This is a delightful and refreshing article that renews one’s faith in leadership and in leaders who dare to think beyond motherhood, who dare to have passion, emotion, and who dare to dream.
I don’t know how many times in my corporate life that I have been told that I’m too emotional and that I care too much. The body corporate doesn’t like these characteristics – and if you have any hope of climbing the corporate ladder or navigating the corporate politics, these emotions (in their eyes, ‘weaknesses’) must be banished for more acceptable corporate behaviour.
Reaching for the stars and aiming beyond the horizon are viewed as silly. The hospitality industry knows it is selling and providing an experience to its customers. And I suppose you can describe an experience in cold and calculating terms like – we aim to exceed customers expectations. Duh! If that’s all you are doing then perhaps you should be selling railway sleepers to the department of transport!
It is precisely this dreaming that spells the difference between being mediocre and being special. Isn’t it time to take out the dusty mission and vision documents and to breath life into them and create a strategy that takes you, your staff and your guests on a magic carpet ride?
Wednesday, 07 March 2007
Why ‘Care’ for Your Customers when You Can ‘Love’ Them?
Top 10 Trends in the Hospitality Industry
Ernst & Young released a report on February 15, 2007 where they identify ten key trends that will influence the hospitality industry in the US and major hospitality markets internationally.
Top trends that will influence the global hotel industry in the year ahead include the stabilizing of the U.S. lodging market, increasing capital flows into the hospitality sector from a broad range of investors, including offshore funds, and superior performance among luxury hotel brands, according to a report released today by Ernst & Young LLP.
“In this report we’ve identified ten key macro trends that, taken together, we believe will shape the hospitality sector this year and for years to come in the U.S. and in major hospitality markets around the world,” said Michael Fishbin, national director, Hospitality & Leisure, Ernst & Young LLP.
The ten key trends identified in the report are:
#1 Supply and Demand in Balance — Perhaps the biggest positive trend for the industry in 2007 is that supply growth is relatively low with a 2.5 percent increase projected this year. This, combined with last year’s 1.8 percent growth gives owners a chance to upwardly reposition existing hotels and grow revenue per daily room (RevPAR) and average daily room rate (ADR). Stability is good for the industry’s short term profitability and, as a result, the outlook for 2007 is positive.
#2 More Good News for Luxury — The hotel sector generally is experiencing positive growth, but the performance is particularly strong in the upscale sector. With no sign of a drop-off in the primary demographics populating upscale hotels, more stellar performance is expected.
#3 Construction Costs — Developers will have to be more creative in planning and building new hotels due to high construction costs. Look for more mixed-use developments incorporating hotels, especially in the upscale segment, more creative financing strategies and maximizing of project density to make the numbers work in a more expensive development environment.
#4 Operating Costs — For hotel operators, better control of energy and other major operating costs will be a key objective in 2007. For the last two years, costs such as labor, energy and insurance have skyrocketed. While automation has historically helped manufacturing, it has played a very limited role in reducing costs in service-based industries, such as hotels. Yet hotels’ use of web-based systems is increasingly helping the bottom line.
#5 All the World’s a Stage for Hotel Investors — One aspect of the phenomenal influx of capital into the hotel sector is that the sources of this capital wave are truly global, creating a worldwide investment market with growing cross-border transaction activity. In an increasingly complex business environment, investors are likely to seek out deals in all corners of the globe. However, the U.S. hotel sector, as the most transparent market in the world, will continue to garner more than its share of foreign capital.
#6 Will New Passport Rules Dampen Tourism? — The U.S. Western Hemisphere Travel Initiative may cause a short-term drop-off in travel to the Caribbean and Mexico as U.S. tourists balk at the almost $100 passport fee or get caught in a lengthy application process. Some hotels are proactively moving to offset the passport cost by offering discounts to first time passport holders. The passport impact is likely to be short term and may even help U.S. domestic tourism.
#7 Pricing Issues May Cloud Sector’s Future — The last few years have seen solid market fundamentals, limited construction of new product and low interest rates, the combination of which has driven pricing on some deals into the stratosphere. With more construction ahead, hotels’ operating growth levels are unlikely to be sustained. We’ll begin to see this year what return on investment these top premiums will yield.
#8 Private Equity’s Love Affair with Hotels — Private equity players were the biggest single buyers of existing hotels in 2006, and they are expected to continue to buy in 2007. Since many do not have significant lodging industry experience, the question remains, how will they perform as owners? And when and how will they execute their exit strategy? We’ll begin to learn the answers to such questions this year.
#9 Growing pains for condominium hotels — With the U.S. building boom of 2005-2006 now over, there may be headaches on the horizon for developers and owners who jumped into this market with both feet. An estimated 8,000 new units are expected to become operational in the next 12 months in the U.S. despite last year’s cooling of the development market. By 2008, developers and owners will have a good idea of what worked and what didn’t in the condo hotel craze. Meanwhile, the hotel condo craze has hit the Caribbean, Mexico, the Middle East and Europe’s resort vacation spots.
#10 The hotel market as an engine of economic recovery — In Mississippi’s Gulf Coast region, the inventory of hotel rooms leaped 23 percent between March and September 2006, contributing significantly to the area’s tourism and gaming recovery and boosting its struggling economy. Communities around the world have a growing awareness of the impact hotels can have on their economies and will move quickly to support rebuilding of this critical sector in the event of natural disasters or human conflicts.
“In general, the hotel sector continues to perform well and has been especially adept at attracting new investment,” said Fishbin. “But continued growth within the sector depends on many of these factors.”
Ernst & Young offers a range of services for every major hospitality segment, from lodging to travel and from tourism to attractions – including hotels, resorts, mixed use developments, convention and conference centers, stadiums, amusement parks, golf courses, and other leisure-related assets.
For a complete copy of the Ernst & Young Report ‘Top Ten Thoughts for the Hospitality Industry in 2007’ please visit www.ey.com/us/realestate.
Hotel Websites Are Tops in Customer Satisfaction
Recent studies in the US show that hotels' web sites have finally overtaken online agency portals in terms of customer satisfaction. This has been accomplished with a lot of hard work on their websites by the hotels, who can now enjoy a level of independence from the online travel agencies to develop their services for customers and increase their customer loyalty.
The Market Metrix Hospitality Index (MMHI) is a quarterly study that is the largest and most in-depth measure in the US of hospitality company performance. What the data reveals is the increasing popularity of hotel website usage and satisfaction with the online experience. More people are researching their trips online and more people are booking online.
Another significant trend is that people who book online in the US are looking to make their booking directly on the hotel’s website rather than a travel portal. In 2004 and 2005, travel portal sites like Yahoo Travel outstripped hotels sites for satisfaction with the online booking experience. Since then hotels in the US have worked hard on improving their navigation, design, usefulness of information, ease of booking and other critical components of the online experience. As a result of this, hotels are less dependent on the travel site portals, are paying them less and are establishing a relationship directly with their guests.
The message for South Africa is that international customers expect an online experience that is of international standards. If a site doesn’t meet their expectations, they can (and do) quite easily move on to the ones that do - all with the click of a mouse. Online customers expect that they can book easily, safely and securely online, and the US experience shows that customers would prefer to deal directly with hotels for their bookings. They may research, shop around and compare prices and packages in multiple places on the web, but when they come to book, their preference is to book with you directly.
And the reasons are multi-fold. Customers prefer hotel websites because:
- they can earn rewards points in the loyalty program
- there are no additional/hidden fees
- it’s easier to cancel and change the booking
- they already have an account with the site
- the hotel site provides true availability
- they get better customer service
- they feel hotel websites are more trustworthy
Online travel agencies have the edge when it comes to the selection of hotels on offer, they frequently offer cheaper hotels and the customer can get the best rate guaranteed, and they offer bookings for flights, cars and other activities.
The 5 most important factors that would most influence a US consumer to make a booking on a hotel’s website would be:
- if hotels offered best rate guaranteed
- offers of specials and promotions
- the ability to earn points and rewards
- making it easy to make, change or cancel reservations
- to provide better descriptions of rooms on the sites
For more on the above, check out the following links:
Loyalty is the Key to Online Travel Market
Are Online Customers Less Loyal?
Hotel Web sites scroll to the top in customer satisfaction
Hotel Web Sites Now Score Higher In Satisfaction Than Popular Travel Sites
South Africa in E-marketing Drive
In its ongoing commitment towards implementing world-class international tourism strategies in order to increase awareness and grow arrivals to destination South Africa, South African Tourism has kicked off 2007 by sealing a landmark deal with BBC World.
The deal is an e-marketing campaign that comprises online advertising and commercial presentations and will be aired on BBC World across Europe, Africa and North America from February to July this year.
If one asks the age old question –– what’s in it for me (WIIFM) – then I would suggest a lot! This campaign is a great opportunity for all hotels in South Africa who target countries like the UK, Netherlands, France, Germany, Italy, the US and the African states to leverage the South Africa marketing exposure to with their own individual campaigns.
Finding out more about the schedule from the South African Tourism campaign and using it would give individual organisations synergy and publicity that is difficult for one organisation to achieve alone. Indeed a concerted effort by several organisations for the benefit of South Africa Incorporated would bring extraordinary gains for everyone.
2010 – Help for Small Businesses
South African Tourism CEO, Moeketsi Mosola South Africa was speaking at a business forum hosted by the University of the Free State in Bloemfontein when he announced that for the first time in its history, Fifa will be contracting non-hotel accommodation (eg national parks, B&B’s, lodges, guest houses) during 2010.
However, in order to qualify to be contracted the establishment needs to obtain a grading rating from the Tourism Grading Council of South Africa. Establishments can apply to TEP for assistance to partly cover these costs. TEP (Tourism Enterprise Programme) is a R170-million investment by the Environment Affairs and Tourism department to stimulate small, medium and micro enterprise (SMME) development in the tourism sector.
Mosola pointed out to that accommodation is not the only area where people should be looking as there are many other opportunities for 2010 – for example in the support services like housekeeping, food and beverage supply and laundry services.
In writing this, I took a look at the Tourism Grading Council website. The grading process looks time-consuming and bureaucratic, not to mention expensive. The process is still very much document driven but the instructions are reasonably clear and the criteria documents are available to be downloaded directly from the website. The cost is not inconsiderable – if you have a 3-room establishment the cost is R1,292 (R1,236 + R56) and if you have a 30-room establishment the cost is R3,373 (R3,148 +R225) and if you have anything over 151 rooms, the cost is (R5,279 + R225) R5,504.
But the establishment of standards and having a grading system which serves as a communication tool to customers is great. Of course such a system is only as good as the high (world class) standards that are set, the frequency that those standards are revisited and updated, and the organisation and people who manage and enforce them. Gearing up to 2010 and putting in place these systems could indeed help move South Africa towards one of the world’s top destinations of which Mosola talks!
Under-developed Business Travel Could Offer Opportunities
In his address to the African Business Tourism Conference in Sandton, Minister Marthinus van Schalkwyk said that business travel is lagging considerably behind the leisure market, accounting for 5% of the total tourism market.
When you bear in mind that on average business travelers spend three times more than leisure travelers and return to a destination within 5 years, this must surely be an opportunity area. Of course this relies on the fact that business travelers need to, or want to come to South Africa. They will need to come to South Africa if they are doing business with South Africa – so in this sense the hospitality industry is a support or secondary industry to the real driver of businessmen and women to South Africa – business and investment in or with South Africa.
The other side of business travelers coming to South Africa is if they see it as a place to host their meetings and conferences, and in that area we have much to offer as long as we stay competitive with other international destinations. And yes, there’s a lot of competition out there so we need to be able to provide outstanding services at competitive prices.
And of course we can’t hide away from the security issue in our country. These are things we need to address face on to become players in the international economy and to bring benefits, wealth and opportunity to everyone in our country. I refer to the recent survey done by South African Tourism Update (free registration needed for access), an independent monthly trade magazine, in conjunction with the South African Tourism Services Association and other tourism organisations where the results are overwhelmingly conclusive – over a million travelers decided not to come to South Africa because of crime.
The survey conclusion is that crime is holding back the growth of the tourism sector and its ability to create jobs. Natalia Thomson, editor of the magazine asks the thought-provoking question – “where would tourism in South Africa be without crime?” Where indeed! And let’s face it – there are other places in the world to go. But if we get our act together, the tourists and business travelers would come over and over again to our beautiful country with all that it has to offer that is indeed special!
Tourism to South Africa
The tourism industry in South Africa is a significant player in the country’s economy. It brings in money from abroad and is a valued source of employment. Everyone is getting hyped for the opportunities that 2010 will or should bring to the industry. Tourist arrivals are up by 14.5% and from Jan – Sept 2006 over 6 million people visited South Africa.
Tourism Minister Marthinus van Schalkwyk gave 2006 data for SA Tourism in an address to the African Business Tourism Conference in Sandton where he said that Africa had achieved the fastest growth rate of any region worldwide.
A summary of the numbers is:
- There was a 14.5% increase in 2006 from 2005 in tourism arrivals
- Over 6 million (6,055,726) people visited South Africa between Jan – Sept 2006.
- The largest source of arrivals are from Africa – 18.3% are from the African continent.
- The Number of Visitors from specific regions/countries changes as follows:
- North America grew by 9.7%
- Russia grew by 42.4%
- Hungary grew by 24.1%
- Finland grew by 17.4%
- India grew by 17.5%
- Asia grew by 4.5% (“excellent growth” in arrivals from Japan, Thailand, Singapore, but China, Malaysia and Philippines declined)
