Technology has been a major driver of change in the way we conduct business. It stands true for all sectors. Self-driving cars in the automotive industry and automated burger machines in the food industry, technology disrupts and creates new trends. Similarly, in the hospitality sector the combination of social media and tech has transformed the process of doing business. Here are the recent trends that show the effects that technology and social media platforms have had on the hotel industry.
1. Social Media Strategy
The hotel industry depends strongly on word-of-mouth marketing. A negative review on sites like Yelp or Lonely Planet can hamper a company’s reputation. Hotels with a good image in social media seem to be popular with guests. According to a survey conducted by USA Today, the number one choice for consumers contacting hotels via social networks is to find local info. Hotels have taken hospitality up a notch by providing guests with rewards for posting pictures or talking about their services on social media. In 2014, Marriott International started a program in which members could earn up to 2,000 points a month and have four transactions a day. They earn 25 points for following participating hotels’ Twitter and Instagram accounts or for re-tweeting content from the Marriott Rewards Twitter account with the hashtag #MRPoints.
2. Tech Updates
In this technology-driven economy, hotels are challenged in keeping their tech updated. The rise of software-as-a-service (SaaS) means it is getting easier for hotels to receive customer requests and also disseminate information to customers. SaaS can be customized, and there are a variety of companies that offer different products for hotels. Here is a list of SaaS companies to choose from.
3. Rise of the Millennials
The millennial generation was predicted to outsize baby boomers in 2015. This means that hotels now need to strategize plans to attract younger clients. Millennials look for convenience over extravagance. They want facilities like grab-and-go meals and affordable room rates. The younger generation also demands healthy lifestyle options. More recently, hotels have started to design programs which provide healthier dining options and also yoga programs. Hotels are customizing services according to millennial demands. In 2014, Marriott International introduced hotels specifically targeting millennials through its subsidiary AC Hotels. The hotel features areas to socialize and rooms with the latest technologies. Similarly, other big companies like Best Western International and Hilton Worldwide have also created brands for the millennial generation.
Tough Competition
The competition within traditional hotels is ongoing. However, a company that has worried big chains is Airbnb, a startup which started making waves in 2012 with its innovative ideas for accommodation. Airbnb spearheads what is now called the sharing economy, along with companies like Uber and Lending Club. Any person is able to put their room or house up for rent on Airbnb. The client has the option to choose between rooms, boat houses, mansions, and in some cases, even castles. The guest and host interact virtually before the deal is made. This type of relationship is considered informal by traditional hotel standards, but this is what attracted people to Airbnb. The company is valued at over $25 billion dollars right now. In the summer of 2010, only 47,000 people stayed with an Airbnb host compared to the summer of 2015, which saw almost 17 million people stay through Airbnb.
Big Business
Accommodation is the largest sub-sector of the travel and tourism industry. In 2012, hotels accounted for 19% of total travel industry output. The industry employed 1.9 million people and generated lodging sales revenue of $179 billion in 2015. There are more than 53 thousand properties registered in the database of American Hotel & Lodging Association (AHLA). Texas has 8940 registered lodging properties which is the highest in all of the country followed by California and Florida with 5545 and 3626 registered properties, respectively. In Hawaii and Nevada, 35.40% and 31.60% of the population are employed in the hotel industry, making the two states the highest with hotel employees. If we look at sales figures, California generated $40.3 billion in total sales from industries like transportation, agriculture, manufacturing, restaurants, and recreation which are interlinked with the accommodation sector statewide, coming second only to New York which has sales figures of $62.5 billion.
Complementary Effects
Establishment of a hotel brings many opportunities to a community. A five star hotel needs proper maintenance, and the size and scale of these types of facilities demand numerous employees. Hotels also create a complementary effect in the local economy. Hotels create demand from furniture to food suppliers. Restaurants and other businesses are profited by the presence of hotels. Research conducted by Pinnacle Advisory Group found that, in general, the multiplier effect typically ranged between 1.1 to 2 of total direct impacts depending on the size and economic diversity of the regional economy.
The hotel industry revenue is predicted to reach $550 billion US dollars globally in 2016. The industry was worth $457 billion US dollars in 2011. The accommodation and food services sector makes up approximately 8% of all employment in the US. Hotels are known to adjust their services as per consumer demand. This means that the hotel industry still has opportunities for future growth, and in the years to come, economic developers can look forward for new projects brought in by hotels.