Emerging Trends in Hospitality

Emerging Trends in Hospitality

In recent years consumer behavior in the hospitality industry has changed dramatically. Easily available information coupled with economic uncertainty has made today's travelers extremely discerning in their choices regarding the hotel properties they book and how they book them. Meanwhile, hoteliers are under pressure to maximize occupancy, fight for every customer and earn their loyalty. Simply relying on traditional marketing practices, offering a promotion or two, or counting on online travel agencies (OTAs) to fill rooms is not enough anymore. It is clear that this is a disrupted marketplace for hoteliers. So how does the industry adapt its go-to-market strategies to remain profitable? The emerging industry trends provide an answer.

Marketing to the Hyper-Connected Traveler

Consumers' increased use of social media has created both challenges and opportunities for hoteliers, as they determine how to participate and respond to the growing online buzz. Travel-focused blogs feature consumers' experiences (sparing no details), while social networking sites like Facebook provide a forum to share travel stories and photos. Websites like TripAdvisor offer customer opinions, ratings, reviews and comparisons of hotel stays, impacting consumer choices.

A recent Cornell Center for Hospitality Research study1 showed that incorporating the information collected from social media sites would have a measurable impact on a hotel's performance and on its ability to capture this hyper-connected traveler. Hotels cannot ignore the fact that today's traveler would choose to stay at a hotel that has favorable guest reviews and ratings. This suggests that hoteliers have to invest in technology to analyze this "big data" and make profitable customer-centric decisions continuously, for every customer.

Selling to the Price-Conscious Traveler

Pricing approaches that cater to a customer's willingness to pay have been a significant focus for hoteliers during the last couple of years. Such approaches consider the hotel's own historical data along with readily available market (demand and rate) data. Sophisticated mathematical models understand each customer segment's likely response to a price offer and enable a simple business principle: When demand is robust, hoteliers can be more aggressive in terms of pricing, and when demand is weak, they need more competitive pricing to gain market share. Hoteliers need to go a step further and use pricing technology to inform their promotional activities; the impact of each promotion on customer demand must be quantified before the offer is extended. There is no point in offering a discount where one is not needed and no point in planning a promotion if strategic goals around volumes and revenues are not likely to be met. In either case, hoteliers end up with rate dilution and no strategic benefit.

Rethinking the OTA Strategy

Pricing to win the customer is only half of the equation; the other half is retention. Hoteliers rely on OTAs to sell inventory they feel they cannot sell themselves. While this strategy — to sell what you can and let someone else sell what you cannot — made sense when reaching every customer was difficult, it has created some additional challenges. As a result

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