THE FUTURE OF THE HOTEL & CRUISE INDUSTRIES

When it comes to the hospitality industry, trends can be both ephemeral and everlasting. Some are just a flash in the pan; others have a staying power that last for decades. Last year’s trends were, in many ways, shaped heavily by consolidation and the drama that accompanies mega mergers and acquisitions (i.e. Starwood and Marriott) as well as the direct booking wars waged among hotels and their eternal fr-enemies -> the online travel agencies.

According to data, nearly all of the world’s major travel regions are currently outpacing their prior year (2016) hotel bookings, indicating a very healthy outlook to the hospitality industry and tourism in general. It is indeed still early, but it is extremely encouraging to see that booked hotel-room nights for 2017 (up-to-date, confirmed bookings and forecast) are already significantly outpacing 2016. Even despite attempts to frighten people away from travelling, the industry is not only surviving, but also thriving and both the hotel and cruise sectors in particular, continue to grow at a faster rate. Whatever ends up ultimately happening in 2017, it promises to be a year of great change! In 2017, we even have a hotelier in the White House, for whatever that’s worth. And following last year’s multiple mergers and acquisitions, the lasting effects of those consolidations will finally begin to emerge, and become that much clearer.

“What are the biggest trends in hospitality you are seeing these days?” This is a question that we attempt to answer each and every day. But as we all know, no matter what sector of travel that you fill in the blank, the trends continue to evolve day in and day out, building upon trend-lines that have persisted throughout the course of the industry’s history. Consequently, we make our predictions for some of the biggest trends that will impact the hospitality industry and the overall guest experience by analysing past and present behaviour and taking into consideration all factors that may influence such behaviour across the political, financial, technology development and cultural spectrums. It would be too pretentious to guarantee complete or absolute accuracy here, but given what’s happened in the past year, this is where I see the various trends culminating.

CO-LIVING

Co-living seems to becoming the next big trend in hospitality. While it is doubtful that we will suddenly see a surge of pod hotels, poshotels, or co-living/co-working spaces flooding the hospitality scene in 2017, the tenets of “co-living” — that emphasis on collaboration and community — will permeate much of the hotel guest experience in 2017. For instance, last September Accor Hotels announced it was launching a new brand, Jo&Joe, largely inspired by co-living and hostels. In December, Hilton Worldwide announced it too was considering launching an “urban Microtel” brand concept in the near future.

In 2017, expect to see even more emphasis an investment on communal areas, as well as on spaces and experiences that bring people together. Because if there’s one advantage hotels have over home shares like Airbnb or HomeAway, it is that role of being a real community fixture — a place where strangers can really gather together. Indeed an Airbnb might place you in the heart of a local neighbourhood and you might be introduced to a local host but in many cases, the experience of a home stay can also be isolating. There is no central hotel lobby where you can gather with other travellers or locals. So expect hotels to double down on this distinct advantage, and attempt in their own way, too, to make guests feel as though they really “live there.”

DESIGN

Thoughtful design is not something exclusive to boutique hotels anymore — it is the basic price of admission these days as demonstrated by how Marriott, Hyatt, and Hilton are shedding their out-dated design legacies. Whether your hotel is ultra-luxury or bare-bones budget, your guests are going to expect it to look good, and feel good. And if current retail and interior design successes are any indication these days, they are proof that you do not necessarily need deep pockets to have good design.

Design has always played a crucial role in hospitality, especially in defining that hotel’s brand or persona, and today’s guests are intuitively attuned to interpret design to fit their conceptions of what a hotel is really like, and if it is the right fit, or lifestyle, for them. With the entry of home furnishing and fashion names like West Elm, Restoration Hardware, Armani, Bvlgari and Karl Lagerfeld into the hotel space in recent years, expect the bar for good design in hotels to be raised even higher in 2017.

EXPERIENCES BEYOND THE HOTEL

Whether or not Airbnb’s gamble on Trips succeeds or fails, the mere fact that the company has launched tours and activities should be a clear signal to hotels that they too need to be paying more attention to guests’ experiences not just inside the hotel but outside of it. They need a much more holistic approach to overall guest experience than they are used to delivering. We have already seen glimpses of this, especially in the luxury end of the spectrum, but we should expect more hotels in other categories doing the same, too. And if they are not, they need to start thinking about them sooner than later.

EVOLVING LOYALTY CONCEPTS

The loyalty program remains the backbone of so many different hotel companies’ master strategies, and that certainly will neither change in 2017 nor in the future. And while so many hotel companies are placing so much emphasis and scrutiny on their loyalty programs, I hope they will not follow in the footsteps of the airlines.

In many ways, today’s overall travel loyalty landscape is one fraught with fragmentation. And in the case of the airlines, loyalty programs are increasingly rewarding gamesmanship and large spending over anything else. Perhaps that is the strategy that makes most financial sense, but is it really the strategy that will win customers’ hearts and minds? If hotel brands want true loyalty from their guests, it will be hard to achieve that if they rework their programs to be more like the various airlines of the world. They should also know better than to offer canned responses to loyalty members’ requests for more information when they decide to revamp their programs, too. Hotel loyalty, as it stands today, is entering an age of awkward adolescence, the result of multiple consolidations and changing consumer behaviours and expectations. In 2017, hotels have a golden opportunity to redefine what real hotel loyalty is like and will hopefully seize that chance.

HOSPITALITY ROOTS

A lot of times it can be easy to forget that, at the heart of it all, the travel industry — especially the hospitality industry — is really about people. We do not mean to, but sometimes, in the pursuit of efficiency and profit, we as an industry have forsaken our biggest and most important resource: humanity. The real disruption and innovation in hospitality does not lie in technology or constructing great spaces. It is about the service, and the people delivering it. Design is meant to make the environment appealing to both guests and employees and technology is to support the service delivery, not to replace it. The basics of hospitality have been compromised to make room for innovation, but the best innovation comes from the inside-out. In fact, creativity happens when employees are empowered, they are not feeling any fear and are confortable with the use of technology - not frightened by it. This is why easy-to-use, high-tech tools are more and more in demand.

THE LOCALS & STAY-CATIONS

Hotels need to stop thinking of bringing “local” into the hotel through artisanal hand soaps or locally sourced, free-range products. In the same vein of bringing more humanity back to travel and hospitality overall, hotels need to start thinking more about their local community, too. In fact more and more hotels are beginning to reclaim the role they once had as community centres, only this time they have evolved to solve challenges unique to modern times.

In fact, 90% of what had been done for the past 50 years has been based on the guy coming from outside of town; a traveller, from a different city, from a different country, which whilst being interesting is not too smart because hotels have missed out a population which is 100 times greater and better and easier: The local inhabitants. They live around the hotel, or they go to an office around the hotel, and 90% of them never dared going into the property, because they were fearful that hotel staff would ask ‘What’s your room number?’ They don’t need a room, but they may need a service and the opportunities to enhance their interest to choose a local hotel for stay-cations, which are becoming the millennia’s vacation choice, are countless.

In conclusion, the most interesting aspects that the hospitality industry is looking into to drive innovation, enhance profitability, secure loyalty and reach out to potential guests are indeed still based on community, individuality and personality yet the human-factor alone may not suffice without the support of advanced technology in a world where connectivity and real-time interaction is overwhelmingly influencing our lives.

Knowing in advance guest’s likes and dislikes not only facilitates service delivery but also dramatically influences the perception of guest’s appreciation hence winning over guest’s loyalty preferences. Attaining such goal may be possible only via a thorough interaction between the booking agents and the properties, delivering expectations and service. How do we achieve that? By integrating all existing databases and enhancing the capabilities to constantly gather up-to-date information on each individual existing or potential guest. Just think of and perhaps analyse what Facebook, Google, Amazon (just to name a few) do in profiling costumers or just desultory, curious visitors. 

PRESENT AND FUTURE TRENDS IN THE CRUISE INDUSTRY

Having spent basically all of my 25 years professional career working in hospitality - specifically within the ocean and river cruising sectors of the industry - I am always intrigued with the prospects for this behemoth industry, and the long-term implications of designing ships today that mesh well with the changing attitudes and fickle interests of traveling consumers many years in the future - as opposed to today’s - within the whole hospitality industry.

At the heart of this discussion is the 30-50 year economic life of a ship. With design and construction time for mega-ships taking five to ten years, it is already possible for them to be unveiled to the public noticeably out of date. And 5-10 years into their operational life, cruise lines run the risk of having to schedule a major rework to re-sync the functionality to match consumer expectations. Today’s emerging trend, in fact, is to actually allot resources to invest in major refurbishments and re-design of existing vessels in order to cope with the scarcity of professional shipyards that may secure the time and the “space” for new builds.

Some interesting parallels can be seen with shopping malls, where mall owners have seen stiff competition and are now filing a record number of bankruptcies, and jumbo jets with a similar usable life span but a rapidly increasing cost of operation during the later years. Unlike shopping malls, cruise ships can easily be moved to better markets. And unlike jumbo jets, many repairs and upgrades can happen “on the fly”. It is not unusual, in fact, to carry out maintenance jobs whilst the ship is actually in operation (i.e. public areas upgrades, carpeting, minor jobs in the engine rooms and on the navigational deck). For the moment, the industry is sitting on top of the world with a growing consumer base and stellar earnings reports. It is precisely this time when the industry needs to spend considerable time reinventing itself.    

Over the years the cruise industry has grown up with a majority of its passengers coming from North America. However, with the fluidity of global markets causing a constant shifting in the wealth of nations, the North American dominance of the industry is beginning to erode with the shifting of capacity to European and Asian regions. At the same time, countries around the world who are interested in building their image are realising that cruising is an important vehicle for sampling destination areas to which they may later return. Here below are the evolving trends within the cruise industry.

Global Load Shifting - Over the coming years, the rapidly growing European and Asian markets will cause a constant realignment of ships and cruise strategies with companies moving more of their ships into European and, specifically, Asian ports. Already positioned as some of the most preferred destinations for travellers, look for strong growth in the Chinese, Australian, New Zealand, and Singaporean cruise industry.

Branded Differentiation - When scanning through the current listings of cruise options, it is easy to become overwhelmed by the uniformity. They all start looking the same. Yes, they originate from different ports and make a variety of stops at diverse ports along the way, but there is little to set them apart (in a way, and sadly so, companies just “copy” each other). People today are more inclined to identify with a branded experience as opposed to a branded ship. With this trend we will begin to see cruise companies align themselves with corporate sponsors in an effort to make every 5, 7, or 14 day cruise a branded experience.

Growing need for Office space - As the pace of business continues to climb, and the nature of employment continues to morph, few will be able to completely escape the demands of work for the duration of a cruise. For this reason, companies will begin to redesign their staterooms to include a functional work environment. As an example, ceiling mounted flat screen televisions will enable one person to watch TV with headphones and not distract someone else who is working on a computer at a desk. Rolling office chairs, pull-out desk space, affordable in-room Internet & mobile phone connections, projection screens, and large-screen computer monitors are just a few of the elements needed to give travellers the convenience of on-demand workspace whenever the need arises.

Rapidly Evolving Shipboard Innovations - Smaller ships will tend to focus more on their own branded experience while larger ships will continue to push the limit of what’s possible at sea. Below water viewing chambers, on-board observatories, electronic gaming tournament centres, pet spas, cook-your-own dinner-dining rooms, slash-casters, movies-under-the-stars outdoor theatres, graffiti walls, and cruise-for-a-cause walls of fame are just a few of the possibilities here (and some of these are already happening). In addition, on board wireless networks will give rise to interactive game playing through personal mobile phones. Some ships may even begin to use flying drones (!!!) for such things as extended view whale-watching, storm monitoring, cloud formation, and weather analysis. While near land, drones can be used to view the surrounding countryside and even witness city lights at night.

Wellness Cruises - This is the growing trend for cruising and healthy travel. Going on a cruise used to be about guilty pleasures: eating and drinking  too much, and doing as little as possible. The gym was almost an afterthought, often a tiny room hidden in the bowels of the ship, and the spas weren’t much more than a massage room. Now, cruisers are seeking something very different – they want to finish their trip healthier than when they started. Passengers can take a boot camp cruise, a spa cruise, a yoga cruise or even a marathon cruise. Gyms have premium positioning at the top of the ship, along with walking tracks, obstacle courses and yoga decks. Day spas still do massages, but you can also get a anti-cellulite algae wrap, acupuncture, dental – or even Botox – treatments. Recent figures show that $1 in every $7 spent on tourism goes on wellness pursuits. This category (which includes healthy cruising) was valued at $574 billion in 2016 and is predicted to grow at 10 per cent over the next five years, reaching $880 billion dollars by 2022.

Expedition Cruises - The exponential growth of expedition cruising that is expected to be seen over the next few years kicks off in February 2017 with the addition of two ships in the Galapagos but they will not be the only "new" expedition ships this year. Expect to hear much more about expedition cruising in the next years. In fact, five cruise lines will be delivering double-digit expedition new-builds over the next five years. The wave of new ships certainly will draw a new batch of travellers to the cruise industry as this segment is proving to be high generating revenue with occupancy rates over 100% and high net-worth passengers. Companies like Compagnie du Ponant, Crystal Cruises, Silversea Cruises, (to name a few) are actually introducing more vessels within their fleets assigned as solely expedition cruises.

The rise of River Cruises – There will be 18 new River vessels delivered in 2017 and more on order for the years to come. This translates in an increase of 10%. River cruises are adding more choices for active and highly educated travellers. Most lines now have bikes that can be used by passenger in port on their own, as well as for guided tours visiting famous landmarks and exotic places. Lines like AmaWaterways, Uniworld, Emerald and Scenic have hiking and kayaking tours. Meanwhile, Avalon has developed an entire Danube itinerary that focuses on active pursuits, and it plans to add a similarly dedicated itinerary on the Rhine next. This is a trend to watch closely as river cruising is specifically designed for the travellers that prefer more cultural and exotic voyages, less crowded environments and the possibility to enjoy extended stays in port. Crystal has recently entered this sector with the introduction of an unrivalled new fleet of state-of-the-art, luxurious river yachts offering extended overnights, untapped itineraries and a selection of intriguing activities.

River cruises have always been more inclusive than most sailings on the ocean, but it seems that more and more operators are moving to a completely all-inclusive product. As guests increasingly look for ways to add value to their holiday, this looks to be a shrewd move. Extras such as drinks, Wi-Fi and gratuities are being bundled into the initial cruise fare to offer a much more appealing package and this is something that is sure to continue. However, operators such as AmaWaterways have chosen to take a different route by launching a happy hour immediately before the evening meal. So, whichever way you look at it, river cruise lines are finding new ways to provide increased worth.

Increases in Multi-generational Travel - The CLIA fleet carries over 1.6 million kids traveling each year and that number is increasing, in part due to the growth of multi-generational bookings. One recent survey found that 46% of families have taken two to four cruises with children under the age of 18, and 15.2% have taken five to seven cruises, and 4.8% have taken more than ten. As life expectancy grows, and 80-90 year olds become increasingly more active, cruise lines will find themselves needing an even broader selection of programming, with a range of offerings that appeal to even more age groups. Adding to the complexity of age-related programming will be the diverse, rapidly changing interests of multi-cultural age groups.

In recent times, river cruise operators have made a move to try and encourage a younger crowd onto their ships. AmaWaterways have teamed up with Adventures by Disney and have their itineraries aimed at families and Uniworld Boutique River Cruises  have announced that they plan to launch a new brand called ‘U’ which will be targeted at travellers between the age of 18 and 40. All this points to a desire to get more millennial’s on board, something that will be achieved by offering a bigger range of active and immersive activities, new facilities and technology  on the ships and exciting new destinations that may appeal to a younger crowd.

Shorter Lead Times - Businesses around the world are beginning to grapple with the fact that shorter lead times are getting shorter every year. Our rapidly accelerating communications networks are constantly raising the bar. The once radical notion that packages and letters could be delivered anywhere in the world overnight, is now stodgy thinking, far too slow for today’s on-demand generation. For cruise lines, representing an industry built around the leisurely pace of leisure, this creates a number of friction points, as well as several advantages. Customers, who would have booked 6-12 months in advance in the past, now see little need to book more than 1-2 months in advance today. This last-minute thinking that causes heartburn from an operational standpoint also opens the door to last-minute promotional schemes that can insure a near-capacity turnout virtually every time. While switching embarkation and destination points still needs advance planning, it requires far less than it did even a couple years ago. Customer notifications can happen quickly and last minute requests and changes are becoming much more manageable. On board staff and talent can be booked with little notice.

Floating Cities and Floating Nation-States - The cruise industry has been quietly testing the limits of international law by asking the fundamental question, “What things can happen in international waters that are not permitted inside most countries?” They are already claiming exemption from sales tax, gambling laws, HR requirements, minimum wage laws, and a multitude of other restrictions that land-based businesses have to deal with. But how far are they willing to push it? And how far is too far? Could a medical tourism ship be stationed in international waters to perform medical procedures that are still pending approval in other countries? Can they create and enforce their own laws, begin to incorporate businesses, develop their own currency, manage their own banking operations, and serve as a tax haven? In short, is it possible for a ship to become its own sovereign nation? If this line of thinking sounds too extreme, consider the following:

a) Floating cities on the ocean have been receiving added attention due, in part, to concerns over climate changes.

b) A number of groups are already in the early development phases of floating and undersea cities of the future.

c) One floating city is already in operation, “The World” operated by Residensea. It has been designed for wealthy families who wish to live and work from a sea-based permanent home floating in international waters and is also open to regular cruises.

d) Seasteading Institute in California is based on the belief that current political systems are out-dated and work poorly, for two reasons. One is the lack of a frontier – a place to go try out new forms of government. The other is the lack of mobility on land that happens because people are tied to buildings and buildings are fixed in place.

e) SeaLand is a manmade structure 60 miles off the coast of England that has established itself as an autonomous country.

Extreme Ship Designs - Cruise lines have proven that they are sitting on top of a very profitable industry and the more outrageous the ship, the more profitable it becomes. This line of thinking is paving the way for a new era of extreme ship designs and extreme operational strategies. I should note that something only sounds extreme before it is built and operating. After it becomes a successful, the label “extreme” gets traded in for “genius”.

Cruise Lines -> Go Green - The International Maritime Organisation has been cracking down on sulphur emissions for years, and cruise lines continue to explore new ways to be more environmentally friendly. Liquefied natural gas, heralded as the cleanest-burning fossil fuel, is the fuel of choice for a growing number of cruise lines. According to LNG leader Carnival Corporation, the natural gas eliminates sulphur-oxide and soot particles completely and drastically reduces nitrogen-oxide and carbon dioxide emissions. Other green-cruising initiatives to expect and that will continue to grow are scrubber technology and paperless options for passengers, who will have the choice to go mobile, thanks to apps that allow access to the ship's daily planner and reservations systems. In order to meet this challenge, cruise lines are now referring to more sustainable, efficient and easy to use software to maximise fuel consumption control processes, enhance proper port scheduling, drastically reducing waste and go totally paperless by the use of applications on mobile devices. 

For cruise lines it was important to first establish a durable industry, and they have done a remarkable job so far. But here is where it gets interesting. Each of the industry leaders are now well-positioned to leave their mark on the future, and the only durable way of doing it is by pushing the envelope, taking risks, and breaking rules. Cruise lines, while still lagging on the digital frontier, are entering an experimentation phase with each trying to establish themselves as a leading innovator so be tuned and let us wait for what is coming next.