Top Trends For 2015: Will Your Hotel Be Ready To Welcome The Savvy Traveler?
In an industry that revolves around customer service and satisfaction, hoteliers must constantly be aware of the changing attitudes and behaviors of their customers. Management that focuses on the most important trends in the industry will better understand what their guests want. Hotels that meet and exceed the expectations of their guests are always in high demand.
As a whole, the hotel industry spends hundreds of millions of dollars doing research to identify the different trends that will have a major impact in the future. Everything from hotel occupancy and room rates to jobs and profits can be affected by making the right or wrong moves. The stakes are big.
A valuable report, published a few years back by Deloitte, identifies those trends that continue today and will become even more pronounced in the future. The report that is entitled “Hospitality 2015: Game changers or spectators,” covers five major points.
• Changing demographics
• Market segmentation
• Technology
• Staffing
• Sustainability
Changing Demographics Was Top Trends in 2014
According to the Deloitte Hospitality 2015 Report, by the year 2015, the Baby Boomer generation in the United States will control about 60 percent of the nation’s wealth and account for about 40 percent of all spending. Those individuals, who are between age 45 and 65, represent the most important demographic for the hotel industry.
Baby Boomers who were born shortly after World War II on up through the mid 1960’s, are either in their prime earning years or approaching retirement age. Statistically, they are more affluent than other age groups, have more free time, and enjoy using that free time to travel.
Hotels need to make sure that they pay particularly close attention to this core group of travelers. They need to offer the services and amenities that appeal to this group while, at the same time, not ignoring the wants and needs of all other travelers.
According to the 2010 US Census, the median age of the population was 37.2 years. Individuals are placed into different categories depending on the year in which they are born.
• Mature / World Way II Generation (40,267,984) – people born before 1946
• Baby Boomers (81,489,445) – people born between 1946 and 1965
• Generation X (61,032,705) – people born between 1966 and 1980
• Generation Y / Millenials (85,405,385) – people born between 1981 and 2000
While each generation is important to the hotel industry, the biggest impact in 2015 will be by the Baby Boomer generation. Baby Boomers meet the three components that are most desirable for hotels.
• A large target audience
• Money to be able to afford to travel
• Time and desire to travel
In terms of potential revenue production, the Mature World War II Generation only represents an incremental amount of additional business for hotels. Seniors tend to have tighter travel budgets, less desire to leave home and limitations on how often they can travel due to health conditions that may limit their mobility.
Generation X represents about twenty percent of the overall US population and typically consists of what is known as the middle-class. These are the families that are raising kids, perhaps saving to put a child through college. Both parents often work and they probably have a mortgage on their house and a car payment. While these families may take a summer vacation, they generally do not have the time or resources to travel extensively during the year.
Generation Y / Millenials are the young people. Many of them are still in college or just starting out in their careers. They may have other priorities like saving up to buy a house or car. While young people certainly have more of a sense of adventure and like to travel, other priorities tend to limit the amount of money they have to spend on vacations. Young people are more apt to visit family or friends and stay with them instead of booking a hotel room.
Of course, all of the above statements are generalizations to some extent. People of all ages like to travel and stay in hotels. Like any other business, hotels have to know their market. They can not be all things to everyone. It depends on where your hotel is located and what you have to offer. A fine restaurant would not locate in a rural country town and a hotel up in ski country would not target its advertising to the over-65 crowd.
Market segmentation
Changing demographics and changing preferences of travelers will lead to further market segmentation in the coming years. Segmentation will influence innovation in product development, how properties and products are branded, sales strategies, and daily operations.
As Generation Y travelers get older, their travel habits will start to change. The same is true of Generation X, Baby Boomers, and Mature travelers. To attract more Mature travelers, hotels will have to offer this budget-conscious segment discounts, more value, and other enticements. Marketing to the Generation X and Generation Y crowd will mean using more social media and mobile applications. It will become increasingly more important to focus on both the leisure and business traveler.
According to a D.K. Shifflet and Associates report, 60 percent of domestic travel is for pleasure and 40 percent of domestic travel is for business. When leisure travelers book hotel rooms, 56 percent of the rooms are booked by adult couples. Of those adult couples, 38 percent are between ages 35-54 and 39 percent of hotel room bookings are for leisure travelers age 55 and older. From those statistics, you can infer that younger couples (under 35) account for only 23 percent of hotel rooms booked by couples.
The Report also noted that 67 percent of business travelers are male and of that 67 percent, 52 percent are between the ages of 32 and 54. While that is significant, hotels need to pay close attention to the female business traveler whose role in business is expanding Trends are likely to show that more women will be traveling for business in the near future.
The Baby Boomer segment is the most dynamic of all segments. They say that 50 is the new 40 and that 60 is the new 50. People are living longer than ever before and are healthier and want to enjoy their lives when they retire. Particularly appealing to this market segment are vacations that allow for learning and “off the beaten path” adventures.
Hotels can attract Baby Boomers with cooking classes, wine tasting tours, spa experiences and other things that are different from what they can get at home. Boomers who are in their 50’s and 60’s want to feel young and vibrant. While they may not be up for sky diving or repelling off of a mountain, scuba diving in the Florida Keys or hiking through Yellowstone National Park might be appealing to the older, but still active, generation.
Technology – Top tech hotel trends
Artificial intelligence technologies are already starting to be introduced into the hotel industry to help predict consumer preferences and habits. This advanced technology will be used in the food and beverage portion of the hotel industry to control costs and reduce waste. In house restaurants, free breakfast buffets, room service and even mini-bars in guest rooms, all have the potential to generate more revenue while also reducing expenses to provide such services.
Consumers and not hotels will continue to drive in-room technological advances. We have already seen such technology that allows guests to charge multiple electronic devices and check-out from their room, but that is only the beginning. As guests rely more and more on their smart phones, hotels must make it easier for guests to get what they want and need through simple apps.
Hotels will need to continue to invest in technology to help improve the guest experience, but, they must also make smart investments. With limited budgets, hotels can not afford to try every new technology. They must upgrade to technologies that have been proven to add to revenues and reduce costs. It may be great to give every guest a remote control that opens the windows and closes the shades in their room, but that may not be justified if it does not bring in more revenue than it costs.
Staffing
No matter how much technology there is, a hotel can never replace the human touch. Robots may someday be able to do all of the housekeeping and kiosks may be able to provide all of the basic front desk services, but when guests come to a hotel, they still want human interaction.
It has been shown in study after study that long-term employees of hotels are a valuable asset. It takes time to become a seasoned hotel employee and understand how to provide the best guest services while also staying within the budgetary constraints of a hotel. You can not easily replace a ten-year employee with someone who has never worked in a hotel before.
Hotels will face the challenge of employee retention in the future. Hotel employees have historically been asked to work harder for less money than most other occupations. It is not unusual for the front desk clerk to also be the person that sets up the breakfast buffet, cleans the lobby, does the bookkeeping and also must greet every guest with a big smile. Housekeeping is often asked to clean three or four rooms per hour in an 8-hour day.
Compensation is and will become a major issue. Already there is talk of a national minimum wage of $15.00 per hour. Health care costs are another concern. If the hotel industry wants to attract and keep good employees, they will have to do a better job of taking care of their employees.
Sustainability
People are becoming ever-more conscientious about the environment and are showing a strong preference for supporting hotels and other businesses that are good corporate citizens. Sustainability is a trend that appeals to both the hotel guest and the management of a hotel. People are willing to cooperate and only have their sheets changed every two days or to participate in recycling programs. Hotel staff and management also want a cleaner and more sustainable environment.
On the business side, hotels can realize large cost savings by investing in energy-saving climate-control systems, using water more efficiently and building new properties that incorporate the sun and other natural elements to reduce energy usage.
Hotels will face regulatory challenges as they seek to reduce their carbon footprint. Transition to a more sustainable property will involve changes in attitudes and financial costs may make the change more difficult to achieve. Hotels that make the necessary investments will be better positioned for the future. Just like the automobile industry has been slow to adapt the infrastructure to support widespread use of electric vehicles, the hotel industry is not going to change course too quickly. The trend is toward greater sustainability, but it may take another decade or two to make a meaningful shift.
Other Trends
It is impossible to ignore the impact that international tourism will have on the hotel industry in America. In emerging markets like China and India, there is a growing middle-class that will come to America for both pleasure and business. Hotels will need to adapt to the cultures to welcome more international guests.
In China, GDP per capita is expected to double in 2015 from 2010 figures. In India, by the year 2020, it is forecast that there will be more than 50 million outbound travelers. Hotels located in major cities as well as around major attractions should be preparing for an influx of visitors from China, India and many other international origins.
• Partnerships between hotels and local businesses will continue to increase
• Hotels will re-evaluate their use of Online Travel Agencies (OTA’s)
• More money will be spent on Research and Development (R&D)
• Hotel guests will place greater value on Lifestyle brand hotels
• Hotels will rely on computer software to maximize efficiencies and profits
The hotel industry is doing well both domestically and around the world. Pricing will remain a function of the basic economic equation of supply and demand. With new hotel construction going strong both domestically and globally, that indicates that there is more demand and supply. In 2015, Baby Boomers will be the most significant demographic group for the hotel industry, but other groups will still be important. Hotels need to continue to provide more value and give each segment of the market what they want and need.
