Gen Y and international visitors to drive growth in the hospitality industry
The millennial generation (also known as “Gen Y”) represents the fastest growing customer segment in the hospitality industry. In addition to being technology savvy, they are also constantly searching for an unique and novel experience at a reasonable price. Gen Y currently represents 32 percent of all United States (U.S.) travelers and that number is expected to rise this year.
This is expected to be supplemented by a surge in Chinese travelers following the new ’10 year visa agreement between the U.S. and China. The U.S. Department of Commerce expects the volume of international travelers to grow by 4 percent this year.
Technology essential in consumer retention and increasing profitability
More mobile applications and websites are expected to be launched this year to deal with the increasing demands of online travelers. By providing direct booking websites for customers, hotels are able to increase the profitability of their businesses by relying less on online travel agencies (OTAs). This substantially reduces expenses, which complements the increase in revenues driven by higher occupancy levels, average rates and revenue per available room (RevPAR).
In addition, technology also allows for real time marketing. Rates of walk-in customers at hotels have dropped in recent years with the emergence of the online traveler. Evidently, direct booking websites are essential in capturing a huge portion of the market share.
In such a highly competitive industry, businesses are also beginning to recognize the importance of reputation management in retaining customers. This includes servicing customers on various websites and social network platforms to ensure good reviews and to perform service recoveries in response to bad reviews.
Innovative technology such as mobile check-in and seamless connectivity across platforms and devices are readily being made available to consumers. It was recently announced that Starwood and Hilton will be launching a mobile check-in app in 2015.
Political and legislative uncertainties to affect hoteliers this year
With the presidential elections coming up in 2016, politics and government policies influence hoteliers in many ways. Uncertainty over the re-authorization of Brand USA and healthcare measures creates an unstable environment for business planning.
Politics also affect the living wage movement and creates a degree of uncertainty as to how quickly the minimum wage will increase. Wages determine the level of consumption in an economy and such uncertainty affects a business’s ability to forecast or budget.
In addition, the lack of consistent legislation dealing with companies such as Airbnb, Uber and Lyft have left hoteliers unsure of how to react. The San Francisco City Council passed state regulation, which provides a legal platform for these companies to operate within the law. However, in the absence of a unifying federal regulation governing such businesses, hoteliers will remain confused.
Chicago Marriott unveils healthy vending machine
The Chicago Marriott O’Hare, together with Farmer’s Fridge, recently launched a healthy and wellness program, which provides a “healthy vending machine” for guests. The machine replaces soda, candy and ice cream with a salad made of kale, quinoa, Greek yogurt, berries and locally sourced honey. Despite the positive response to the machine, the “Marriott burger” remained the hotel’s best-selling item.