Robert Rauch, president of R.A. Rauch & Associates, Inc. and a recognized hotelier serving a variety of clients in all facets of the industry, has unveiled his projections for the most important hospitality trends in the coming year.
The 'Top 10 Hospitality Industry Trends in 2015,' according to Rauch:
1. Millennials have become the fastest growing customer segment within the hospitality industry. Exploration, interaction and experience are the major focus of Millennials who are willing to pay more for a greater experience.
Many of them are looking for an overall gourmet experience for a reasonable price and this has produced all new lobby designs in the hotel sector. Lobby bars and hotel restaurants are wide open with combination work, play and eat/drink spaces designed with this Millennial customer in mind, one who is a "party of one" but "hanging out together." They are looking for a unique and novel experience and this has and will continue to command change within the market.
2. Customer service will make the list every year but this year it must be a combination of "high tech, high touch" as coined by John Naisbitt in his best-seller Megatrends in 1985. Service today must include enabling guests to be self-sufficient. As an example, if a guest wants to find information using his/her smartphone, providing an app or mobile website that accommodates that information will appeal to many.
The rise of this digital traveler requires the hotel industry to balance the expectation of personalization while enhancing the need to remain independent.
3. Expectation of more international visitors has been talked about for two years but these travelers are here now. International leisure travel has increased markedly due to the visa waiver program introduced by President Obama in 2012 and this is moving more international tourists to travel to the United States. The U.S. Department of Commerce projects an annual growth rate of approximately four percent in international travel. This represents over 80 million visitors.
China is preparing to send tens of millions of leisure tourists into the international market every year. With the new "10 year visa" agreement between the U.S. and China signed earlier this year, we will be getting more than our fair share of Chinese travelers. Considering the average Chinese traveler spends a week in the U.S., huge incremental demand is created. These Chinese travelers average spending over $1,000 per day when traveling abroad, excluding accommodation.
4. Booking more profitable business is critical as more revenues result from strong increases in occupancy levels, average rates and revenue per available room (RevPAR). This may suggest more profits, but the growth in distribution costs as well as other operating costs such as health care and the minimum wage increases can stunt profit growth. While the revenues are coming first and foremost from RevPAR growth, there are additional ways to increase both revenue and net income.
5. Innovative technology, mobile check-in, and seamless connectivity across platforms and devices are no longer the future, they are the present. Today, mobile apps are being used as everything from a digital concierge to accessing big data. Geo-location can make it easy to sell guests something that is literally right in front of them. In a recent survey by Software Advice, guests desired local restaurant and hotel restaurant discounts when looking for deals as well as maps with coupons for other deals.
At our hotels, we use 1App, which sends guests deals to do everything related to eating, playing and shopping. Additionally, monitoring guest use of the Internet relative to bandwidth can provide a different data set, perhaps one that will drive down your ever increasing costs of providing ridiculous levels of said bandwidth. Most importantly, when looking at the face of a changing consumer today, technology innovation is paramount. As most have heard, Starwood and Hilton will be having guests check in via mobile phone in 2015.
6. The sharing economy is a new reality hoteliers are still grasping to embrace. Over the past few weeks we have seen jurisdictions attempt to regulate this reality as evidenced by the San Francisco City Council implementing new legislation providing a legal avenue for Airbnb. Uber, Lyft, and other ride sharing companies are also in uncharted legal territory that will be legislated over the next few years.
The challenge here is that users like these services, government legislation is not generally keeping up with these rapid developments, and hoteliers are unsure of how to react. Is Airbnb a complement to hotels or is it a threat to the traditional hotel model?
Given the penchant of Millennials to chart their own path and their increasing share of the traveling public, expect to see Airbnb, Uber, and other competitors continue to dominate the conversation. It would be interesting to see if STR is able to capture the impact of Airbnb and incorporate it into the competitive set of hotels, particularly in dense, urban environments where the impact may be the greatest.
7. Political uncertainty will continue to be an unfortunate reality because at the national level, it is unclear that the President and the new Republican Congress will be willing to compromise on anything leading into the 2016 presidential campaign. This impacts hoteliers on many levels but most crucially as it impacts two areas of vital importance to the hospitality industry: health care and the re-authorization of Brand USA legislation.
Whether or not you agree with Obamacare and its implementation, now that it is reality the hotel industry is just getting its arms around incorporating the demands of the legislation into HR policies, legal ramifications, and the impact it has on the health care options available to employees. Continuing threats of repealing the legislation or defunding Obamacare create uncertainty about what resources may or may not need to be allocated in the coming years.
8. Reputation management continues its importance because it is no longer all about TripAdvisor. Although this platform continues to dominate in the hotel industry, it is easy to skip over the increasing importance of Yelp, Yahoo, Facebook, and Expedia for guest reviews and comments. Managing a property's reputation is increasingly important and using tools to help this process is crucial.
Many of our properties use Revinate as a complete, one-stop solution for reputation management instead of the cumbersome process of logging into each platform and spending an exorbitant amount of time on a crucial yet time consuming aspect of the hotel industry. Engaging with guests and responding to their needs publicly through these forums can go a long way in driving future bookings to your property.
Social is Mobile and maybe soon we will see social as a dominant booking engine. According to PhoCusWright, the term "mocial" may be among the most overused buzzwords of the past few years, but there's no disputing the importance of mobile to social strategy. Hotel companies are likely underestimating traveler interaction with them via mobile. For most social platforms, mobile is becoming the primary means for travelers to access and contribute content.
9. Real time marketing and providing content on an ongoing basis will dominate the industry. Although it would be unwise to discount the impact of traditional marketing, real time marketing must take place on a regular basis and incorporate guest-generated content, especially via social media. This must be a crucial component of the marketing mix. Think of your property's Facebook page as a second website with the option for guests to contact hotel staff and make reservations.
At RAR we use a Facebook app provided by buuteeq, one of our digital marketing providers, that pulls information about the property from the hotel's website onto its Facebook page. This app also provides a link through which guests can book a room directly on the property's website. Facebook pages also need to take advantage of custom apps that can highlight a hotel's unique features, characteristics, and charm.
Whether it is Facebook or another social media outlet, guests should be able to contact the hotel with an expectation that they will receive a response in a timely manner.
10. Health and wellness trends will continue to drive customer decisions. Healthy food options are one of the easiest ways to cater to this trend. The Chicago Marriott O'Hare recently implemented a test pilot in partnership with Farmer's Fridge, a Chicago start-up, to provide a healthy vending machine. At the suggestion of a guest, soda, candy bars, and ice cream were replaced with a "detox salad" made of kale, quinoa, Greek yogurt, berries and locally sourced honey. Although the response to the healthy vending machine has been positive, the hotel's best-selling food item is still the Marriott burger. There is a need to balance health and wellness with tasty options that are cost effective.
As I wrote in my recent forecast, 2015 is poised to be the best year the hotel industry has ever experienced. Understanding these trends and planning accordingly will provide you with the opportunity to experience a record-breaking year ahead on both the revenue and net income side of the equation.
Click here for the fully detailed list of the top 10 hospitality projections for 2015.
Robert Rauch has over 35 years of hospitality-related management experience and maintains a blog where he expounds upon insights and trends in the hospitality industry at www.hotelguru.com. His education qualifications include a bachelor's degree in Hotel Administration from Western International University and a master's degree in Tourism Administration from Arizona State University.
He is a Certified Hotel Administrator and has served as chairman of numerous tourism organizations nationally and in the western U.S. Mr. Rauch currently serves on numerous Boards of Directors.
