Exploration is something that many say is in the DNA of humanity. When one travels away from home, there is a need to stay somewhere that is safe, comfortable, and accessible to the sites that are going to be explored. This is ultimately what the lodging industry provides to everyone around the world.
The global lodging industry is expected to have revenues reach $550 billion by the end of 2016. This is in comparison to revenues of $457 billion achieved in 2011.
The Middle East and Africa are surprisingly the most expensive regions for hotel room rates in the world today, with an average price of $165.97 per room per day. The APAC region and Europe are seeing the highest occupancy rates, at 68% on average each day. In the lodging industry, there are several key trends in business, marketing, and technology that will help to continue encouraging this growth.
Supply and Demand Within the Lodging Industry
- Business travelers in the United States are expected to see their lodging rates increase in the next decade. Look for an increase of up to 7.5% as US motels and hotels look to begin offering room rates that are equal to Europe.
- Millennials are expected to replace Baby Boomers as the dominant consumer for the industry by the beginning of 2018. Watch for more marketing efforts being geared to target younger traveling consumers in anticipation of this transition.
- More than 75% of travelers currently agree that smartphones are critical to the traveling experience. 1 in 3 say that they use their smartphones more when they travel compared to their home use. Look for the lodging industry to embrace more apps and mobile device technologies to personalize the consumer experience.
- More than half of all hotel bookings take place online and this trend will continue to expand as higher internet saturation reach the Middle East, Africa, and the APAC region.
- In the US, there are currently 53,000+ properties that offer about 5 million rooms to the general public. 4.8 million people in the US will utilize the lodging industry every night.
- US revenues per available room are $74.12, with an average occupancy rate of 64.4%.
- According to the American Hotel and Lodging Association [AHLA], the industry added more than 30,000 new hotel jobs and more than 100,000 new travel-related jobs, resulting in an increase of over $12 billion in travel-related wages and salaries, up 6%.
- 51.8% of travelers who book trips via digital means will do so using a mobile device in 2016, according to eMarketer’s latest estimates, which is a 43.8% increase from the year before.
- 68% of hotel guests report that it is extremely/very important to be able to call a hotel during the purchase phase, with 58% likely to make that call from their smartphone. 2 in 5 which make this call will do so to make a purchase.
Some communities, such as Austin, TX, are seeing high occupancy rates simply because they do not have enough rooms to accommodate the demand they are seeing. Yet supply and demand within the lodging industry can be somewhat fickle as people travel often travel based on trends and familiarity instead of a desire to actually explore. 1 in 3 people go on vacation to the same place every year. Some families have been staying in the same hotel for generations. These are the households the lodging industry is going to want to target because they provide stable revenues. Then look for niche marketing efforts to reach out to the other travelers who plan on coming into town.
What Future Marketing Efforts Will Look Like
- Based on an average of stay values, phone reservations bring in 38% more revenue than OTA’s and almost 9% more than web reservations. Look for more mobile phone call links on web pages to encourage these types of reservations.
- The lodging industry will need to increase their budget to chase customers through online channels since this can boost their ROI and increase online conversions.
- Look for dynamic rate marketing to continue expanding within the industry, including real-time room rates and availability through a number of online marketing channels.
- The industry will need to continue embracing display advertising, retargeting, and business listings to reach online customers. Look for increases in meta-search marketing, retargeting, and email marketing so the industry can target specific consumers based on their own behavior.
- More than half of all consumers around the world have made at least one purchase within the lodging industry based on a recommendation they found online.
- Social media is now the primary battleground for the lodging industry if they wish to strategically engage their consumers as a way to grow their room occupancy rates.
- Look for more targeting toward the recreational traveler. The AHLA reports that the typical business traveler spends about 3% more per night, and the typical leisure traveler spends about 6% more per night.
- International travel to the US continues to increase, making the U.S., by far, the top destination for international travel. By 2020, 96.4 million visitors are forecast to visit, which amounts to an increase of 29% over 2014.
Some households may visit the same place year after year, but 67% of households are going to go somewhere new. Internationally that often means a visit to the United States. With highly affordable hotel rates, especially with the dollar in relation to the euro or the pound, it is a truly affordable destination. For the global lodging industry as a whole, look for an expansion into international marketing for US destinations, along with co-branding solutions for destination locations and travel tours, as a way to expand the industry through a better value proposition. Think of a visit to the Grand Canyon, a shopping experience in Phoenix, and a competitive hotel room rate as the lodging industry’s equivalent of a quick service restaurant’s combo meal.
Targeting Millennials Within the Lodging Industry
- Millennials prefer to have digital check-ins and automatic room service, which can free up local employees to focus on providing personalized services to guests.
- Millennials also prefer lodging options which have made eco-friendly practices a priority. Look for more motels/hotels to install solar panels, implement water reduction practices, and update equipment so that items shut off when a guest leaves the room.
- Technology advances will attract Millennials in other ways as well. Take the Aria Resort and Casino in Las Vegas, NV for example. Guests are issued cards with an RFID signal so that the door unlocks before they reach it.
- Millennials also prefer an emphasis on health and well-being while interacting with the lodging industry. Look for co-branding opportunities with spas, fitness centers, yoga spaces, and healthy dining options within the industry.
- New room services, such as in-room exercise equipment or vitamin-infused showers, will also be added as premium services to attract Millennials.
As Millennials begin to take over as the generation which travels the most, the lodging industry will adapt to their preferences with the rooms that are offered. One of the most common desires that Millennials have is to receive personalized services in a way that is still environmentally friendly. In the coming years, this personalization may extend to WiFi hotspots, specific TV/movie watching options, and other room benefits that expand the ideas that have already been implemented.
Why more Communities Will Partner With the Lodging Industry
- According to the AHLA, $141.5 billion is the combined tax revenue generated each year in the US thanks to business travelers.
- Resident and international travelers in the United States spend an average of $2.5 billion a day, $105.8 million an hour, $1.8 million a minute, and $29,398 a second. Tourism generates nearly $1 trillion in sales annually.
- 1 in every 9 US jobs depends on the travel and tourism industries, to which the lodging industry belongs.
- 8% of the US GDP, or $1.4 trillion, is generated throughout the economic chain because of travel revenues.
- In 2014, international travelers spent an estimated $220.6 billion. The US share of world tourism receipts was at 14.2%, well ahead of Spain or France, which were ranked second and third respectively.
- International travelers in the US account for 20% of all lodging sales. 93% of travelers make reservations, while 80% will travel via automobile to reach their lodging destination.
- The average income for households that book rooms in the US: $99,000.
Communities will partner with the lodging industry, but travel agencies may continue moving away from the industry unless they receive a greater share of the revenues. The issue is who “owns” the guest which books the room. If the lodging industry doesn’t have access to guest data that the travel agency receives when a booking request is made, then it hampers the ability for the industry to market to that consumer for repetitive business. Watch for hotels to ask for more email addresses and other forms of personal information to capture this data as a way to counter travel agencies that may be withholding it.