Luxury travel being the privilege reserved for the wealthy is a thing of the past. Today’s consumers have more access to these services, and this is thanks to ‘disruptive’ low-cost airlines and mobile booking sites.
What follows are highlights from several travel providers who are racing to enhance the consumer experience, win new business and, ultimately, customer loyalty, according to a Forbes Magazine report.
Supply meets demand
Travel and tourism make up 9% of global GDP, and the industry is the world’s largest employer, responsible for one in 11 jobs. However, as big as the industry is, it has the potential to be a lot bigger. Within the next decade, it is anticipated that this industry will create an additional 75 million jobs. The statistics support this assertion: the tourist population has doubled in the past 20 years and is expected to double again over the next 20 (reflecting the same increases in the middle-class population).
Millenial Generation Have Different Demands
Such tremendous growth has changed the face of the travel and tourism industry. As more capital flows from east to west, as the middle class continues its surge, and as the Millennial generation – which within 10 years will be in its peak earning, spending and travel years – demands faster, customized services, many accommodation providers have moved toward a model that caters to these changing demographics.
Mobile travel services will continue to be a hot platform, as will social media, digital innovation and analytics tools in a bid to engage customers and build loyalty. By using the information captured by these tools, differentiated experiences are created, which motivate customers to visit more frequently, stay longer and spend more.
private players
Recent hotel IPOs (Initial Public Offering) in the US have largely been driven by major private equity players. Several years of steady revenue growth and limited additions to supply have enhanced investor confidence, particularly where a dynamic growth story exists for the future. Other large, private owners have clearly taken notice, and this hotel IPO and venture capital trend will likely continue for large portfolio owners with the right economics and growth stories.
Hilton Worldwide, which in 2007 agreed to an all-cash buyout by the Blackstone Group, is a great example of the benefit of leveraging private equity funding. Chris Nassetta, President and CEO, shared his own experience.
fastest growing
Since taking the buyout, he said, “We have become the fastest-growing lodging company in the world with growth in rooms at 37%. We have the largest pipeline in our history, with nearly 200,000, and more new rooms under construction than anyone else in the industry. Most importantly, we’ve received a great reception upon our return to the public markets and are feeling very positive.”
It’s an exciting time to be in the hospitality and travel industry, as it contends with increased competition, shifting economics, and increased and unique demands from shifting demographics. We’re going to see lots of great things happening in the next decade, but one thing is for sure: travel companies are gearing up their resources to get us where we want to go and give us a great place to rest our heads.
