The luxury hotel industry is one of the fastest growing parts of the hospitality industry. A study by Amadeus
(2016) predicted that over the next 10 years, the growth rate in outbound luxury trips would be 6.2%, almost a third greater than overall travel (4.8%). This is partly due to the pursuit of experiences over possessions and digital is a key tool in providing a gateway to those experiences.
The digital landscape and technology are constantly shifting and simultaneously consumer behaviour and expectations are also changing. These trends and changes have an important impact on a luxury hotel's management and marketing activities. The industry must react appropriately in order to maintain high levels of consumer satisfaction.
There are of course other challenges that this sector is facing, and the coming year will be even more difficult. The key to success is being proactive in keeping abreast of, and adapting to, the latest trends.
In this article we identify various challenges to the luxury hospitality industry and how they might be mitigated.
1. Innovative technology
Many luxury travelers are buying a curated experience and are often time-poor. They value friction-free and efficient service and certainly don’t want to be queuing at a reception desk. A contactless, electronic check-in is easily achieved with web technology. Many hotels have recently implemented this innovation in response to COVID-19. Once the guest has booked, the hotel offers the service and all future dealings are carried out digitally.
Scannable door keys may still be used but a better solution is via their mobile phone with guests using an app. As they arrive at the hotel, they don't need to check in at the front desk and can make their way directly to their pre-confirmed room. Their phone is also their key to unlock not only their door but also all the other services which the hotel provides.
A time-consuming paper-based process can be moved effortlessly to the digital realm.
2. Reputation management
Online comments and feedback enable guests to directly communicate their experience in a hotel, usually with images. This channel is possibly the most important aspect of managing your brand and developing a high level of trust between you and your guests.
Reviews, comments, and feedbacks can make or break a hotel's reputation. Social media and luxury travel are inseparable. High end travelers have embraced platforms such as Instagram where they can tell their stories and share experiences. Hotels can leverage this user generated content to promote and manage their reputation and create a positive feedback loop where more endorsements create more bookings and revenue.
3. Finding and retaining talent
Fundamental to the success of the luxury hospitality industry is its people; it is quintessential that hotels attract and employ top talent and often these will need to be recruited overseas. In recognition of this fact we can see that the growth of this sector depends on both global and local economies.
Many organizations attract the right people but often don't retain them. This pertains from the CEO down to the receptionist. One key method for this particular sector is hiring based on referral. Implicit in this is training and attitude – a person who understands and can respond to the needs of the luxury traveler can transfer their skills to any hotel. Once in post, motivating and training employees should be focused on providing a service-centric rather than a product-centric offering
4. International travel
As the global pandemic has demonstrated, the luxury hospitality industry is utterly dependent on international travel. Previously it was important to have a focus on creating a meaningful experience for both domestic and foreign visitors who perhaps had different expectations. It seems likely that for 2021 the local guest will remain the dominant target market. As we have written before
, having a website and digital strategy which is optimised for direct bookings gives hotels the ability to communicate directly with their customers, adjust their own rates and quickly pivot their offering to attract a different audience. It gives them the leverage to win direct business from the OTAs. Combined with their local knowledge, this gives them a powerful boost in the fight to maintain their bookings and rate.
5. Guest experience personalisation
The digital world has increased the desire for a more authentic, focused travel experience. Personalisation should be the key for luxury service providers and they should seek to offer customised experiences for consumers. On average people travel internationally between one and three times per year. This doesn't give hotels many opportunities to learn directly about their clients. A comprehensive digital strategy allows hotels to remain in touch and develop strong, personalised messaging via social media or email.
6. Brand Loyalty
Achieving direct bookings is another key challenge which hotels are experiencing as they face fierce competition from OTAs such as booking.com and Expedia. It is crucial that independent hotels offer loyalty programs and value-added special offers however this is not enough. Brand awareness, word of mouth and customer advocacy are vital for any luxury hotel to remain top of mind for travelers as this blog explains
. Rather than blind brand loyalty this is dependent on hotels being seen as an authentic, trustworthy and caring partner who can satisfy a traveller’s aspirations.
There are a wide range of challenges that the luxury hotel industry is facing, yet with the right attitude and approach they are also an opportunity for growth.
The measures outlined in this article are proven to work for the modern, digitally savvy, luxury traveler. They are dependent on hotels having a great digital platform on which to execute them. For advice on any aspect of web design, digital marketing or direct booking strategies for luxury hospitality please get in touch with Aró.