Winning strategies in the global hotel industry

A fascinating report arrives in my inbox from consultants Deloitte which assesses the future for the global hotel industry over the next five years. Quite a lot of detailed analysis in there which is beyond wat students need to know, but there are some key drivers of strategic change which Level 3 students wanting some research evidence might like to add to their notes. A summary below:

According to Deloitte:

In order to reverse the recent downward trend and achieve future growth, the hospitality industry will need to address seven major issues over the next five years

According to the report, the key drivers in determining success through 2015 and beyond will be:

Emerging markets
China and India will continue to be the key hospitality markets, and according to the report, by 2015 these countries will have absolute year-on-year tourism growth greater than the United Kingdom, France or Japan. In the emerging markets, the rise of the middle classes will drive significant new demand for both leisure and business hospitality. The greatest future potential in these markets will lie in developing mid-market and economy-branded products aimed at the domestic traveller.

Changing Demographics
In 2015 and beyond there will be two key demographic drivers of change in the industry, which will create new patterns of travel and demand in the West, and important new source markets in the East: the ageing baby boomer population, and the emerging middle classes of China and India. By 2015, US boomers are forecasted to account for 60 percent of the nation’s wealth and 40 percent of spending .The key to attracting boomers is appealing to their ‘forever young’ attitude and desire for experiential travel.The middle classes of China and India will also create ripples of change far into the future as their travel patterns evolve from domestic to regional to international. India alone is forecasted to have 50 million outbound tourists by 2020 .

Brands recognising the importance of social media
The growth of social media in the last five years has been staggering, and will continue to grow. This new form of communication and feedback is good news for consumers, and offers both threats and opportunities for operators. The most successful brands will be those that embrace and learn to harness social media rather than underestimate or fight against its influence.”

Staff retention
An average hotelier spends 33 percent of revenues on labour costs, but employee turnover in the industry is as high as 31 percent . High employee turnover continues to plague the industry and operators need robust strategic plans to retain their critical employees and manage turnover.

Continued Investment in Technology
According to the report, to be successful in 2015, hotel companies must invest in technology. The battle to drive bookings through proprietary websites will continue, but all major operators will also develop applications and websites for mobile devices to meet consumer demands.

Sustainability
Sustainability will become a defining issue for the industry in 2015 and beyond. Rising populations and increasingly scarce resources will provide a challenging business environment in which sustainability will need to be embedded within all facets of the hospitality industry.

Crisis Management
According to the report, the key to the hospitality industry’s survival of unpredictable shocks and minimising their impact is to establish appropriate responses, protocols and risk management programs. Operators also need to capitalise on new opportunities that may present themselves in challenging times.