Macro Global Trends Impacting the Hotel Industry

By Marc Glasser Managing Director, RM LLC | March 25, 2012

This article is "global" (intentional pun) in nature as we discuss macro global trends and significant associated information. There are numerous macro global trends, directly or indirectly, impacting the hotel industry. While most of the article content does not identify specific Macro Global Trends Impacting the Hotel Industry this in no way detracts from the critical importance of the identified global trends below. Please pay particular attention and emphasis to the identified global trends below. Their importance and management are enhanced by this article's supplemental information. Before we identify global trends impacting the hotel industry it is important to emphasize there is a direct correlation between macro global trends impacting your company and company valuation. Value impact can be in terms of such quantifiable indicators as: company stock price and company value (including privately held corporations); market share and room rates. Additionally, harder factors "to quantify" include: company reputation and your customers' feeling of safety and security. There are certainly a lot of details associated with global trends, company valuation, awareness and action. This article will concisely address some of the significant details. First we will discuss macro global trend awareness.

As a hotel executive you have a responsibility to your stakeholders to be aware of current macro global trends and "Black Swan" events (discussed below) impacting the hotel industry including your company. Further, you need to be aware of and be able to assess less significant global and local trends to determine the likelihood they may indeed progress to significant macro events impacting your hotel operations. It is important to note that "stakeholders" include equity shareholders, privately held/company owners, senior executives to include your company's Crisis Management Team as well as customers, employees, vendors, regulators and the media. This list is by no means all-encompassing. Additionally, in smaller companies senior management and staff often wear "multiple hats". For example, in a smaller company the Crisis Management Team, whether officially designated or not, may consist solely of the CEO (or appropriately titled individual fulfilling the typical CEO responsibilities) and/or executives already having responsibilities for multiple business functions.

Crisis Management Teams, Global Trends and Company Value

Up to this point in this article, we have utilized the term "Crisis Management Team" a few times. Let's explain further. A company's Crisis Management Team considers strategic and tactical responses to a significant crisis affecting the company and provides direction to, among others, c-suite, emergency management, business continuity, supply chain, security and public relations company personnel. A company's Crisis Management Team's (or those serving this role) response, or lack thereof, to a macro global trend or significant regional or local event can further have a "macro" impact on your hotel operations, positively or negatively. The response can range from comprehensive mitigation, response and recovery plans to"nonexistent" awareness and lack of preparedness. If your company is lacking the Crisis Management Team function, it may be because senior company management:

  • is unaware of potential or impacting macro trends;

  • is aware of the significant trends but is not adequately aware of likely ramifications affecting company hotel operations and bottom line; or

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.