The FINANCIAL — London. In order to reverse the recent downward trend and achieve future growth, the hospitality industry will need to address seven major issues over the next five years, according to new report by Deloitte entitled, Hospitality 2015.
According to the report, the key drivers in determining success through 2015 and beyond will be:
China and India will continue to be the key hospitality markets, and according to the report, by 2015 these countries will have absolute year-on-year tourism growth greater than the United Kingdom, France or Japan.
Alex Kyriakidis, Deloitte Touche Tohmatsu Global Tourism, Hospitality & Leisure Leader, said: “In the emerging markets, the rise of the middle classes will drive significant new demand for both leisure and business hospitality. The greatest future potential in these markets will lie in developing mid-market and economy-branded products aimed at the domestic traveler.”
In 2015 and beyond there will be two key demographic drivers of change in the industry, which will create new patterns of travel and demand in the West, and important new source markets in the East: the aging baby boomer population, and the emerging middle classes of China and India.
Alex Kyriakidis said: “Hospitality operators who understand the drives and needs of these growing demographics will reap the rewards and become the future leaders in the industry.”
By 2015, U.S. boomers are forecasted to account for 60 percent of the nation’s wealth and 40 percent of spending 1. Adam Weissenberg, vice chairman and leader of the tourism, hospitality and leisure sector, Deloitte and Touche LLP in the United States, said, “U.S. baby boomers will drive growth in hospitality in the leisure sector. The key to attracting boomers is appealing to their ‘forever young’ attitude and desire for experiential travel.”
The middle classes of China and India will also create ripples of change far into the future as their travel patterns evolve from domestic to regional to international. India alone is forecasted to have 50 million outbound tourists by 2020 2.
The growth of social media in the last five years has been staggering, and will continue to grow. This new form of communication and feedback is good news for consumers, and offers both threats and opportunities for operators.
Robert Bryant, Consulting, Tourism, Hospitality & Leisure Partner, Deloitte UK, added: “The transparency of social media will highlight any inconsistencies in the delivery of the brand, and will provide a quick and enriching communication channel between brand and consumer. The most successful brands will be those that embrace and learn to harness social media rather than underestimate or fight against its influence.”
An average hotelier spends 33 percent of revenues on labor costs, but employee turnover in the industry is as high as 31 percent 3. High employee turnover continues to plague the industry and operators need robust strategic plans to retain their critical employees and manage turnover.
According to the report, to be successful in 2015, hospitality companies must invest in technology. The battle to drive bookings through proprietary websites will continue, but all major operators will also develop applications and websites for mobile devices to meet consumer demands.
Sustainability will become a defining issue for the industry in 2015 and beyond. Rising populations and increasingly scarce resources will provide a challenging business environment in which sustainability will need to be embedded within all facets of the hospitality industry.
According to the report, the key to the hospitality industry’s survival of unpredictable shocks and minimizing their impact is to establish appropriate responses, protocols and risk management programs. Operators also need to capitalize on new opportunities that may present themselves in challenging times.