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Sun 21 Jan 2018 05:36 PM

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Opinion: Increasing supply of MidEast hotels a challenge for operators

Outlook: Three factors to drive hospitality in 2018

Opinion: Increasing supply of MidEast hotels a challenge for operators
With an increasing supply of hotels and brands across the region, guests have become more curious, connected and assertive in their choices.

Driven by changing economic conditions and greater competition over the past two years, the hospitality industry in the Middle East faces a new reality.

With an increasing supply of hotels and brands across the region, guests have become more curious, connected and assertive in their choices.

This presents the industry with new challenges. While the sector enjoyed double digit growth over the last five years, the era of easy business is over.

To grasp opportunities, hoteliers will have to be agile, transformative, and rethink how they position their brands and services.

I see three areas that will shape the hospitality industry in the future with impact in 2018: maturity of the market with growth in the economy and midscale segments and the emergence of lifestyle brands; increased digitalisation and personalisation into the customer experience; and the need for personal connections not only with guests but also our colleagues which will transform the way we attract, develop and retain talent.

Growth of economy and midscale brands

For many years, the Middle East was positioned as a luxury travel market, with international economy and midscale brands having limited exposure.

However, as the region expands tourism with the opening of theme parks, cultural attractions and with Expo2020 Dubai on the horizon, greater attention is being placed on economy and midmarket segments.

This trend will continue well into 2018, as GCC residents increasingly travel outside of the region, experiencing new concepts and products abroad and wanting the same back home. The challenge becomes placing greater attention on attracting more visitors in every segment.

Emergence of lifestyle brands

The hospitality industry faces a new generation of travellers that have challenged previous travel perceptions. These travellers, often times referred to as ‘urban nomads’ are not necessarily motivated by traditional hotel ratings, but rather by sustainable, personalised and culturally-conscious experiences.

Driving this development, we’ve focused on our own lifestyle brands. As an international hub, Dubai is the perfect location for the first Mama Shelter and 25hours hotel which will both open by 2020, two brands that will undoubtedly find great expression with urban nomads in the city.

As a group, we have been conscious to protect our lifestyle brands while providing these individual small companies with the unique opportunity to leverage our global distribution and digital platforms.

However instead of drowning out their uniqueness, which often results following a merger, the aim is to protect and nurture their creativity, culture and their people, with a wider objective to also influence our brands from economy, midscale, upwards to upscale and luxury. We predict that this convergence will genuinely reshape our travel and hospitality DNA with larger implications for the tourism industry in the future.

Digital first or customer first, a contradiction?

The use of digital technology across industries is gaining tremendous momentum. This no longer just extends to disruptors. The hotel industry has gone through a number of changes with new actors such as Microsoft and Google and even Facebook is generating a lot of interest and opportunity.

Within the travel industry, the rise of digitalisation has led the move away from personalisation and personal connections. But digitalisation also has the ability for increased connections, personalisation and travel companionship. 

AccorHotels’ development of an intelligent chatbot, ‘Phil [Feel] Welcome’ was created to better anticipate our guests’ desires.

As agility and transformation are key descriptors that I mentioned at the onset, Accor Local, an app that connects residents to the services of the local community and our hotels, is an example of how our Group is forging genuine connections for neighbourhoods in close proximity to our hotels, addressing the needs of residents around the clock 24/7.

Personalisation, digitalisation and talent

The consumer experience remains at the heart of our industry. As mentioned above, digitalisation is being realised as a means to enhance our personal connections with our guests.

With over 200 hotels in the Middle East and Africa and the opening of 1-2 new hotels each month, these interpersonal connections with our guests is vital, but equally or even more so with our colleagues.

As market dynamics evolve in 2018, operators face the responsibility of attracting and retaining talent. Just as our guests expectations are high so is our colleagues’ expectations, and in order to remain as an employer of choice, we must actively communicate and relate in ways that are meaningful to them.

While the digital experience is key in attracting and retaining top talent of equal importance is the personalisation of their work and life experiences with AccorHotels.  While I appreciate that this is challenge in many hospitality companies, in our region we are tasked with finding 35,000 colleagues within the next five years in addition to nurturing our current colleague base.

In summary, while the competitive landscape sharpens in 2018, the areas that I’ve outlined from the growth of economy and midscale brands, the rise of lifestyle brands and their influence on our group, the digitalisation and personalisation for guests as well as for our colleagues, will shape the discussion in travel and hospitality in the years to come.

Olivier Granet, Managing Director & Chief Operating Officer, AccorHotels Middle East and Africa