“Winter is coming” to the hospitality industry. After enjoying years of unprecedented growth, hotel owners must now prepare for tougher times ahead. Growth in revenue per available room has slowed. Some bellwether markets are experiencing declines as new construction that started during the boom years continues to add to capacity.
Meanwhile, digital is reshaping the industry. It puts instant buying power in guests’ pockets via their smartphones. But at the same time, it creates complex “frenemy” relationships between hotels and online travel agents like Expedia and Priceline’s Booking.com, which are simultaneously suppliers of bookings and high-fee competitors for both profits and brand loyalty. A similar dynamic applies to relationships with credit card companies as they try to develop their own loyalty programs that come between the guest and the hotel brand.
Global opportunities abound — for example, there is explosive growth in China and other parts of Asia and in Africa. Local flags are rushing to fill the gap in those markets, where no brand yet dominates. The new generation of millennials also is on the rise, with new preferences and priorities. It’s more than enough to keep hotel executives up at night.
How we help
With extensive experience in the hospitality industry, L.E.K. Consulting is here to help senior leaders in the hotel industry think through the major questions confronting them, including:
- How can we maximize both revenue and profit in the face of declining bookings and intense competition on so many fronts?
- How can we market successfully to a changing customer base? Do we need to create customized offerings for distinct customer segments? What should those offerings be, and how can we plan and execute them?
- How should we be using mobile technologies to create more and better touch points with guests?
- How can we best leverage the extensive data we are accumulating to productive effect?
- What is the right strategy for managing our profitability, brand and guest relationships in the face of significant distribution trends?
- How should we view our relative market position in a consolidating landscape, and what is the role of partnerships against this backdrop?
- How should we plan to seize global opportunities? Alone or in partnership? In what markets? At what scale?