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A shift toward value
By Jonathan Chajet

The hospitality industry will continue to move forward cautiously in 2012, focusing on pockets of growth and making measured investments to reinforce guest loyalty and enhance differentiation.

Flight to value
One clear outcome of the global recession has been a distinct shift toward value. Not simply a money-saving tactic, consumers are trading down to reflect a new view of their world: frugality is beautiful. From choosing to drive rather than fly, saving the weekend getaway for truly celebration-worthy events, or simply cutting corners to meet tighter budgets, value for money is essential at all price points. For hoteliers, this means higher guest expectations. Flawless execution of the basics is a must. Sustainability-friendly practices are not just about being green, but adopting a “waste not, want not” philosophy.

Personalizing my stay
The internet continues to shape travel purchase behavior, with increasing use of digital tools to compare experiences, features, and prices. Today’s traveler is an informed traveler. Interestingly, online booking sites like Travelocity, Expedia, and Ctrip represent only a small fraction of actual sales, but play a disproportionately large role in shaping price perceptions. As a result, hotel brands are actively participating in travel review sites, with customer service representatives responding directly to customer complaints in travel forums for the entire world to see.

Once a guest reaches the front door, hotels are increasing their emphasis on empowering guests and giving them control and personalization in the experience. Travelers demand excellence. Make my technology work as seamlessly as it does in my home or office. Give me choices in my stay experience. Connect me with the world outside the hotel and make my trip run more smoothly. Help me turn your space into my space.

Fighting homogeneity
At the luxury and near-luxury end of the market, hotel brands seem to be in an arms race over features, creating short-term buzz but long-term risks. To justify their rates, hotel brands are investing heavily in formulaic interior design, celebrity chefs du jour, and lavish rewards programs. Many of these tactics are short-term differentiators, but research reveals that travelers are starting to feel as though everyone looks and sounds the same. This could lead to an apathetic market edging towards commoditization, not unlike the airline industry.

The sea of sameness will put the high-end of the market to the test. Increasingly sophisticated travelers are putting hotel brands under the microscope, demanding exceptionally proactive service to go along with their exceptionally comfortable beds. Those who don’t just promise, but actually deliver consistency in their brand experience will have a far easier time finding, attracting, and retaining loyal guests. The global economic recession has put one destination on the top of every hotel brand’s travel wish list: China. As one of the few growth markets in the world today, more and more hotel brands are turning to the Middle Kingdom to add to their bottom line. In fact, it is estimated that Starwood is opening a new property in China every two weeks.

Currently, travel to and within China is booming. But, in the long-term, Chinese consumers will become an increasingly important segment of the international hotel market as well. Overseas travel is frequently cited as a life-long dream for Chinese consumers who now have the means to do so. Hotel brands are building properties in China as fast as they can sign construction contracts in order to generate brand awareness and create preference for the years to come.