TLDR: To Long Didn’t Read
The hospitality industry faces challenges in adopting fintech advancements due to legacy systems but can partner with and invest in fintech startups to enhance guest experience. The US tourism industry needs better coordination, investment, and collaboration to achieve a full recovery post-COVID-19. More bookings than last year, but much more short-term, making it hard for revenue managers to forecast traffic. Global Distribution Systems are becoming outdated and a new tech protocol NDC is slowly giving back airlines control over their own fares and additional bookings. China's economy is on course for a double dip, and the tourism boom may not last due to higher interest rates and decreased spending. The most successful German hotel chain, Motel One, has a unique revenue management strategy and is mostly independent of OTA channels. Tips include using guest names effectively and benchmarking guest experience scores.
0. News snippets
Not important enough to expand on, but worth hearing about
Israel is bouncing back in tourism, mostly thanks to the Abraham Accords (Middle East Internal market might become self-sufficient); More startups are starting to go bust, mostly due to a lack of funds to support day-to-day profitless businesses; Airbus is expecting demand for over 39t new planes by 2040, half of which are replacements of older models.
1. Main Hospitality News
Core news related to the industry
GDSs are becoming just another distribution network
Global Distribution Systems are slowly becoming outdated and a new tech protocol NDC is slowly giving back airlines control over their own fares & most importantly additional bookings (like hand baggage). Effectively NDC allows airlines to create their own API integration to which anybody can connect, multiple GDSs, clients directly etc. And most importantly guests who booked via an NDC system can then go back to that booking and upgrade (directly getting data from the airline). Previously GDSs were the ones putting this data together for passengers limiting communication & upselling opportunities. Basically, airlines can now communicate directly to the bookers without intermediary limiting that, more details here. As part of that news, Air Canada has announced their own NDC and has recently announced a deal with Sabre (a GDS) to become part of that network and not the sole operator of it.
Concerns of hotel executives regarding fintech disruption.
Fintech companies offer alternative payment platforms and blockchain-based systems. The benefits of this include reduced transaction costs, increased security, and improved efficiency in financial operations.
However, traditional hotels face challenges in adopting new technology due to legacy systems and processes that are not compatible with fintech advancements.
To embrace fintech, the hospitality industry can partner with and invest in fintech startups to adopt their solutions. For example, in loyalty programs and revenue management, fintech can enhance the guest experience through streamlined payments. More here on Skift.
How can the US Tourism market recover fully?
The U.S. tourism industry needs better coordination, investment in infrastructure and technology, improved air travel policies, sustainable practices, a diverse and inclusive workforce, innovation, traveller safety and security measures, and collaboration between public and private sectors to achieve a full recovery post-COVID-19. Read more here.
How to make an airport soundproof for the neighbourhood
The case against flights being cut has been raised by a multitude of airlines in the main airport of the Netherlands (Schiphol) after the local government decided to stop giving new routes (flight permissions) and has even decided to cut some existing flight routes as part of noise decreasing & more environmentally friendly policies. KLM uses it as their central hub or in other words as their main platform to grow and has also proposed a more “smart” alternative. Reroute some of the flights to avoid noise & to upgrade the planes being used in the airport, which would comply with local standards. This is a very interesting case of the government going for a drastic solution, while a major business is trying to propose more lean resolutions. Schiphol is the first airport in the world (as far as we know) to try to impose such measures, hence this might create a domino effect across the world. Unless of course airlines and place producers won’t come up with some innovation, like Airbus reducing noise by over 50% in their new A320neo models.
More bookings, but also more short-term chaos
More bookings than last year, but much more short-term. Making it hard for revenue managers to forecast traffic. A trend illuminated by the recent meeting of hotel executives at an Investment Council meeting. Hence, while all the recent data shows an uptake in guest bookings relative to 2019, it has become more sporadic and less manageable for the hoteliers themselves. (Source)
2. Externalities
Econimics, finance, geopolitics. All have an impact on the hospitality sector.
China doing great, but not really
China, China, China. Will it bring back its tourists to the rest of the world and take over major chunks of hotel rooms & of course restaurant sits? Hard to say, since the news on this front is very much mixed. On one hand, China has made a trade deal with over 15 countries in the Asian region and has in many ways out-traded the US. On the other hand, internally there are “issues”. While the rest of the world is still running around with high-interest rates, China is forcing them down in order to revitalize the real estate market. The tech market is apparently suffering from the overreaching hand of the authoritarian state. Local governments have overspent and are struggling under internal debt that cannot be paid back. So while on the outside China seems to represent prosperity, internally things are not so simple. Whatever it is, long-term Western world is not seen as a partner for China. Especially when even Japanese banks are raising internal alarms and are likely to decouple themselves from the Chinese market.
Economics vs tourism
Will the tourism boom last? This is a question we have seen many ignore in the past few months, blinded by the happy return of countless guests from all over. But will it? According to this article, likely not. Why? Likely higher interest rates that stay higher for quite a bit longer, hence slowing the economy down. Decrease in other forms of spending like clothes & dining out. Chinese lower than expected demand and opting in for staycations. Overall, not a very positive forecast for hospitality professionals.
3. Academia
Scientific papers related to the topics above. For those who want to know for sure ;)
Future of airline distribution from 2006 forecast
A study all the way back from 2006 forecasting the future of airline travel distribution. Conclusion? Air travel distribution will become more fragmented even allowing passengers to book more directly with the airline. In other words “deregulation” of the sector, forces
various b2b providers to offer more value when it comes to organizing trips. I suppose the forecast was correct!
4. Readables
Books, podcasts & the big stuff.
Motel One founder interview or the number 1 German hotel chain.
The most successful German hotel chain Motel One is doing great and has survived Corona well. But how did it come about at all? A recent interview with the Motel One founder has shown light on the thinking and strategy that Motel One implemented for over 23 years now. Amongst them is the very peculiar way of revenue management that Motel One has, which is basically none. In fact, Motel One Promise is always one price no matter what, except of course exceptional events throughout the year. This resulted in 80% of direct bookings that make Motel One more or less independent from the OTA channels (an achievement, almost no other hotel chain can claim). There are several other outside-the-box innovations that this chain has brought, hence we highly recommend you watch the interview.
5. Tips & Tricks Tools & SaaS
Any new software you can use? Industry tricks you missed?
How to use guest names in the day-to-day business
Using your guest’s name has been a long-standing rule in hospitality. A recent article here illustrates 5 ways you can do that effectively. Some academic sources indicate a 6% increase in tipping from restaurant guests if addressed by name. Hence, it is a strategy one should try to use more.
Benchmarking guest experience
How to benchmark your guest experience scores vs the market? We found a Q1 benchmark report with just that topic, going by star rating and regions. To look it up click here.
Cybersecurity for hotels, the how-to-guide for beginners
While cybersecurity is extremely important, it often seems so complicated for that regular hotelier, that the topic is entirely ignored. Until of course, your guest is stolen, bank accounts are hacked and you have a lawsuit on your lap. So should one do? For starters, the article provides a simple guide on what data is actually important. 2nd step is to make sure it is safely secured behind a 10-step process. Understand what you need to protect & protect it (following best practices here)
#12 - Airlines on deregulation, Fintech goes hospitality & more