07 Mar, 2019
Top 10 Hospitality Trends
The hospitality industry has been undergoing tremendous changes and disruptions over the last two decades. What key trends have been steadily reshaping the industry and where is hospitality heading in the near future?
1 — Virtual communities
Social networks and in particular TripAdvisor have had a profound impact on customers. This has led to more transparency and, overall, to an improved quality of the services provided by hospitality companies.
2 — Sharing economy
Airbnb represents a major disruption in the hotel industry, making the competitive landscape tougher than ever. This is further reinforced by the fact that lodging properties listed on Airbnb do not necessarily have to comply with the same rules and regulations than traditional hotels.
3 — Online Travel Agents
They have had at least three major impacts on the hospitality industry. First, they have altered distribution channels and consequently taken value away from hoteliers. Second, the notoriety of brands owned by Booking Holdings and Expedia are such that these companies have almost replaced hotel brands. Third, they have built solid relations with travelers. Now, hoteliers have to pay to get access to these customers, thereby leading to a thinner profit margin for the former.
4 — Digitalized guest experiences
Apps, in particular, are increasingly important in the way hoteliers manage the services they provide to their customers and can now control many aspects of the guest cycle and experience.
5 — Booming global tourism
Low cost carriers enable more people to travel the world at a reasonable price. Moreover, several emerging markets have seen their GDP increase at a rapid pace, thereby enabling their citizens to travel the world. Customers from South Korea, China, India, and others, now constitute a large body of potential travelers. Their demand, of course, has a big impact on the offer.
6 — Experience economy
Customers request extreme personalization, unique experiences, and so on. This could very well lead to the death of the travel agent and the rise of the independent traveler.
7 — Asset management practices
The asset-light approach has become prevalent in the industry. The separation between the management of operations and real-estate assets now allows hospitality companies to focus on their core business, thus improving efficiencies. It however induces additional complexity and potential agency problems, explaining the emergence of new types of jobs, such as asset managers.
8 — Professionalization
As stated above, new job profiles have emerged following the increasing complexity of the hospitality industry. In parallel, the need for quantitative competencies (for forecasting, budgeting, etc.) has also increased.
9 — Generations Y and Z
These new generations have different requirements and needs compared to older generations. Older generational think about hotels and car rentals. Younger generations think about Airbnb and Uber.
10 — Sustainability
People are becoming increasingly sensitive to environmental and social issues.
What does the future of hospitality holds? Major technology firms will replace most hotel brands, because they can offer technology solutions and create markets to attract customers. The traditional hospitality industry will evolve into niche markets (serving specific types of customers), or extremely luxury sector (so they can afford to pay their staff reasonable salary). Those who can’t identify their niche will become the money machines for technology companies. Some brands big enough may survive, but their business will get tougher.