18 Sep, 2006
Tourism Products, Processes Changing With Lifestyle, Business Pressures
Two studies released last week by PricewaterhouseCoopers LLP and American Express show how the products and processes of the travel & tourism industry are changing in line with lifestyle trends and business pressures.
The fourth ‘European Lifestyle Hotel Survey’ by PricewaterhouseCoopers LLP released last week said that “lifestyle hotels” (which are now becoming a rage in Thailand) are continuing to raise the bar for the industry through differentiation, innovation and value-for-money.
“This niche sector continues to have widespread consumer appeal and, although there have been new developments throughout the lifestyle segment, the budget end saw the most action in terms of new names and new ideas,” the survey concluded.
Liz Hall, head of hospitality research PricewaterhouseCoopers LLP and editor of ‘Hospitality Directions Europe’ was quoted as saying: “While many larger hotel chains continue to try to emulate lifestyle hotels’ distinctive offer, we found that the real action in terms of innovation and value for money is still being driven by the smaller operators, particularly in the new, up-and-coming branded budget lifestyle segment.”
According to the survey, the top 25 hotels in our European survey saw a 5.9 per cent increase in room capacity compared to a year ago and now account for 11,386 rooms.
An analysis of the performance of 60 UK lifestyle hotels with over 4,000 rooms showed that the UK lifestyle sector is still more volatile than the rest of the hotel industry but should experience good RevPAR (revenue per available room) growth of 7 per cent this year.
“There is some evidence that the sector is now becoming more attractive to investors particularly venture capitalists and private equity firms. In the past, lack of scale has tended to make returns insufficient to attract investment groups, but this may be changing,” the survey said.
According to Ms Hall: “Its always going to remain a niche sector but we found some evidence that new, quality products with the potential to be rolled-out as small branded groups are attracting growing interest from venture capitalists and private investment groups. Investors are seeking replicable concepts that could build critical mass in new and emerging markets.”
Sharon Stotts, director performance improvement consulting PricewaterhouseCoopers LLP was quoted as saying, “What we are seeing is a revolution where the consumers will soon overtake businesses in demanding what they want, when they want it, in a way they want it.
“The challenge for hoteliers is to develop business models that are flexible enough to deal with the technologically-driven consumer while also focusing on new revenue-streams. A customer’s pre-trip experience is even more important in developing hotel experience; and technology is being used to track customers’ preferences before, during and after a visit.
“Just as we are seeing in the media sector, delivering the content that customers are looking for is increasingly the key to success. But consumers are fickle and fashions change ever more quickly. For hoteliers with a highly perishable product, this presents some real challenges in keeping up with and staying ahead of the game,” according to Ms Stotts.
The second study, the 2006 American Express Travel Management and Business Expense Study, tracked travel management and business expense practices in Canada, based on a survey of 500 mid- and large-sized companies.
Conducted by Ipsos Reid, an independent research firm, the study found that Canadian companies now spend approximately $24 billion annually on travel and business expenses. That’s up from $12.9 billion in 1997 when Amex last published its in-depth report on this sector.
The study also reveals companies stand to reclaim as much as $2.4 billion through better control and cost savings.
Shawn Klerer, vice-president and general manager, Business Travel Canada, American Express, was quoted as saying: “Turmoil in the travel industry and changes in the corporate environment have transformed business travel and increased emphasis on financial controls and accountability.”
Key Findings:
– Nearly three-quarters (73 per cent) of companies have travel policies – an increase from 62 per cent in 1997.
– Even more have strong guidelines for purchasing everyday items such as office supplies (76 per cent), telecommunication services (76 per cent) and computer software/hardware (81 per cent).
– And, almost one-third (32 per cent) of companies say their most senior executives are involved in the overall management of travel and business expenses.
Where some companies are falling behind is in their lack of consistency and commitment to the policies, practices and processes they have put in place. In many cases, employees are not being mandated to follow travel and expense policies, the survey found.
“Too often, the systems for maintaining and controlling expenses remain rooted in management practices that are out-of-date,” it noted. “Most companies have travel and spending policies in place, but there is no follow through to ensure and reinforce compliance.”
As a result many are missing out on huge savings opportunities, leaving as much as $2.4 billion on the table.
For example, study results show companies are hesitant to explore new technology. Online booking has increased significantly, but more than one-third (37 per cent) of companies say they have no plans to move online. Through a carefully managed online and offline booking approach, companies can meet their travellers’ needs and maximize savings for the company.
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