5 Key Challenges Facing Hoteliers

Meeting planners face plenty of challenges, but hotel suppliers have just as many worries on their plates, too. As the industry works together to fill room blocks, here’s a look at five pressing issues impacting hoteliers right now.

1) Commodities cost more.

While planners may want to ask for a price break on F & B expenses, it’s important to recognize just how quickly the costs of food are rising. According to the United Nations Food and Agriculture Organization, global food prices increased by 2.7 percent last year. It’s a trend that most experts predict will continue as crops around the world deal with the continuing impact of climate change and rising fertilizer prices. As hotels work to adjust their menus to accommodate food allergies and offer organic dining options, slashing prices is simply becoming more challenging.

2) Technology is outpacing investment.

From meeting planners making site visits to families planning vacations, just about everyone is demanding the newest bells and whistles when it comes to technology. There’s just one problem: those new features cost a lot of money.

While planners launch new mobile applications for their meetings and attendees power up their computers, tablets and smartphones when they’re on-site, it’s important to remember that a wi-fi signal doesn’t just magically appear. From paying for bandwidth and 24-hour IT staff experts to covering continuing upgrade costs each year, that signal comes with a significant price tag.

3) Loyalty is a lost art.

Many hotels used to be able to bank on brand loyalty, but today’s world of online travel deals has left that loyalty in the dust. Global consulting firm Deloitte conducted a survey of 4,000 business and leisure travelers, and the results are troubling for hoteliers: just eight percent of respondents in the research indicated that they are always loyal to the same brand.

“Greater transparency means the consumer can research and book directly through suppliers, search engines, comparison sites, affiliates, agents and more,” Adam Weissenberg, Vice Chairman, U.S. Travel, Hospitality and Leisure Leader, Deloitte & Touche LLP, says.

As travelers explore the wide range of options for accommodations, hotels are facing more pressure to reinvent those loyalty programs.

“We argue that hotel companies should adopt a wider view of loyalty building and reinvent programmatic approaches to better suit a market characterized by a myriad of hotel options and brand switching,” Weisseberg adds.

4) New business destinations come with new learning curves.

Meeting planners are looking to capitalize on new opportunities in new markets around the world. In order to expand outside the traditional borders of the industry, attendees are going to need places to stay.

“Companies should consider planning their market entry strategies as new markets open up,” Weissenberg says. “Additionally, new market opportunities in legalized gambling may be taking place in countries such as Japan and Vietnam.”

Capitalizing on these new markets requires plenty of work, though.

“As more business travelers and meeting attendees look for trusted hotel brands in emerging markets, there are tremendous opportunities for hoteliers. However, opportunities come with challenges,” Michelle Stoddard Crowley, manager, global development, PCMA, says. “As hotel brands expand into new markets, the investment requires that management understand the cultural norms of doing business in those new destinations.”

“While hotels may be well-established North American-based brands, they also want to make sure that attendees can truly experience the local culture, too,” Stoddard Crowley adds.

5) Competition continues to heat up.

While the industry may continue to change, there is one element that all hoteliers know they’ll continue to battle: competition.

“You’re always wondering ‘what are the Joneses doing?’ when it comes to the renovation cycle,” Bill Lemmon, Director of Sales, Omni Hotels & Resorts, Chicago, says. “The hotel industry is constantly updating its offerings. Even if you’re just two years behind a new renovation, your competitor may be able to drive a higher rate.”

“The only element you can control on a day-to-day basis is quality of service,” Lemmon adds.

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