While a hotelier in the White House is redefining politics, hoteliers around the world face are redefining their business. Hotels are adapting to the new generation of guests, change the way we look at public space and get reshaped by technological innovations.
Observations
- In 2016, the global hotel industry retail value was $493 billion and this is expected to grow to $553 billion in 2018. The year-on-year demand of hotel rooms has increased in all global regions since 2014. With 68% hotel occupancy rates, Europe and the Asia Pacific are the two global regions with highest hotel occupancies.
- Rising prosperity is allowing more people to travel. Among other Asian countries, the Chinese and Indian middle class is growing: the Indian from 50 million reaching 200 million by 2020 and China reaching 475 million by 2030. Four decades ago, ten visitors from China arrived in Australia every week. During 2016, the same number arrived every five minutes. Every year, European destinations welcome about 10 million Chinese visitors.
- By 2020, it is projected that Millennials will spend half of the total amount of money spent in travel. The increasingly budget-conscious Millennial is moving away from traditional luxury and traditional hotels.
- More than one-third of the world’s travelers use their smartphones more when they travel than they do at home.
Analysis
The majority of travelers will soon consist of Millennials and they will demand different services than Boomers. Also, they will be more numerous and an increasing number will come from countries with a growing middle class. Furthermore, airport deregulation, airport connectivity and affordable flying, make traveling more accessible for lower income groups as well. And new high-speed railroads are connecting major cities; look at China’s new connectivity. In a few years, the hyperloop by Elon Musk could be the future of travel: a super-fast transportation solution. What will hoteliers do in the face of these shifts?
With hotel lobbies functioning as public spaces, hotels have a central role in shaping the city center
We can already identify at least three new paths and forms of hotels. The first is that the hotel is not only a place for the night anymore. Millennials are increasingly mobile, and boundaries between work and private life and between public and private life are blurred. Hotel by Day is a business capitalizing on this, allowing guests to book a hotel room for only a few hours and to enjoy privacy and anonymity without having to stay the night.
Second, hoteliers invite locals. Airbnb successfully gives travelers the ‘authentic’ locals’ experience. Hotels are tapping into this by opening their hotels up to the public with communal lobbies and social hubs. The Hoxton in Amsterdam has a lively lobby welcoming you to walk in and stay and offer events organized for a broader public. The Student Hotel is fusing long-stay student accommodation with short-stay facilities for travelers. Seen in a wider perspective, with hotel lobbies functioning as public spaces, hotels have a central role in shaping the city center. Many cities worldwide have privately owned public spaces, or POPS, that are for a large part owned by hotels. In New York, these POPS grant owners of buildings zoning bonuses if they open up parts of their properties to the public.
A third move that can be identified is the hotel as a pioneer technological home. Hotels increasingly use online check-ins or iPad front desks with a live face, like FaceTime, where reservations agents check you in. The fastest Wi-Fi connection and the best interactive communication with the hotel staff are competitive advantages. The strategy is that hotel chains are now using the upscale hotel as a science lab to develop technologies and subsequently take them down into economy brands. The hotel can be seen as a pilot space for new (IoT) technology. Citizen M is an example of a hotel focusing on money-conscious Millennials and business travelers, reducing employee costs by having no front desk.
