customers Spend Searching Online

Source: http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03411usen/GBE03411USEN.PDF

The hotel sector has to react by personalizing their offerings while standardizing their operating processes. The hotel sector will benefit from increasing levels of disposable income in emerging economies. This means more people will be travelling from more diverse cultural and language backgrounds. Figure 3 below displays the expected growth in travelers from emerging economies.

IBM Global Travel Growth Forecast Emerging Economies

IBM Global Travel Growth Forecast Emerging Economies

Source: http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03411usen/GBE03411USEN.PDF

Personalization means making the customer feel they have considerable say in the way the hotel provides service: booking on line facility and ease of use; checking in autonomously if desired; room layout and facilities options; media accessibility; checking out options. The customer needs to be able, in a seamless way, to choose what they want and make changes easily once booked in. Much of the personalization will be conducted via the hotel’s website. Customers will use their computer or mobile device to facilitate their personalization choices. As a result the hotel’s websites will have to be available in multiple languages, with outstanding levels of translation, awkward machine translation will most likely make matters worse. Figure 3 below encapsulates the different areas of personalization.

IBM Global Examples of Hotel Personalization

IBM Global Examples of Hotel Personalization

Source: http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03411usen/GBE03411USEN.PDF

The effort that a hotel puts into personalization will determine the level of success. It will not be enough for an easy to use website. To really take advantage of personalization the hotel sector will have to collect as much data as possible from their customers and then use this data to build up a profile of each and every customer. Besides collecting the obvious elements of data such as when a customer makes a booking on-line and inputs their details, passive data collection will be just as important. For example if a customer selects a particular hotel service while at the hotel – room temperature setting; location for food service delivery; taxi or shuttle bus pick up – this information is used to make proactive service changes for that particular customer in the future. In effect the hotel will be empowering the customer to customize their experience at the hotel. By doing so hotels will differentiate themselves from their competition. Data collection and intelligent decision making requires robust and standardized operating systems that will work anywhere in the world, with any language. Data protection will be of utmost importance and being certified to the likes of ISO 27000 (This family of standards help organizations keep information assets secure) will be essential.

Behind the scenes, as hotels expand they risk increasing levels of complexity within their operations. However, if operating systems are standardized throughout the company/chain then complexity will be prevented. This will leave staff more available to work with guests and improve the personalization capability of the hotel. Standardized operating systems mean that the same backroom processes and procedures are used everywhere throughout the company/chain. To make this happen top quality translation, in accordance with EN BS 15038:2006 (translate – revise – review), of system processes and procedures will avoid any confusion from one country to another.

We can assist hotel sector clients with very high quality translation for their websites, internal process and procedural documentation.