Contact: Sarah McFarlane
Deloitte
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The hospitality industry will need to address five major issues over the next three to five years, including brand, emerging markets, human capital, technology and operating models. These factors will be key drivers in determining winners and losers through 2010 and beyond, and will heavily impact shareholder value, according to a new report by Deloitte and the Preston Robert Tisch Centre for Hospitality, Tourism and Sports Management at New York University.
The Baby Boomers in the United States and Europe are a huge demographic with enormous amounts of disposable income. Alex Kyriakidis, Global Head of Tourism, Hospitality and Leisure at Deloitte says: “The percentage of the population aged 65 and over in Europe will increase from 15 percent in 2000 to nearly 25 percent by 2015 and increased travel by the ‘silver’ segment will maintain Europe’s position as the number one tourism exporting region, delivering some 730 million travellers by 2020. This will provide an enormous opportunity for the hotel sector, which should be developing strategies to market products to generational segments now.
“In addition to addressing the needs of aging consumers, the hospitality industry will need to address talent management issues, as aging populations hamper the ability to find sufficient staff in some regions.”
In China, India and the Gulf States, both domestic and international travel is booming, due to lower airfares and emerging middle classes keen to travel for the first time. Between India and China, the report predicts that a total of 35,000 additional hotel rooms will be required to reach the same penetration as in more developed countries, and the majority of these will be positioned in the economy and mid-market segments. These new markets pose unique challenges in politics and ownership, as well as in recruiting, training and retention of local staff.
Alex Kyriakidis says: “While these emerging markets offer exceptional growth opportunities, the world’s largest tourism market – the United States – still has a way to go. Total travel and tourism spend in the US, both domestic and outbound, is predicted to double from $830 billion to a staggering $1.6 trillion by 2015, leaving room for growth, particularly at the luxury end of the market.”
The industry is historically in the lowest quartile of technology spending; however, all the executives interviewed expected to increase IT investments, particularly in reservations, distribution, loyalty programs, and customer management. In the US and Western Europe more demanding customers have come to expected more personalised service, and in the future hospitality suppliers will need to consider online room selection and check-in, personalised bed (variable firmness), and personalised in-room food and beverage offering.
Alex Kyriakidis says: “Historically, the airline industry has led the way, with travellers showing greater preference for airline miles than hotel points, willing to fly the same carrier despite inconvenient schedules. All CEOs interviewed plan to spend more on IT, appreciating the opportunity to interact directly with the guest maximises revenue, and avoids the potential merchant intermediary costs which can be as high as 25% of room revenue.”
Ends
Notes to editor
Hospitality 2010 is based on in-depth interviews with leading industry CEOs and research and analysis of multiple economic and financial data. Alex Kyriakidis, global managing partner of Deloitte’s Tourism, Hospitality & Leisure practice, and Dr. Lalia Rach, Associate Dean and HVS International Chair of the NYU Tisch Centre co-authored the report
About Deloitte
In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Known as an employer of choice for innovative human resources programmes, it is dedicated to helping its clients and people excel. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities. Neither DTT nor any of its member firms has any liability for each other’s omissions. Services are provided by member firms or their subsidiaries and not by DTT.
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The information contained in this press release is correct at the time of going to press.
