TLDR: Too Long Didn’t Read
In the follow-up section, there's a report on the travel habits of Gen Z and Millennials, highlighting their preference for Instagram as the top social media platform 📸🌍, their focus on adventure and outdoor activities 🏞️🌄, and their willingness to spend more on travel 💰✈️. In the main hospitality news, the US ranks 17th in attractiveness among global destinations due to safety, government leadership, and visa rule issues 🇺🇸🌐. Hilton and IHG are expanding in China 🏨🇨🇳, while political decisions in Maldives are causing a loss of Indian tourists 🏝️🇲🇻🇮🇳. The rise of the middle-class travel market is noted, with many hotel brands targeting this segment 🌐💼. In externalities, Taiwan's election results could have implications for geopolitical conflicts 🗳️🇹🇼🌏. In academia, a study from Ghana emphasizes the correlation between HR practices and hotel revenue 📚🏨💰.Finally, a digital hotel operations report by h2c provides insights into industry trends like digital check-in and CRM adoption 📊🏨💻.
0. News snippets
Not important enough to expand on, but worth hearing about
If you are a fan of the White Lotus show, it was recently announced that season 3 will be filmed in Thailand | DEHOGA, a major German Hospitality Sector association asked its members about the increase of taxes on the F&B. Results. Operators are not happy!
0.5 Follow up
Where we follow up on news from previous weeks
New Gen Z and Millenial trends
Another report on Gen Z and Millennials’ behaviour is out. Where they book, what they book and why they book. Results are slightly different to those from last year and can be seen here. Number 1 Social Media platform is Instagram (1 fifth of the total market share). The number 1 reason to travel is “Adventure and Outdoor Activities”. Around 60% of people book hotels and the rest is distributed amongst vacation rentals and other forms of accommodation. Finally, both Gen Z and Millennials are expected to spend more, 59% of Gen Z and 65% of Millennials. Must be all that money they are currently earning.
Choice and Wyndham Part 3
Remember Choice trying to acquire Wyndham? Well, now it's an information war. Wyndham has released a report claiming Choice acquiring them would go against anti-trust laws (creating a quasi-monopoly) and Choice is now releasing a presentation disputing that. 4 Points they don’t agree with are: There are 9 other competitors in the market, therefore it ain’t a monopoly, the acquisition would decrease costs for franchises, guests would get a bigger offer as part of their loyalty programs, Choice expects the commence the process on the 11th of January. The employees of Wyndham are probably convinced too and hyped about the upcoming hostile acquisition.
1. Main Hospitality News
Core news related to the industry
The US scores 17th in attractiveness among top destinations worldwide.
The US is 17 out of 18 top destinations worldwide for global travellers. According to a recent report by Euromonitor International. Reasons for it falling behind are a low safety index, Government leadership and strict customs and visa rules. At least those are the indicators by which the US has scored low and are used to build up the total score. Despite all the above, the land of the free still is number 3 in the world share of inbound visitors even though that has decreased by 0.1%. France was number 1 and Spain number 2. See the full list and how other markets performed over here.
Hilton and IHG are capturing the Chinese market.
Hilton has opened its 600th hundred hotel in China with its entire brand portfolio, while IHG is on their 700th. IHG on the other hand has 12 of their 19 brands in there. Both are trying to open up in several regions. Hilton has even been named “Best Workplace in Greater China” 4 years in a row. Different sub-brands are testing different models. From Management and franchise to Master Leases. Different brands, different strategies. These numbers, however, do not come even close to Chinese brands like Jin Jiang which has over 10 thousand hotels open. All top 10 hotel chains in China are indeed Chinese. Indeed almost everywhere you look in the greater Asian continent, Western chains are growing comparatively slow compared to the local players. Nonetheless, Accor for example was petting itself on the back with 62 signings across Singapore, the Philippines and India or a total of 14.8 thousand keys in one year. Given that India has a total of 105 thousand rooms operated by major hotel chains (old data from 2017), this is a pretty significant growth. Indication of the huge potential India has for various hotel chains, while China (even though a bigger economy as of now) is mostly operated by local players.
Maldives losing 10% of travellers due to politics
On the topic of India, Maldives was hooked on Indian tourists, making it 10% of the total market share. A pretty significant dependence, when 30% of your GDP comes from tourism. That has likely been lost now due to a political move from its current president Mohamed Muizzu, where the campaign was “India Out”, betting on the Chinese market. This turned out to be a wrong bet since the Chinese travel market has yet to pick up from COVID-19. Finally, Prime Minister Modi made a series of posts in Lakshadweep, a destination similar to Maldives, which has caused an instant drain of bookings from Maldives to the Indian alternative. Several Indian OTAs are now even suspending their Maldives segments and removing any related content. Next time when you make a political move, consider that a major share of your GDP is tourism, hence making enemies on the global market is perhaps not the best for your economy.
Middle-class guests are the future?
At least most major hotel brands seem to think so. Middle-class demand is likely to increase by another 700 million participants. Mostly sourced from China, India and other regions. With it, hotel chains are investing in appropriate brands to host that demand. Express Four Points by Sheraton, Garner by IHG, Hyatt Studios and more. Hence, the expectation is that most properties developed in the upcoming decades will be mid-scale properties, despite their lower profit margins (at least previously, since digital-only concepts seem to improve that). But are these new market participants interested in the big brands or can new players take over the lead here?
2. Externalities
Econimics, finance, geopolitics. All have an impact on the hospitality sector.
Taiwan votes against Mainland China
These 3 hot geopolitical topics can be described as current or potential conflicts: Israel, Ukraine and guess who? Taiwan. The 2 that are already taking place are impacting the world economy whether you want it or not. Taiwan, being the majority producer of electrical chips is on that list as well. This week the party that is a non-Chinese “separatist” has won (DPP) the Taiwan elections. Why are they not pro-Mainland China? Mainly because China denounced their political Leader Lai Ching-te. And so the show continues. With China pressuring Taiwan into submission and Taiwan playing a sort of diplomatic game. Let’s hope there won’t be 3rd hot conflict this year.
Gaza Status Quo
“The Economist” has recently released an article breaking down the status quo of Gaza in connection with the availability of food, medicine and other supplies. A neutral take on the situation, that is otherwise hard to judge. Read about it here.
3. Academia
Scientific papers related to the topics above. For those who want to know for sure ;)
HR practices have a direct correlation with hotel revenue
A recent paper all the way from Ghana has looked at how Human Resource practices impact the bottom line, specifically what measures are most effective. From the obvious results like competitive hiring, training initiatives and technology integration, the study goes into the previously said topic and lists other strategic HR practices and their impact on revenue. Most importantly, a direct correlation between these and a revenue increase is shown, hence maybe do not ignore your HR next time and give it a bit of professional love!
5. Tips & Tricks Tools & SaaS
Any new software you can use? Industry tricks you missed?
Digital Hotel Operations Report
h2c has surveyed various hotel operators and created a digital hotel operations study for 2023. This report serves well when trying to compare yourself with the industry. For starters, only 34% of chains offer digital check-in and not many more are planning to offer an increase in the offering. The main concern is an increase of the total digital cost system by 14%, the concern is especially elevated due to inflation as a whole. Internal CRM and recording online direct booking have been growing and are currently offered by 54% of participants, while 76% were going to offer it. Meaning if you don’t have CRM yet, you are below average at this point.
#25 - Geopolitics and travel