Hospitality 2010: An in-depth report into driving shareholder value in the hospitality sector
A five year wake up call
New York University (NYU) and Deloitte dedicated a joint team of professionals to develop a “Vision 2010” of the global hospitality industry. Our vision is supported by research, analysis and structured interviews with leading industry CEO’s. The report focuses on the strategic implications of the mega trends that are shaping the future of the hotel industry and which generate most shareholder value.
“Technology is the fastest weapon the industry has for material product differentiation. Brands are more important over the longer term and changing brand perception is a slow process. Demographic changes tend to take 5 to 10 years to materialise.”
– Andy Cosslett,
CEO, InterContinental Hotels Group
The Tourism, Hospitality & Leisure team at Deloitte believes today’s challenges provide opportunities for businesses to re-think their strategies, develop new products and services and harness advanced technologies to create better value for the customer while gaining competitive advantage in a volatile marketplace. Deloitte has an unrivalled knowledge of both the industry and the business imperatives facing individual clients. Its teams work together to provide service excellence with a focus on value creation that is unique to Deloitte.
To focus our strategic analysis, we used the Deloitte Enterprise Value Map® to filter all the possible drivers of change on the basis of their potential impact on shareholder value which, whether a public or private enterprise, is the key measure of financial success. We concluded that five “mega-trends” will have the greatest impact on shareholder value namely:
As most gateway cities reach product saturation, brand, long held as the most important value driver in consumer business, is receiving the industry’s full attention. The changes in customer lifestyle, demanding experiential stay, will mean that brand choice, as opposed to location choice, will lead the way in the future.
Three emerging markets stand out above all in terms of growth opportunities for the industry, China, India and the Gulf States. China and India, today 2nd and 4th in GDP purchasing power parity rankings, will move up to 1st and 3rd by 2020 with China overtaking the USA for the number 1 slot. Between India and China, we predict that a total of 1.4 million of additional branded hotel rooms will be required for those markets to reach the same branded hotel penetration as in UK.
Attitudes and lifestyle differ between the main generation segments with the baby boomers (aged 42-60) living longer and enjoying a more active and younger outlook. These so called “silver” consumers are brand wise, travel more and desire new experiences both in terms of cultural and event based tourism.
The industry, historically in the lowest quartile of spend on technology within consumer business, recognises the need for greater investment in technology, particularly in customer relationship management (CRM) systems, as a means of influencing customer behaviour. The airline industry leads the way, with travellers showing greater preference for airline miles than hotel points and making conscious decisions to fly with the same carrier despite inconvenient schedules.
The future of air travel, the critical link in the tourism chain, is bright, with skyrocketing numbers of passengers flying by 2010. Over 1.6 billion passengers worldwide use the world’s airlines for business and leisure travel. By 2010, we estimate that number to be in the range of 2.3 billion with Revenue Passenger Kilometres (RPKs) expected to reach 5 trillion.
Continue reading about the future of global hospitality industry in full-text report attached below.
About the report
In this report, the Tourism, Hospitality & Leisure team at Deloitte together with New York University identifies and analyzes strategic implications of the mega trends that are shaping the future of the hotel industry.Related information
- Article: Air Transport in 2010