IT’S THE New Year and the hospitality sector is abuzz with a whole new energy. The direct contribution of tourism and hospitality to GDP is expected to grow at 7.5% p.a. and cumulative FDI inflows are pegged at USD 12.7 billion. Standing out as a fast growing, young nation in a world grappling with recession and ageing population, India definitely has that advantage. Yet with international chains expanding in South Asia and success of “sharing economy” driven by the new age millennial, hoteliers will have to be on their feet to not be left behind by the expected trends.
Trend #1: Direct Booking
The Indian hospitality sector stands as an inverted pyramid today with excess supply in the luxury segment and hardly 18 rooms available for 100, 000 of the population in the budget/mid size segment. Encouraging a customer to directly book on a hotelier’s website saves up immensely on distribution costs which ranges between 4-5% (inclusive of website technology upgradations, content personalization, SEO, real time data marketing, social media marketing, consultancy) as against a hefty 18-24% commission given to the OTA. Saving up on distribution costs will allow the hoteliers to invest the same in product/service improvements, human resources, in turn adding to the bottom line. It also enables hotels to invest in customer interface and build greater lifetime value by removing its dependency on OTA for customer data.
To increase direct bookings, investing in the right tools is a must. Data intelligence, A/B testing (variation of different elements on the website), smart personalization (tailor made content as per the profiling of the customer) are necessary to drive conversions. However since 98% of the customers leave your website without making a booking, re-targeting (tracing the user on the web through cookies) through reservation abandonment applications is a priority area.
Trend #2: Loyalty Program
It is high time that hotels ditch the rigid, point based loyalty program whose time taken for benefits to mature is time handed down to the new age millennial to search for “authentic experiences” (valued by 32% of them in contrast to 14% of the older generation) elsewhere. This traveler expects simplicity in communication of program benefits, a choice to opt for benefits as per his taste and quick gratification (75% demanding it to be within 3 months of last booking) of the same. If this rings warning bells of a hole being burnt in the hotelier’s pocket, such fears may be baseless. As per a Deloitte study, the millennial is ready to spend 41 USD more per night and travel up to 15 minutes out of his way to spend his time at his preferred hotel brand.
Loyalty is not obvious through a mere enrollment in a program. It is behavioral. Only 4% of loyal customers of a brand would book through an OTA. However nothing stops the remaining 96% from directly visiting a competing hotel’s website. This is where data intelligence plays an important part in selling to the customer that “only you know him the best” – an early check in for a business traveler , a collection of hand picked coffee beans from around the world for a coffee connoisseur or room savings per night displayed prominently on the website for a rate seeker can all be incorporated basis the gold mine of data you are sitting on.
Trend #3: Internet of Things
Every month, there’s a new sign on for Amazon Echo or Google Homes. Intel estimates that by 2020, on an average there will be 25 smart objects per human on this planet. Starwood Hotels & Resorts utilizes a technology called “daylight harvesting” to save on energy and provide consistent in-room lighting by automatically adjusting the LED lighting on the basis of incoming sunlight into the room. Imagine the efficiency if the housekeeping staff prioritized room cleaning as per the keyed in expected arrival time OR the maintenance staff serviced the AC based on actual usage.
The technology is still nascent with the need for a universal coding language that can communicate between devices on different operating systems or made by different companies restricting maximum inter-connectivity. However with a lot of innovative start-ups in the API space, vendor integration isn’t a distant dream.
Trend #4: Data Intelligence
The success of the above mentioned three trends rests on the foundation of sound data intelligence. Imagine the data from your direct booking engine integrated with your property management system. You hit the jackpot in making the customer submit his primary email address and also can work on preferences recorded at time of booking (ex: ground floor/ concierge services/ non smoking room/ allergies/ special dietary requirements). Integration with social media profiles, when not too intrusive, can add to the charm of “a home away from home” ex: a pet friendly hotel at a certain premium. Purchases made at restaurants/ gift shops within the hotel recorded through sales POS is also a data source that can aid more surprise with better targeted offers.
The adjustment of the ambient temperature conditions on check in through IoT is possible due to the same being recorded on your visit the same time last year. If you had mentioned the need for large bathroom slippers in your review on Trip Advisor post the visit, there’s no reason why it shouldn’t be pre-arranged for you this time. From pre-arrival to during stay to after stay, an opportunity to delight the customer and win his lifetime loyalty exists with hoteliers. All that’s needed is initiative to work on a state of art CRM and analytics to make sense of all that data.
Trend #5: Pro-hospitality and tourism government policies
The vibrancy of tourism in a country is also a function of the socio-economic and political environment in which it operates. Memorandums of Understanding signed between Air BnB and Gujarat (to highlight the unique experiences across the Rann of Kutch or Rani Ka Vav) or between Make My Trip’s Right Stay and Assam (to provide home-stays employing the locals in difficult but exotic terrain) , creation of Hospitality Development and Promotion Board to monitor hotel project approvals/clearances, passage of the Goods and Service Tax Act enabling a bill that should confound the customer no more, conceptualization of a “tourist police” for safety of travelers , are all expected to give a positive fillip to the industry.
What remains to be seen is the impact of urbanization and steep land rates. Whether it is the major players moving to the asset light space or the sharing economy taking advantage of the more community oriented millennial traveler to provide less space per capita , 2017 will be a year to remember.
Are you ready to brace the change?