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.

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.

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).

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.

Games Customers Play

Have you noticed how our guests have become smarter over the years and are now able to wangle better deals from you? As much as the world gets smaller, travel has become much less complex and affordable and today’s guests can be geniuses at negotiating much better deals than earlier. Besides, a larger supply of hotel inventory as well as destinations has tilted the scales in the favour of the guest.

Following are some of the most popular tactics that used by Guests

  • Shortage of funds/ limited budget/ more than estimate
  • Complaining from the time of check in /event
  • Never appreciating the positives during his stay
  • “I am too busy now, meet me later”
  • “Your competitor is offering me better rates than you”
  • Praises the competition
  • “What is your best offer?”
  • “I’ll book with you only if you quote me a discounted rate”
  • Referring documents to make out as if he is comparing your quote with competitors, but not specifying any comparison
  • Asks you to give him a minute and keeps on doing other things for a long time
  • Does not pay proper attention – talks to others around – Leaves in the middle for a while
  • Raises his voice on the phone with the person he is talking to in front of you
  • Showing off that he will be favouring you if he commits in your favour
  • Asks for a complimentary stay to check quality (in case of a large residential banquet query)
  • Makes out that he is very pressed for time

I was used as a catspaw!

Children’s author Aesop in 1919 relates a fable of the monkey, the cat and the chestnuts.

Once upon a time a Cat and a Monkey lived as pets in the same house. They were great friends and were constantly in all sorts of mischief together. What they seemed to think of more than anything else was to get something to eat, and it did not matter much to them how they got it.

One day they were sitting by the fire, watching some chestnuts roasting on the hearth. How to get them was the question.

“I would gladly get them,” said the cunning Monkey, “but you are much more skillful at such things than I am. Pull them out and I’ll divide them between us.”

Pussy stretched out her paw very carefully, pushed aside some of the cinders, and drew back her paw very quickly. Then she tried it again, this time pulling a chestnut half out of the fire. A third time and she drew out the chestnut. This performance she went through several times, each time singeing her paw severely. As fast as she pulled the chestnuts out of the fire, the Monkey ate them up.

Now the master came in, and away scampered the rascals, Mistress Cat with a burnt paw and no chestnuts.

Hence the phrase – ‘he used me as a catspaw.’

How often have we been used as a catspaw in our jobs?

As a General Manager, I was given to sign termination letters and file cases against various employees. Sometimes I may not have agreed with the harsh step taken, but job insecurity out of fear, may frankly have led me to comply… not my proudest moments for sure!

We all have our values, our code of ethics, our ways of looking at life… yet moments come when we find ourselves being used as a catspaw. You may relate to situations like these:

  • Your colleague convinces you against your better wishes to go along with his/her plans or ideas…
  • Your subordinate entices you into signing off his/her leave form with flimsy excuses and you do so in order to gain his/her approval…
  • Your boss gets you to do his/her work using flattery to keep you motivated…
  • Your boss takes your idea and implements it without giving you due credit…
  • People are nice to you only because they need something off you and not necessarily because they care for you…

All of the above may happen, but at a cost to you. Remember how pussy’s catspaw was singed while pulling out chestnuts from the fire for the monkey?

So keep a watch and be aware of such situations!

How many time have you been used as a catspaw recently?

Disruptive technology half a century ago ~ Sony vs. RCA

There is a class of technological changes where almost always the new entrant – with far fewer resources and with no track record – topple existing industry giants. This special class of technological changes, paradoxically, does not have to be sophisticated or even radical.

Take transistor television as an example. When RCA first discovered transistor technology, the company was already the market leader in colour televisions produced with vacuum tubes. The company naturally saw little use for transistors beyond a mere technological curiosity and decided to license it to a little-known Japanese firm called Sony.

Sony, of course, could not build a TV out of transistors, but it did manage to produce the first transistor radio. The sound quality was awful, but the radio was affordable for teenagers, who were delighted by the freedom to listen to rock music away from the complaints of their parents. Transistor radios took off. Still, the profit margins were so low that RCA had no reason to invest further. RCA was busy making serious money and investing every R&D dollar on improving vacuum tube colour TV.

Sony, meanwhile, was looking for the next big thing. It launched a portable, low-end, black and white TV targeting low-income individuals at a rock bottom price. Called the “Tummy Television,” it was tiny enough to perch on one’s belly — an antithesis of RCA’s centrepiece that graced middle-class living rooms. Why would RCA invest in transistors to make an inferior television for a less attractive market? It did not.

The real trouble began when Sony finally pushed the transistor’s performance to allow it to produce colour TVs based entirely on the new technology. Overnight, RCA found itself trying to catch up on a technology that it had ignored for the past three decades, which it had ironically pioneered and licensed out. This type of technology – inferior at first but immensely useful later – was disruptive, a term that has since been immortalized in the business lexicon of executives, consultants, and academics.

2016 India Biz Travel

India is one of the fastest-growing economies in the world, and the business travel spend that originates there is expected to reach $33 billion in 2016. India is the 10th largest global business travel market, and GBTA expects the country to climb into the sixth spot by 2019. In July, GBTA had estimated that business travel spend growth from the second quarter of 2015 to the second quarter of 2016 would come in at 10.2 percent. Now that those numbers are final, GBTA has found that business travel spend grew 10.9 percent during that period.

GBTA expects domestic business travel spend, which it estimates represented 91.4 percent of India’s total business travel spending in 2016, to increase 12 percent to $30.2 billion in 2016 and to reach $33.8 billion in 2017.

Think out of the box

An interesting case study…

First you hire someone, then you train them. Right? David Bowd thinks that’s backward.

Earlier this year, the CEO of Salt Hotels was preparing to open his fourth location, in Asbury Park, New Jersey. But he didn’t run a cattle call. He and his team started Salt School instead.

“This is an industry where it’s all about attitude and hard work,” said Bowd, whose resume includes stints with boutique hoteliers like Ian Schrager and Andre Balazs.

The company invited local job-seekers to a free, 10-week, 25-hour introduction to hospitality, and the only requirement was explaining why they wanted to be included. The result: 380 applicants, from teens to 60-year-olds, for 160 spots – many with moving stories of seeking a break, a second chance, or to be a role model for their kids.

“We set about calling in every favor we could with all the hotel friends we had” to staff the Saturday morning sessions, Bowd said, which focused on topics like sales and marketing, F&B and revenue management. In one class, students role-played front desk scenarios – luggage delivered to the wrong room, complaints about loud neighbors. “The purpose was to make decisions on the fly. It’s thinking creatively,” he added.

Bowd watched students gravitate toward certain responsibilities. “It was such a natural evolution of people moving toward areas that they felt comfort in and had a passion for,” he remembered. It also fostered a healthy competition. “You see who’s shy, who’s outgoing, and you are able to match people with their skill set much easier because you see them perform,” he said.

In the end, 110 students graduated, and the hotel hired 67 (three have been promoted); 90% were from Asbury Park. Other local companies have inquired about hiring the students, as well.

“At the end I thought, why have we never done this before? We just employed a whole workforce that we’ve already spent 10 weeks with,” Bowd said. “They know what our core values are, they know what to expect, they have a passion, they’re all local. This is a no-brainer.”

It’s also a lot of hard work, he acknowledges, but with results that far exceeded traditional recruitment, using an approach that he would like to see larger companies use in the communities they enter.

The school moves next year to Topeka, Kansas, where Salt is working on a 109-room hotel. Former students will become staffers to help prepare for an early 2018 opening. “I’ve opened many hotels, and this is the best way of doing it,” Bowd said.

Applying EI in Organizations

Emotional management skills which provide competency to balance emotions and reason so as to maximize long term happiness for self as well as dealing with others, when applied within organizations has major benefits.

Customer Service: Learning how to help your customers feel heard, understood, helped, served, respected, valued and important.

Hiring: Selecting employees with relatively high Emotional Intelligence, i.e. emotionally sensitive, aware, optimistic, resilient, positive and responsible.

Turnover: Enabling turnover reduction through helping employees feel appreciated, recognized, supported, challenged, rewarded and respected.

Training: Raising EQ at all levels of the business through Emotional Literacy and EQ awareness workshops.

Corporate Culture: Creating an environment where employees feel safe, trusted, special, needed, included, important, cooperative, focused, productive, motivated, respected and valued.

Productivity: Developing intrinsic motivation. Increasing employee commitment, cooperation and cohesion. Reducing lost time spent on conflicts, turf-battles, defensiveness and insecurity.

Goal Setting: Setting goals based on feelings. For example, stating the goal that we want customers to feel satisfied, appreciated, etc. and setting similar goals for employees, and then getting feedback on feelings and measuring and tracking performance.

Emotional Support: Mitigating negative emotions like fear, worry, anxiety, and stress.

Leadership: A leader with high EQ is emotionally aware. This means that he or she is aware of his own feelings and is not limited to logic, intellect and reasons when making decisions and managing people.

Marketing through Instagram

Its going to get harder and harder to think of Instagram  as nothing more than a simple tool for sharing a filtered version of your life with family and friends as this social media platform is fast becoming a marketing machine.

Now, businesses can set up a profile that contains a “contact” button that allows prospective buyers to call, email, or text a seller without ever having to leave the app. That grill making your mouth water? Call and make a reservation at the restaurant.

There is also the new Insights feature which promises to give businesses actionable information about ‘who their followers are and whose posts resonate better than others.’ By learning more about the behaviour and demographics of your audience, one can create more relevant and timely content.

Sellers will be able to promote posts, turning well-performing posts into ads right within the app. A business simply has to select an existing post, add an action button, and then select a target audience (or let Instagram suggest an audience on its behalf). From there, you will have an ad ready to run for as long as you’d like. The whole world will be able to access these tools by the end of the year.

Improving your ranking on TripAdvisor

Quality, Recency and Quantity of reviews are the three key factors that interact to determine a property’s popularity ranking on TripAdvisor. So what does one do to seek for prime positioning on TripAdvisor? Here are some suggestions to do it the honest way…

  1. Provide remarkable service
  2. Be true to your brand
  3. Be honest
  4. Mobilize your team in creating a guest-centric culture at your hotel
  5. Offer great value to your guests
  6. Do it with passion every day
  7. Empower your staff
  8. Reduce negative reviews by service recovery during the guest’s stay
  9. Listen to your guests in order to enhance the experience and overall satisfaction.
  10. Encourage guests to leave a review

Bookings cost more through OTAs

Sometimes, we all need to be reminded of just how much we’re throwing away by leaning too heavily on OTAs as a primary source of online bookings. Everyone knows that OTA bookings cost more, but very little is ever made of the fact that OTA bookings are usually much lower in total value than direct bookings.

The picture of an OTA customer is clear. They don’t care about your hotel brand (or any other property’s brand for that matter), what makes your experience unique, or any of your updates and renovations. You are a commodity to them. They’re looking solely at price and where they feel they’ll receive more bang for their buck.
OTAs are not only your least valuable booking sources, they are also your costliest. To make matters worse, many hotels attempt to out-do their competition on OTA channels by offering even lower rates than what is listed on their own hotel website (via opaque offers). It’s the hotel industry’s version of hara-kiri. Not only is this short-sighted, it unnecessarily undercuts and cheapens any other efforts you make to drive profitability at your property. Lowering already-discounted room rates will ultimately leave potential guests no reason to book direct.