Emerging Markets and Trends: Where are the Next Frontiers?
By Shawn Basler Principal, Perkins Eastman | June 08, 2014
An international hospitality practice, specializing in emerging markets offers creative opportunities, unique challenges, and financial rewards. The pursuit and execution of projects in emerging areas carries with it certain risks that should be weighed before making the commitment to expand into these markets.
The hospitality market has entered an interesting phase of its evolution, with personalization being a rising priority. Whether a luxury brand or a mid-market brand, each touch point of the guest experience is expected to offer some level of personalization. From check-in, room selection, choice of bedding, meals, and activities-everything is expected to be customized, personal, and reflective of the local culture and traditions. Even within the public spaces in a hotel, a personalized approach is the state-of- the-art. Lobbies evolve during the course of the day, from animated public spaces at daytime to more intimate experiences at night. Seamless technology is also a global trend that is part of the personalized experience. From guest-facing applications to back-of-house management, technology is a permanent part of today's hotels and resorts. Many of these trends started in the boutique market, but there is no segment that is not currently influenced by them. Lifestyle brands are new global norm.
It is not just the hotels and resorts that have changed; the profile of the typical guest has changed. People do not just travel globally for business-they are mixing business with pleasure. Hotels in global destinations have to cater to both sets of expectations: a hotel with meeting facilities and a good restaurant also have to offer a gym and destination spa. Everyone needs to be connected--in their room, the lobby, by the pool. The old cliche of traveling with just a briefcase and eating at the buffet has vanished. The modern business traveler-millennials, in particular-is much more laid-back and more socially connected, and hotels have to operate for business and pleasure at the same time. Emerging markets are realizing that the line has been blurred between what's considered business and what's considered leisure-and these markets are uniquely positioned to deliver on those expectations.
Many these emerging hospitality markets are expanding because they have been underserved for so long. The world is so much more connected now and people are traveling to many more underserved destinations. Whether to countries in Africa or regions of Southeast Asia, there are many markets where business and economies are emerging, but their cities have inadequate hotel accommodations.
For our firm, the decision to practice in these markets is yielding some very exciting opportunities. It is incredibly rewarding to travel to these "undiscovered" places. Paris and New York, Los Angeles and London-these are long-time established and mature markets and, as such, are amazing cities in which to hold meetings. But it is ever more interesting to work in new, emerging markets, with exposure to new cultures and new places--to be on the frontier of how societies and economies are changing. There is nothing better than international travel and being one of the first ones there-it offers challenges and rewards like no other part of our practice. Creativity can be unleashed in emerging markets; there is much to draw from wherever you work-whether Nigeria, Ethiopia, or Morocco, our firm believes the creative opportunities are unmatched by an entirely domestic practice.
Rewards aside, enthusiasm for developing a practice in an emerging market should be tempered with a clear understanding of the potential risks and obstacles to successfully doing so. The risks are typically business risks-project schedule delays, budget overruns, and slow decision-making, for example. One needs to have patience and truly understand the impact of these risks, as local developers do not have the experience that their international counterparts have, and the learning curve can be costly. One also needs to accept the challenges of relying on local materials and craftsmen. Therefore, it is crucial to know the market and specify materials that are available. One can design the most beautiful building or interior, but if it can't be executed with local materials and talent it will not be successful. Political and economic shifts can happen almost instantaneously and the impact can never really be predicted. Projects can go on hold or disappear completely in an unstable environment. Emerging markets can be a bit more volatile, but these risks are common in any international practice. It is an investment of time and money to enter these markets, but with the foresight of the local business landscape, building traditions, and a genuine interest in the people and culture, the risks can be mitigated.
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