Hospitality business trends that will rule in 2017

April 3, 2017

Let’s see what predictions lie in store for the hospitality industry.



Technology will continue to be the BIG thing


According to a study by Hospitality Technology, 54% of the hotels had acknowledged a desire to increase spending on technology, especially in payment & data security, guest room tech, bandwidth and mobile engagement. This year, a greater number of hotels will adopt cloud technology to keep their distribution strategy real-time and minimize the manual errors. They will delve deeper into the implementation of game-changing technologies such as IoT, virtual reality, wireless charging, robotics, interactive digital displays, smart control apps and beacons to take the guest experience to the next level. Hotels will continue to leverage technology as a game-changing strategy in the market.



Revenue intelligence will become more important


Hotels are privy to a wealth of unstructured customer data from various online and offline sources. However, most hotels still struggle to handle this data and gain strategic insights from it. Hotels have limited inventory and usually struggle with higher room inventory utilization and pushing ARRs as adding new rooms is an expensive affair. 2017 will witness a sharp increase in the use of big data, analytics and intelligence products in the hospitality sector to predict customer behavior, provide them a ‘wow’ & tailor made experience and result in better yield management. Hotels will implement tools which will help them to accurately estimate occupancy, and attract optimal price for every room, taking into account low and peak periods, weather conditions or local events. As the hotels mature, there will be a big shift towards revenue intelligence, even in the sub 4-star segment.


The American hotel chain Denihan has set an excellent example of how big data can work wonders for the hotel industry. It uses IBM Big Data Analytics software to combine their own data sets and data collected from blogs, social media platforms and review sites to understand the preferences of their guests, personalize the offerings and determine the room rates accordingly. This way, they are able to optimize their revenue round the year.



Mergers and acquisitions will gain momentum


2016 was a year of consolidation in the hospitality sector with Marriott International’s acquisition of Starwood Hotels & Resorts, Accor Hotels' acquisition of Fairmont Brands, MakeMy Trip’s acquisition of Ibibo and the most recent Louvre Hotels Group’s acquisition of Sarovar Hotels. The spillover effect may be felt in 2017. Several international chains are keen to expand in India and a few domestic brands are adding new properties, which will set the pace for more deals.


Cashless payments will go higher


The demonetization drive has majorly affected all industries, including hospitality sector. However, this is a short-term slowdown and will yield positive results in the long-run. More hotels, especially in the unorganized sector or smaller players, will switch to digital payment options to attract more customers. Due to the availability of more cashless payment modes, the inflow of foreign tourists will go higher as they will not have to deal with currency exchange hassles. As the digital economy penetrates the rural India, business for hotels offering agri-tourism or located in offbeat/remote locations will also see a jump in revenues. 2017 will see hotels adopting cashless systems if they haven’t done already so.


Direct online booking competition will heat up


The tug of war between hotels and OTAs( Online Travel Agency) to earn a bigger pie of online bookings has intensified like never before. The entry of Paytm, India’s largest e-wallet player, in the travel space will take the war only a notch higher. A Millward Brown report revealed that online booking comprises 25% of hotel reservation channels, with 18% bookings are made by OTAs and remaining 7% done through hotel brand websites. While customers benefit the most with the best-discounted deals on their plate, the smaller, independent and boutique hotels end up losing 20-30% of their revenues via OTA commissions. Hotels may not be able to do away with OTAs completely, but they will definitely up the bait for customers and competition for OTAs by promoting direct bookings through loyalty programs, run special campaigns, freebies, etc.


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