Following the success of ‘Hospitality 2010’, Deloitte’s new Hospitality 2015 report tracks travel trends that will impact the region
ACCORDING to Deloitte’s latest report, Hospitality 2015: Game Changers or Spectators, the Middle East is poised to benefit from the emerging “new world order” in global travel and hospitality. Markets like China and India and expected to bring 150 million “new travellers” into the region. The continued expansion of Middle East carriers gives the region a unique opportunity to be a “Game Changer” in the global travel and tourism industry. Add to this, the rich cultural and religious heritage of the Middle East and substantial investment in tourism infrastructure in the GCC led by Saudi Arabia, the UAE and Qatar and the stage is set for the region to emerge as a preferred destination for travel & tourism globally.
However, coming out of a global downturn, Deloitte highlights seven key drivers that will help the Middle East achieve this “Game Changer” status. Hospitality 2015 predicts these to be:
Emerging markets
China and India will continue to be the key hospitality markets, and according to the report, by 2015 these countries will have absolute year-on-year tourism growth greater than the United Kingdom, France or Japan. There will be a significant demand for both leisure and business hospitality from these markets. Their growth, coupled with the route networks of regional carriers, will present the Middle East tourism industry with exceptional opportunities for growth.
Alex Kyriakidis, global managing partner of Tourism Hospitality & Leisure at Deloitte, said: “The greatest future potential in these markets will lie in developing mid-market and economy-branded products aimed at the domestic traveller and in promoting the Middle East as a cultural destination.”
Demographics
In 2015 and beyond there will be two key demographic drivers of change in the industry, which will create new patterns of travel and demand in the West, and important new source markets in the East: the ageing baby boomer population, and the emerging middle classes of China and India. By 2015, US boomers are forecasted to account for 60 per cent of the nation’s wealth and 40 per cent of spending. The middle classes of China and India will also create ripples of change far into the future as their travel patterns evolve from domestic to regional to international. India alone is forecasted to have 50 million outbound tourists by 2020.
Brand
Brand is likely to become a more important choice factor for luxury travellers. By 2015, mass markets lifestyle brands will increase in numbers and scale as well as achieve strong revpars. The growth of social media in the last five years has been staggering, and will continue to grow, offering opportunities to build awareness. This new form of communication and feedback is good news for consumers, and offers both threats and opportunities for operators.
Talent
An average hotelier spends 33 per cent of revenues on labour costs, but employee turnover in the industry is as high as 31 per cent. High employee turnover continues to plague the industry and operators need robust strategic plans to retain their critical employees and manage turnover. Companies must also rethink their operating model to effectively execute business talent strategy
Technology
According to the report, to be successful in 2015, hospitality companies must invest in technology. The battle to drive bookings through proprietary websites will continue, but all major operators will also develop applications and websites for mobile devices to meet consumer demands. In-room product innovation too, will continue but consumers and not hotels will define these new technologies.
Sustainability
Sustainability will become a defining issue for the industry in 2015 and beyond. Rising populations and scarce resources will provide a challenging business environment which means sustainability will need to be embedded within all facets of the hospitality industry. A key challenge will be the adaptation of existing asset base, which could be expensive and disruptive.
Crisis Management
According to the report, the key to the hospitality industry’s survival of unpredictable shocks and minimising their impact is to establish appropriate responses, protocols and risk management programmes. During the recent recession, hotel demand fell four times faster than GDP, the most dramatic fall over the past century. The best practises in a crisis includes organisational re-structuring, business continuity planning, flexibility pricing, loyalty, and customer care.