China – The Emperor of outbound tourism

In only three decades, the Chinese have gone from easily stereotyped, rube, new tourists to conquerors of the industry. After hundreds of millions of visits and billions of dollars showered around the world, Chinese tourists now hail from the middle, rich and the very rich classes. Fewer travel in groups. Some still enrage destinations with their thoughtlessness. Others are welcomed for their enthusiasm and unique points of view. Above all, the Chinese are changing tourism around the world.

The travel numbers are astonishing. For the fourth year in a row, the Chinese are the world’s biggest group of international travellers, taking 142 million international trips in 2017. In the next decade, that number is projected to jump to 390 million, according to the China Outbound Tourism Research Institute.

And Chinese tourists are the biggest international spenders: $258 billion last year. All this has been accomplished at a time when only 7% of Chinese citizens hold passports. On the inbound side of the equation, China is expected to become the No. 1 travel destination sometime in the next five years, knocking out France and solidifying its dominance over tourism.

Chinese tourists can lift economies seemingly overnight. Chinese visitors to Europe improved the Continent’s trade balance by $4 billion.

Wealthy Chinese shoppers among the haute couture shops of Avenue Montaigne in Paris are a common sight. There is so much money involved in Chinese tourism that Anna Wong of the U.S. Federal Reserve recently warned that what looks like tourist spending overseas might actually be money laundering to conceal asset investments from the Chinese government.

It’s hard to wrap one’s arms around this ever-growing Chinese tourism juggernaut, but its emergence is clearly the most important milestone for the industry since globalization kicked off the modern explosion.

Pop-up Hotels

Permanence is passé. As any trend-conscious urbanite will attest, bars, restaurants and stores no longer require longevity in order to achieve success. In many cases, the shorter their shelf-life, the more popular they become.

Pop-up outlets have – with a certain irony – turned into one of the more durable trends of the past few years. Typically they give fledgling brands a showcase, maximise cheap rents and offer customers a sense of having bought into something unique. But can the world of short-lease fashion stores and week-long cocktail bars translate into the hotel sector?

Of course it can. The concept of pop-up hotels has become more prevalent in recent times. This is partly due to clever branding (temporary accommodation, after all, being far from a new phenomenon) and partly due to some highly creative advances on the part of providers. In an era when differentiation has become all-important, there’s value in being able to market an overnight stay that doesn’t fit the usual mould.

Pop-up ‘hotels’ tend to fall into one of a few categories. Many are essentially luxury tents, soft-shell spaces erected for a few days at a time in desirable locations and fitted with as many mod cons as can realistically be managed. The ever-more-popular notion of festival ‘glamping’ also fits here.

Other pop-up accommodations are more functional but no less viable, making use of existing structures that are currently empty. These might be anything from shipping containers to untenanted buildings.

The premise behind the idea is simple. When high-rise residential buildings are completed, it can take them up to two years to secure long-term tenants. WhyHotel, which recently secured almost US$4m in seed funding, makes the most of this period by selling as-yet-unfilled units in these new developments as hotel beds.

“We’re on site for guests 24/7,” explains President and Co-founder Bao Vuong. “We generally start by using around 50% of a building’s units, so early on we have by far the predominant number of people in the building. That percentage gradually falls as the months go by, and by about 20% we pull out.”

The pangs of Over-Tourism

The term “overtourism” is a new one and denotes the phenomenon of a popular destination or sight becoming overrun with tourists in an unsustainable way. We have seen it occur across Asia for much longer than the word has been commonplace, and the reality of it looms large as tourism continues to grow on a global scale. But whose fault is it?

Having acknowledged the issue earlier than most, a British travel company has come up with a list of offenders that includes the expected as well as the unexpected. Those belonging to the former camp include: airlines, which have transformed countless holiday hotspots into honeypots by offering affordable flights without a thought to the environmental costs involved; cruise lines, which have been accused of not only polluting the atmosphere but also giving little – financially or otherwise – to the ports at which they call; tourist boards, which for too long have been concerned with volume over value; and, of course, travellers themselves.

Among the more unusual suspects, however, is the United Nations World Tourism Organisation, nominated for having stated that, “Tourism is not the enemy. Growth is not the enemy, numbers are not the enemy. It’s how we manage growth that matters,” in response to anti-tourism protests in Barcelona, Spain, last year. Arguably, in the case of overtourism, both tourism and growth are the enemy, something that a leading global institution would do well to admit.

The media is also singled out, “mainly because they are resistant to publishing negative stories on their travel pages.” The best beach articles declaring the top 10 Instagram spots are hackneyed, repetitive and guilty of funnelling travellers to the same tiring destinations. Travel publishers, editors and writers could also be pulled up for not acknowledging the issue of overtourism until it becomes impossible to ignore.

Blockchain in Travel

Blockchain enables a community to formulate and implement its own economic rules, hence the rise of crypto currencies like bitcoin, which for the most part sidestep government regulations. This is done in part through the digital tokenization of a commodity, real or virtual, connected to a smart contract that defines when and how value is transferred or realized.

With crypto currencies, the commodity is a financial token whose value is typically measured against government-backed currencies. Hospitality technologies now want to create a token and smart contract linked to a specific room in a specific hotel on a specific date and a platform marketplace where rooms can be bought and sold using an interface similar to what is currently displayed by OTAs.

Although the value will float, it would likely do so with more stability than bitcoin because it is backed by something tangible: a reservation.

Once the room is purchased on the platform, it can be occupied by the buyer or resold, either by a prospective guest whose plans have changed or by a speculator hoping to resell the room at a profit. The speculator can be, as examples, an individual, a meetings or wedding planner, an online or offline travel agency, a tour operator or a festival organizer.

The benefit for hotels is that it frees them from dependency on OTAs and enables them to operate with the same benefits as a vacation club, with income guaranteed for a room that could later be traded, resold or even go unoccupied.

The platform will be enormously disruptive to OTAs and it will free hotels from the temptation to sell inventory at significant discounts to OTAs and will provide flexibility to travellers who might otherwise face losses from cancellation penalties.

This system will reduce the cost to hotel owners from as high as 25% of a room’s rate — an estimate of OTA costs — down to 2.5%.

This platform has the potential to disrupt the hotel brands themselves, and possibly even home-sharing companies like Airbnb, by providing a cheaper form of third-party distribution for owners of hotels and homes/apartments/spare rooms.

Alexa for Hospitality

Alexa for Hospitality is designed to bring Amazon’s voice assistant technology to everything from chain hotels to vacation rentals.

The system can be customized to include key guest information, like checkout time or pool hours; allows guests to request services like housekeeping or room service; and can be configured to control “smart” hotel room functions, like adjusting the thermostat or raising the blinds.

Marriott is Amazon’s launch partner on the new platform, which is notable not only for the potential scale of this rollout, but also because the hotelier had been testing both Siri and Alexa devices ahead of today’s news.

According to Amazon, Marriott International will introduce the new Alexa experience at select properties in Marriott Hotels, Westin Hotels & Resorts, St. Regis Hotels & Resorts, Aloft Hotels, and Autograph Collection Hotels starting this summer.

Fake Hotel Websites Conning Holiday-Makers

The rise of fake hotels is a phenomenon that has left both consumers and OTAs frustrated and out of pocket.

In recent months, the travel industry has witnessed a tidal wave of fake chalet websites, with one website, Alps-stay.com, conning unsuspecting holiday-makers out of tens of thousands of euros.

It’s no wonder fraudsters are targeting consumers booking holidays – hotels in Europe saw an increase in bookings of 6% in 2017 compared to 2016. However, it’s not just consumers suffering the monetary blows, OTAs are too.

How? A fraudster will list a fake hotel and then use stolen credit cards to make a booking via the OTA’s website. The OTA will then receive chargebacks for bookings after making a payment to the fake hotel. By this point, the fraudster will have withdrawn all the funds paid by the OTA and won’t respond to any contact attempts, leaving the OTA with a financial loss.

RevPAR growth translated into profits

Hotel profitability is the primary measure of success for hotel owners, managers and operators. However, revenue and top-line data continue to be the focus of the industry.

There is, however, a clear relationship between top-line performance (RevPAR) and overall profitability (gross operating profit per available room). While examining the relationship between revenue growth and profit growth, generally, profit growth tends to be between 1.5 and 2.0 times the growth in revenue. So a 10% increase in revenues equates to a 15%-20% increase in profits (GOPPAR). Currently, with profit margins near peak levels and significant profit growth tough to come by, this ratio tends to be lower than in past years. If we look at individual hotel performance growth, the relationship is immediately apparent.

In addition to looking at percentage growth, we can also examine absolute growth in revenues. GOPPAR is a function of RevPAR growth. The correlation is much higher when looking at absolute RevPAR and GOPPAR growth.

For every rupee increase in RevPAR, full-service hotels see an increase in GOPPAR. There is also a fixed element in this relationship. The constant tells us that for a static RevPAR, GOPPAR actually decreases. This demonstrates the rising levels of operational costs, like labour costs, HLP costs, F&B Costs, R&M Costs, etc.

A new era of digital marketing in travel

Online search is now the first step for a majority of travellers, with some consumers visiting up to 38 sites before booking a ticket. Yet the travel industry must adapt to newer digital marketing strategies to win over potential customers.

The key to success is delivering ultra-precisely targeted content, leveraging personalized re targeting combined with AI and deep learning.

A single customer looking to book a trip can visits hundreds of travel pages each day. The search often takes weeks before the final purchase is made. This means there’s a ton of data flying around that digital marketers need to make sense of.

The number of digital travel touch points grows rapidly, as travellers look for better offers via search engines, booking apps, online travel agencies, and deal sites. However, 39% of leisure travellers and 45% of business travellers believe that they use too many websites to find flights. In addition, 43% of leisure travellers and 51% of business travellers apparently want to spend less time searching for flights.

Airfare, hotel and car rental providers can reduce this overload by serving brand awareness and personalized offers at precisely the right time. This moment is where AI and deep learning can change the game for digital marketers in the travel industry.

The Evolving Travel Agent

A major chunk of revenue continues to come from commissions and service fees. But the source of these commissions has been changing over the years.

When airlines stopped paying high commissions back in the 1990’s, travel agents started to lean heavily on add-on services such as hotel and transport for commissions.

With services such as Airbnb and Uber now available in almost every major city, commissions from these services too are likely to dwindle in future.
At present, travel agents depend on two categories of travelers for their revenue. A good number of corporate business travelers still rely on partner agencies for their tickets.

In the consumer segment, holiday packages and custom itinerary planning services have been taking off with an increase in international holidaying. The drop in commissions is mostly made up for by the corresponding rise in the scale and value of such bookings

Expected Changes in Biz Travel – 2018

The travel industry is being heavily disrupted – The rise of the sharing economy, changing demographic expectations, big data, political turmoil, AI, and currency shifts are just a few of the many forces that are putting pressure on the industry. Here are some changes we can expect in 2018.

Travel growth expected: According to the Global Business Travel Association report, expected business travel spending is to grow by 6.1 percent in 2018, up from the expected 5.1 percent in 2017 and this optimism in the business travel industry is driven by accelerating global trade, despite echoes of the recession, in recent memory. Growth in manufacturing and in emerging markets is also major factors. There will be an increase in travel costs, with airfares expected to rise by 3.5 percent and hotel prices 3.7 percent.

The sharing economy completes its transition to business mainstream: In 2014, small business owners chose taxis over Uber by a factor of 3 to 1, but by late 2017 that number has flipped, with small businesses choosing Uber over taxis by 3 to 1.

Airbnb may also be approaching saturation. In 2014, small business owners chose hotels over Airbnb by a factor of 16 to 1. By late 2017, that lead is down to 6 to 1.

Clearly, there is some resistance to embracing the sharing economy when it comes to sleeping arrangements, but even those going the hotel route are likely to see changes in a more casual direction. This is part of a larger trend towards the “consumerization” of business, which is likely to become increasingly important for business travel, especially for businesses hoping to hold top talent in recruitment, negotiation, and other travel-heavy positions.

Self-driven cars begin to play a real part: Uber surprised everybody in August of 2016 by launching a fleet of self-driving cars in Pittsburgh. While humans in the driver seat monitored the cars, it was much sooner than anybody thought a major company would be going commercial with self-driving cars, in any capacity.

The gravity of how quickly this shift could take place hit home in late November, with the announcement of a deal that would put 24,000 Volvo self-driving cars in Uber’s fleet. The cars will begin to hit the streets in 2019, but the fact that this major deal was brokered should have important implications for the direction of the business travel over the next year.

AI hits the industry in a big way: While the influence of self-driving cars is more likely to be on the horizon in 2018 than on the front doorstep, the broader world of AI will likely be making a big impact. According to an IBM report, more than a third of travel industry leaders will have four or more cognitive projects underway in 2018, and 41 percent plan to launch a cognitive project. Most of the investment is currently going towards chat bots to assist with customer service, whether in the form of messaging or call centre service.

IBM’s report found that the most cognitive-ready businesses in the industry considered personalization of the traveller experience one of the most important points to focus on. The report stated that an unnamed global airline was investing in a Siri-like AI that would communicate with travellers in natural language to put together a personalized travel plan. That personalization would be bolstered by analysis of interactions with other travellers and large data sets about preferences.

Meanwhile, Quantas Airways is already using self-service tech to cut check-in times by 90 percent, the Watson Virtual Assistant is improving call centre performance, Hipmunk has rolled out an app you can talk to like a person, and Amadeus is building custom offers for people based off of their social media profiles (with permission, it should be noted).

Tried & Tested Hospitality Advertising principles

In the same breath as the mantra ‘new is always better’ seems to make sense, it also unearths the realisation that it may at times be the wrong advice to be following.

In the lightning pace of today’s society, it may seem like guests are shouting at you to constantly provide something new, something upgraded, or something that excites them. And only a fool would fail to listen to their customers.

However, the way in which you deliver what your guest wants doesn’t always have to be completely reimagined. New marketing strategies aren’t always the answer – and aren’t always necessary. Yes, new technology and data gives you greater insight and more potential to impact prospects, but there’s a lot to be said for sticking to tried and true advertising principles.

We’re talking about taking lessons from ‘Mad Men’, street vendors, and vintage travel posters. Here’s what you could do with your hotel advertising now – that worked perfectly in the past.

Give your brand a narrative: You need to recognise the need to tell your story succinctly. Make your brand statement clear from the outset of any marketing activity you employ. Humans love nothing more than a good story; one that makes them feel. Once they ‘feel’, they’re more likely to act which is exactly what you want – the action being a booking. Advertising of yesteryear was very much focused on this and it’s driven companies like Coca-Cola to global success. Have the time and patience to craft a story for your hotel brand that will ignite the imagination of your potential guests and make them familiar with your business. Think of ways to present your story with some originality and uniqueness so you can stand out from the almost literal wave of ‘oceanfront’ hotels, for example.

At the same time you need to recognise people nowadays have ever shortening attention spans, so you need to tell your story succinctly. Make your brand statement clear from the outset of any marketing activity you employ. Consistency is key. If people are only going to be looking at your hotel for a short time and catching glimpses here and there of your brand as they research, you need to make sure the picture you paint holds the same message. This way, travellers will more easily recognise you and have some confidence in your ability to deliver a great guest experience.

Be as visual as possible: capitalise on the sense of wonder and awe great visuals can instilin travellers. It allows them to imagine themselves in the destination. In the past, travel posters and billboards had to accomplish this when there was very little else to rely on. Examine some of the best examples you can find and take a similar approach to any design or imagery you use for your hotel. Always keep in mind what kind of brand you are and who you’re trying to attract – then match this to the visuals you use.

Whatever you do, don’t rely on stock images too much or poor quality photos that make your property look dated.

Don’t waste time on dead ends: The best marketers have historically understood you can’t be everything to everyone; they knew when to push and when something was a lost cause. A lot of people may show interest in your hotel while they research for a trip. You need to identify which of these look right for the markets you usually attract and convert at a high rate. If they fall outside of your criteria, your efforts may be wasted. For example, a business traveller might not be the right fit for your all inclusive package including surf lessons.

By the same token, if a guest’s interest is peaked and they match the profile of your usual clientele you need to nurture this relationship. Make contact with them through online remarketing or email (or whatever is most relevant to their initial interaction), giving them a little more information, highlighting your best features and solidifying your business offering. By maintaining a connection, you can stay top of mind when the traveller decides to make a purchase decision.

Zero in on your guest personas: Traditional marketers would often work towards a niche, targeting their products very specifically to a preferred segment. You need to do the same. How specific you are is up to you. You may simply identify millennials as your target or you could go further and target travellers who work stressful jobs if you’re a resort, people on health fads, or adventure junkies if you’re located in rugged terrain etc.

It doesn’t matter who your key audience is, just as long as you know who they are and develop a strategy to get their attention.

 

 

 

Death knell for Room Service?

Traditional room service is becoming a service fewer travellers are demanding. Instead, they are looking to be able to order food the way they do at home. And hotels are responding by forming partnerships with food-delivery services.

Hyatt Centric has partnered with a food-ordering company to let guests order from restaurants selected by hotel employees. Orders can be made through a customized landing page. Residence Inn, part of Marriott International, leaves guests grocery-request forms in their suites. Employees will shop for the requested items, which are added to the final bill with no mark-ups. The rooms have fully equipped kitchens including refrigerators, microwave ovens and dishwashers.

Hoteliers say they are responding to travellers who crave an experience that resembles their home life. The popularity of cooking competition shows has also made many people enjoy the art of making their own meals.

Many travellers believe being able to cook in their hotel room would make them feel more at home while traveling. Millennials — those travellers in their 20s and early 30s — were more likely to want to cook. Growing up, they’ve been watching cooking competitions and they are into celebrity chefs. They view cooking as a form of relaxation and a form of entertainment.

At the same time, traditional room service has not been a money-maker for hotels, and many have decided to suspend it. Travellers, meanwhile balk at in room dining prices. According to the American Hotel and Lodging Association, 37% of hotels offered room service in 2014 vs. 22% in 2016. Meanwhile, 71% of luxury hotels offered alternatives to room service last year.

Some Hilton brands have moved toward pantry-style grab-and-go markets in their lobbies as an alternative. The shops offer hot or cold sandwiches, salads, snacks and sometimes beer and wine.

Even travel review website TripAdvisor has gotten into the food-delivery game, and has integrated Grubhub into its website in the USA and Canada. It recently also aligned itself with London-based Deliveroo to expand globally.

The food-delivery services are much more practical in extended-stay properties that have kitchens, which in general is a rapidly growing segment in the industry.

Online Marketing Buzzwords

Online marketing in the hospitality sector has a lot of buzz words associated with it. Here’s what 3 of them mean:

 Authenticity: “People like people”. Online, this means that users look for the “human” touch and social media is where they find it as opposed to a company’s website. Make sure you don’t fall in the trap of creating “standardised”, “automated”, “impersonal” content. It is very easy to do, but don’t expect any effective results: everyone and anyone can do this. Creating “personal”, “human” content is unique to your brand or business, and this is what will engage your fans, help you create a relationship with them. This is a very important point for hotels and restaurants as it is essentially a “people” industry.

Brand: Your hotel or restaurant brand is what makes you stand out on the market, what communicates your USP. It is important that your brand stands out as much online as it does in your dining rooms or hotel rooms. This can be done through the content you share, the tone of voice or even thanks to design. There is so much content shared online that in order to drive revenue and maximise your assets, you need to make sure it is your strong brand that is recognisable and visible.

Content: Before setting up your social media accounts, think about what type of content you will publish – video, pictures, text, GIFs… Any restaurant or hotel can publish pictures of their rooms or of their menu. You have to think of the content that will stand out, authentic content that relates to your brand and your positioning. There are so many luxury establishments that publish very low quality pictures for instance or even budget properties who publish very high quality content. One rule: never over-promise and under-deliver.

 

Storytelling to connect with Guests

It is not as difficult as it might seem to trigger an emotional response with your hotel marketing ideas. Even the typical guest room and pool images that hotels use appeal to emotions. The trick really becomes how to play an emotional ‘trump card’, one that generates a stronger emotional reaction, so your property sticks out from the rest.

In the hotel industry, storytelling can be your trump card. From making your message more memorable, to making your content more exciting and emotional, storytelling is what can drive more business through your website.

The first step in integrating stories into your hotel marketing ideas. Instead of focusing on the features of your property, start focusing on the benefits, experiences and emotions those features generate. For example, a pool isn’t just a pool. It’s a place where children can play, families can connect, and adults can relax.

The second step is to start telling these ‘stories’ in as many ways and places as possible:

Write Copy that Connects– Language can turn a typical hotel website page into an emotional story. For example, ‘Planning Your Stay’ can be a helpful page that informs travel shoppers about some of the amenities of your hotel, and some of the sights and attractions they can enjoy nearby. But ‘Prepare for Your Adventure’ infuses the emotion of discovery and a sense of the experience they will have.

Put People in Images– If there is one thing that’s common in hotel marketing images, it’s the absence of people. Adding people to at least some of your images instantly tells a story, illustrates an experience, heightens emotion and sets your site apart from the rest.

Let Customers Tell Their Story– User-generated content(UGC), both written and visual, can be your best source of storytelling. From the reviews that guests leave, to the videos they post on social media, UGC speak volumes in emotional, experiential ways.

Put a Face on Your Team– Visitors like to know they are dealing with real people. Sure, a ‘Bio’ tells a story, but an image adds to the emotional connection.

Create Stories Everywhere – Take a moment to read the descriptions you have of your images, both on your website and those that appear on OTAs. Do they tell a story? Or do they simply put into words what’s in the picture? Instead of ‘Fitness Room’ try ‘Give our fitness centre a workout.’