What do luxury hoteliers have to contend with today? What are they doing to overcome these challenges? Problems and problem solving approaches for the luxury hotel industry in 2023 and beyond.
The luxury hospitality industry is known for its high-end amenities, exclusive experiences, and unparalleled service. However, despite its reputation for opulence and indulgence, the industry is facing a number of challenges that are impacting its ability to attract and retain customers.
One of the biggest challenges facing our industry is the changing consumer demand. In recent years, consumers have laudably become more focused on sustainability, wellness, and authenticity. As a result, luxury hotels are being pressured to adapt their offerings to meet these changing demands. For example, many luxury hotels are now offering eco-friendly options, such as electric vehicle charging stations, solar panels, and water conservation measures and of course also healthy food options - 'from farm to table' supported by local suppliers, waste management etc. etc. Please do read the attached launching offer Climate Positive Program and Award for the Hospitality Industry from our strategic partner NOW!
Another challenge for the luxury hospitality industry is the increased competition. With the rise of online travel booking platforms and home-sharing services, such as Airbnb, consumers now have even more options than ever before when it comes to finding an exclusive place to stay. As a result, luxury hotels are having to work harder to stand out and attract customers - see our recent article on "Brand Elevation". This has led to an increase in the use of digital marketing and social media, as well as the development of loyalty programs and rewards schemes.
Furthermore, the pandemic also has a big impact on the industry, it affects the travel industry as a whole and the luxury hotel segment were not an exception. The closing of borders and the decrease of business travels and tourism have caused a decline in revenue, which has forced luxury hotels to re-evaluate their business models and look for new ways to generate income.
A further challenge for the luxury hospitality industry is the rising cost of operating a hotel. The cost of labor, energy, and materials has been increasing in recent years, which has made it more difficult for luxury hotels to maintain their profit margins. This has led to a focus on cost cutting measures and the use of technology to automate certain processes and reduce labor costs.
In summary, the luxury hospitality industry is facing a number of challenges that are impacting its ability to attract and retain customers. These challenges include changing consumer demands, increased competition, the impact of pandemic and the rising cost of operating a hotel. Luxury hotels are having to adapt their offerings to meet these challenges, such as by offering eco-friendly options, wellness-focused amenities, using digital marketing and social media, and implementing cost cutting measures.
Problems and problem-solving approaches
for the luxury hotel industry in 2023 and beyond.
• In 2023/post-pandemic, hotels will need to focus even more on delivering a great experience and personalisation of their guest services in order to stay competitive.
• (Re)Hiring and training the right employees and offering them a good career package (work/life balance!) is essential for attracting and retaining top talent.
• With continuously changing consumer demands and markets, it is important for hotels to be agile in order to respond well to market shifts.
• GenZ and future generations will continue to tick differently than our current customer potential, as the term 'luxury' has already changed a lot for them.
◦ Interesting: These generations have been redefining luxury for years now, and their idea of what a luxury brand means continues to change. Prices now bring pride instead of shame, demonstrating they have their own take on high end brands.
◦ In a study I read just recently, young consumers were asked to choose between “It is any recognisable brand name item” and “It is a historically high-end brand name item” when defining luxury products, and more than half chose the former. For example., growing up with no-brand clothes has made them see any brand with a name as aspirational, yet exclusivity still matters to them. Unlike other generations, nearly half of young consumers don't consider something luxurious if it's expensive - it can just be something they don't usually buy.
• Marketing is therefor even more essential for driving business from the front and should not be treated as an afterthought by hotel management.
• To remove the bottleneck of insufficient advertising, it is important that marketing technology is used properly. This includes a first-class CRM system and automation tools that take over manual tasks and help with data management.
• A wider marketing funnel can be created by attracting potential guests with a blog and dedicated package pages. If these keywords match the kind of experiential stay on offer – especially if it is a more niche experience concept –this will be enable you to position your hotel for optimal ROI.
• Another way to address this issue is by integrating automation technologies (METAVERSE e.g. for MICE/to introduce your property virtually…) where possible across your hotel business. In particular, these usually cloudbased technologies can take over time-consuming, laborious processes.
• And finally, prioritising is crucial in avoiding feeling overwhelmed. It might seem like there isn't enough time to focus on the above, but that doesn't have to be the case. What will separate the successful hospitality leaders from the industry latecomers are their organization skills, the ability to understand their strategies profoundly, and their readiness to revolutionize their work habits and company culture with staff.
P.S. By 2025, Gen Zs and Millennials are set to make up half of the luxury market!
Between February 2021 and February 2022, these generations accounted for 60% and 63% of luxury sales, respectively. As digital natives, they demand modern online experiences and look for brands that embrace authenticity and sustainability. Luxury brands face a significant challenge in this new market but also have a major opportunity to capitalize on it. To gain a foothold with Gen Z ers and Millennials, they must understand how to effectively reach them in a digital-first world.
Navigating the metaverse can be intimidating, but luxury brands should not overlook its potential - a recent report by Klarna revealed that more than six out of ten Gen Z and Millennial respondents who are familiar with the concept are interested in buying luxury goods via the platform. Louis Vuitton recently used
the metaverse to launch its adventure game. According to Statistica, 74% of gamers in the metaverse were aged between 10-35, constituting a sizable percentage of current and future consumers for luxury brands.
Younger generations prioritize the integrity of brands when making purchasing decisions, so sustainability is a must-have. To make sure that younger customers have proof that materials are sustainable and all sourcing practices ethically sourced, luxury brands need to implement blockchain technology which makes the process transparent for consumers. By using unchangeable digital ledgers for 'product passports’ for items, luxury brands can assure these consumers of their authenticity and integrity.
Blockchain technology provides brands an opportunity to prove the source of their materials to auditors, suppliers, and customers alike. Furthermore, customers are given the history of a product through blockchain-stored data These applications offer luxury brands a chance to tap into this unfamiliar but conscientious audience. The importance of this younger generation in the future of luxury brands should not be overlooked as it presents both challenges and rewards for existing customers.
As technology evolves, so does the hospitality industry. The metaverse presents a new opportunity for hotels to provide memorable guest experiences, both physical and virtual. This could mean offering virtual reality tours, allowing people to visit the hotel with an avatar during the booking process, providing virtual spaces for meetings or celebrations, and more. This platform allows customers to compare products and engages them further with a brand. The possibilities are truly endless!
Have you considered using the metaverse to increase your hotel revenue? The potential is virtually limitless, though it can be argued how far that potential extends. Here are a few possible ways of using the metaverse to do so.
Sales and marketing: This new universe diversifies marketing channels, allowing you to reach more potential guests without spending money –just your resources. You can also use this channel to search for clients and employ innovative strategies.
Upselling: Just as in the real-world, upselling is an effective marketing tool that helps boost revenue. Through the metaverse, you have the opportunity to invite your guests to explore upgraded room options, experiences and products/services, as well as sample the restaurant menu – all beneficial for generating extra income.
Events and meetings: Often geographically constrained in the real world, virtual events provide worldwide access with no need to travel. You can use these offerings as complementary extensions of your real-world services, such as offering VIP events or selling tickets for other virtual events – great for maximizing revenue from conferences and gatherings!
Create a new kind of a loyalty program: Gaining loyalty from guests is essential for your hotel's success. Consider using the metaverse to design a unique loyalty program! Invite guests to participate in virtual activities and challenges, and they can qualify for exclusive rewards, discounts, or promotional codes. With this strategy, you can offer new benefits to existing members and inspire more people to become part of the program.
Conclusion:
In this article, we looked at the metaverse - what it is, its function in the hospitality industry, trends and different ways it can be used to increase revenue. This tool is ever-evolving so its full potential is still unknown; however, it allows hoteliers to expand their services into the virtual landscape, reaching out to additional guests and potentially boosting revenue.
Virtual tourists provide a new set of potential clients for hoteliers - customers who were previously not an option due to physical boundaries. Implementing the correct strategies can transform virtual tourists into in-person guests who are likely to become brand ambassadors on both digital and real platforms.
To make the most of the metaverse, hotel owners should allocate a portion of their marketing budget for this technology and set realistic targets for revenue gains. If done correctly, it could open up endless opportunities and give them an edge over their competition. There's no time like the present to discover just what this amazing tool can do for your hotel!
