Media contact: Laura E. Wilker, Deloitte Services LP, (212) 492-2871 or email@example.com
— Industry CEOs Weigh In on Pressing Issues —
NEW YORK, June 5, 2006 - The hospitality industry will need to address four transformative issues over the next three to five years, including brand, emerging markets, human assets and technology. These factors are expected to be key drivers in determining winners and losers through 2010 and beyond, and are likely to impact shareholder value, according to a new report by Deloitte Touche Tohmatsu and its member firms and the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University.
The report, “Hospitality 2010,” was released today at the 28th Annual NYU International Hospitality Industry Investment Conference, in New York City.
“Hospitality 2010” is based on in-depth interviews with leading industry CEOs and research and analysis of multiple economic and financial data. Alex Kyriakidis, global managing partner of Deloitte’s Tourism, Hospitality & Leisure practice, and Dr. Lalia Rach, associate dean and HVS International Chair of the NYU Tisch Center co-authored the report.
“The global demand for travel and tourism provides unprecedented opportunities going forward,” said Rach. “As our report shows, how individual hospitality enterprises address several key intertwining trends can greatly affect their ability to seize these opportunities and achieve financial success.”
Brand is expected to surpass location as deciding factor in hotel choices
Today, virtually all travelers consider location to be “extremely influential” in hotel choices, compared with slightly more than half being influenced by the brand. “Customers expect the brand promise to cover every interaction with the organization - pre-stay, stay and post-stay. If the hotel gets it right, they can expect improved customer loyalty, and guests who are loyal to their preferred brand are likely to stay more and spend more,” stated Kyriakidis. “We estimate that an upscale hotel chain has up to 200 million guest touch points annually, creating challenges in consistent delivery of the brand promise, customer relationship management and talent management.”
China, India and the Gulf States to experience substantial growth
In China, India and the Gulf States, both domestic and international travel is booming, due to lower airfares and emerging middle classes keen to travel for the first time. Between India and China, the report predicts that a total of 35,000 additional hotel rooms will be required to reach the same penetration as in more developed countries, and the majority of these will be positioned in the economy and mid-market segments. These new markets pose unique challenges in politics and ownership, as well as in recruiting, training and retention of local staff.
“While these emerging markets offer exceptional growth opportunities, the world’s largest tourism market - the United States - still has a way to go,” says Adam Weissenberg, U.S. managing partner of Deloitte’s Tourism, Hospitality & Leisure practice. “Total travel and tourism spend in the US, both domestic and outbound, is predicted to double from $830 billion to a staggering $1.6 trillion by 2015, leaving room for growth, particularly at the luxury end of the market.”
Aging consumers will change the game
The Baby Boomers in the United States and Europe are a huge demographic with enormous amounts of disposable income. They are expected to live longer, be more active, travel more and desire new experiences both in terms of cultural and event-based tourism.
“The percentage of the population aged 65 and over in Europe is projected to increase from 15 percent in 2000 to nearly 25 percent by 2015 and increased travel by the ‘silver’ segment is likely to maintain Europe’s position as the number one tourism exporting region, delivering some 730 million travelers by 2020,” says Kyriakidis. “In addition to addressing the needs of aging consumers/travelers, the hospitality industry will need to address talent management issues, as aging populations hamper the ability to find sufficient staff in some regions.”
Playing catch-up with technology
The industry is historically in the lowest quartile of technology spending within the consumer businesses; however, all the executives interviewed expect to increase IT investments, particularly in reservations, distribution, loyalty programs, and customer relationship management. In the US and Western Europe, more people relied on the Internet for travel information last year than relied on friends and acquaintances, posing significant challenges and opportunities for the industry. In addition, more demanding customers have come to expect more personalized service, and in the future hospitality suppliers will need to consider online room selection and check-in, personalized bed (variable firmness), and personalized in-room food and beverage offering.
“Historically, the airline industry has led the way in loyalty programs, with travelers showing greater preference for airline miles than hotel points and making conscious decisions to fly the same carrier despite inconvenient schedules,” says Rach. “All CEOs interviewed said that they plan to spend more on IT and pursue efforts to interact directly with guests to maximize revenue and avoid merchant intermediary costs, which can be as high as 25 percent of room revenue.”
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About NYU’s Preston Robert Tisch Center for Hospitality, Tourism and Sports Management
The Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University’s School of Continuing and Professional Studies is a dynamic and growing educational and research center founded in July 1995. The NYU Tisch Center offers an extensive complement of hospitality, tourism and sports management academic programs including two Bachelor’s degree programs, three Master’s degree programs and professional certificate programs. The curriculum focus is on asset management, financial analysis, destination management, marketing and customer relationship management.
The School of Continuing and Professional Studies (www.scps.nyu.edu) is one of fourteen colleges and schools that comprise New York University, the largest private university in the United States. Founded in 1934, NYU SCPS educates some 4,200 undergraduate and graduate students each year and enrolls over 44,000 in its noncredit programs. A national leader in adult and professionally-oriented education, NYU SCPS programs include non-credit courses that span more than 125 fields; 14 industry-focused Master’s degree programs; and nine Bachelor’s and six Associate degree programs specially designed for working adults. As well, NYU SCPS is home to NYU Online, the University’s first online bachelor’s program.