whitepaper: top hotel industry trends to look out for in 2016

TOP HOTEL INDUSTRY TRENDS TO LOOK OUT FOR IN 2016 1WWW.HOTEL360CONFERENCE.COM

TOP HOTEL INDUSTRY TRENDS TO LOOK OUT FOR IN 2016

T H E H O T E L B U S I N E S S C O N F E R E N C E

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Produced by IQPC Middle East in association with the Hotel360: The Hotel Business Conference in March 2016 in Dubai, UAE.

2WWW.HOTEL360CONFERENCE.COM TOP HOTEL INDUSTRY TRENDS TO LOOK OUT FOR IN 2016

• As of October 2015 there were 781 hotels totalling 195,705 rooms at various points of construction across the Middle East/Africa region.1

• UAE, especially Dubai and Abu Dhabi have implemented ambitious hotel growth strategies. Dubai leads the tourism and hospitality market and has plans to attract 20 million tourists annually by 2020 leading up to the World Expo.2

• 2015 will be a record year for foreign investment into hotels. Global hotel transactions are expected to increase 55% year-on-year to US$42 billion, up 55% to US$15 billion in EMEA.3

• Jeddah hotels had the highest occupancy rates – up to 84%– among the major cities in the MENA region in September 2015. Al Medina came next with 72% and then Dubai with 68%. The hospitality market in Mecca has the highest growth in RevPAR (revenue per available room) compared with the month of September 2014, due to the increasing importance of the pilgrimage season.4

• Mecca hotels have achieved an increase in RevPAR by 83.2% in September 2015 compared with the same period last year, with a 28.8% increase in room rates.5

• The2ndhalfof2015broughtsoemdifficultfortheMEhotel.Averagedaily rates (ADR) dropped 12.3% YoY in October to $200.66 and occupancy declined 4.6% to 67.4%, pushing down revenue per available room (RevPAR — an industry measure of rates and occupancy) 16.3% to $135.24.However,thisismostlyduetothesignificantincreaseingrowing hotel room supply outstripping demand and causing operators to competitively drop prices.6

• Cairo led the region in hospitality performance in Q1 2015, with RevPAR increasing by 106.6%. Increasing political stability continues to be main driver for Egypt’s hospitality sector.7

• The UAE hotel market is suffering a decrease in travel from Russia and Europe thanks to the weaker Ruble and Euro. However, this is offset by an increase in travel from emerging markets such as India and China, which arebenefitingfromsustainedloweroilpricesandincreasedpurchasingpower.8

As of October 2015 there were 781 hotels totalling 195,705 rooms at various points of construction across the Middle East/Africa region.

1 Hotel News Resource, Middle East and Africa Hotel Development Pipeline Increases 29.1% YOY in October 2015, 12/11/20152Gulf News, Middle East hotel room rates, occupancy continue slide in October, 16/11/120153JLL, 2015 will be a record year for foreign investment into hotels, says JLL, 05/08/20154AME info, Jeddah hotels achieve highest occupancy rates in Middle East, 12/11/20155Ibid6Gulf News, Middle East hotel room rates, occupancy continue slide in October, 16/11/120157 Ernst and Young, Key MENA hospitality markets still performing strongly, 10/06/20158 Ibid

Quick Facts about Middle East Hotel Industry in 2015


Hotel Trends Customer ExperienceHigher levels of personalisation: Personalisation is becoming a cornerstone of hotel CEX management as it demonstrates to the customer that you are listening, understand their needs and are aiming to satisfy them as completely as possible.

Clarabridge, Rotana Hotels one of the leading hotel groups in the Middle East and Africa, overhauled their guest survey and designed a more personalised survey experience, customised to each guest’s stay. Guest satisfaction rose 81.7% at the start of 2015 to 89.2%. Survey response rate is up to 80%.9

Following up on surveys and customer engagement: Leading ME hotels understand that customer satisfaction surveys represent a chance to improve the relationship, they are not simply a means of acquiring marketing data. More hotels are adding an automated response management process for customer surveys that come back with low scores.

Betterintegrationofofflineandonlinechannels to provide more consistent CEX: Hotel customers are quickly embracing new, digital channels to make their hotel purchasing decisions and rate their stay. Hotels are ensuring that they can develop all of their channels to give customers a seamless experience.

The global market for CEX management is projected to grow from USD 4.36 Billion in 2015 to USD 10.77 Billion by 2020, at a CAGR of 19.9% during the forecast period, 2015 to 2020.10

Entertainment and RecreationMore hotels in the ME are opening inside luxurious shopping malls, giving their guests greater access to shopping, entertainment and recreation options with added convenience.11

ME travellers are looking for more diverse entertainment and recreation options and facilities when they travel. They are willing to spend more and travel further in order to secure such options.

The Middle East outbound travel market was one of the world’s fastest-growing markets this year with a 9% increase in outbound trips over the firsteightmonthsofthisyear.12

Enablement is a key watchword for 2016 as hotels need to provide fast and secure Wi-Fi coverage so guests can always connect to their entertainment devices. Multiple operating systems that are compatible with in-room smart television will also aid entertainment enablement.

40% of hotel guests travel with two personal devices, 45% travel with three or more, emphasising the need for seamless Wi-Fi access.13

9 Clarabridge, 3 Ways CX Leaders Personalize the Customer Experience, 12/10/201510 PR Newswire, Customer Experience Management Market Worth 10.77 Billion USD by 2020, 07/12/201511 CNN Travel, Travel trends forecast: Shopping hotels, ‘Nollywood’ and digital detoxing, 12/11/201512 Travel Daily News, High-spending Arab tourists go on more diverse holidays, 09/12/2015 13 eRevMax, Top 5 Trends in Hotel Technology, 11/11/2013

Enablement is a key watchword for 2016 as hotels need to provide fast and secure Wi-Fi coverage so guests can always connect to their entertainment devices. Multiple operating systems that are compatible with in-room smart television will also aid entertainment enablement.


Hotel Design and ExpansionPromoting wellness: Along with expanding the range of dedicated health and wellness facilities within the hotel (well-provisioned gyms, spas, etc) wellness is also being promoted within hotel rooms themselves.Airpurification,healthyenergising lighting and vitamin C-infused water in showers are just a few examples on how hotels are now incorporating health and wellness features into every room.

Sustainable building materials: Reducing a hotel’s carbon footprint secures operational cost savings and positively impacts on brand image. ME hotels are moving towards greener building materials (recycled steel, plant-based polyurethane, structural insulated panels, etc) as well as locally handcrafted and repurposed hotel furniture.14

Sustainable building practices: In addition to using sustainable building materials, more ME hotels are incorporating sustainable building practices into their design, such as advanced HVAC technologies.

TechnologySelf-sufficient path to purchase: Hotels need to ensure that their customersareabletofindthemquickly, easily and uncomplicatedly. This means providing a consistent customer experience across all channels but also allowing them to easily discover relevant information for themselves, without human interaction.

Millennials are the fastest growing customer segment in the hospitality industry, and are expected to represent 50% of all travellers by 2025.15

Innovative technologies on a mobile platform will be expected as more individuals rely on digital concierge services. Mobile check-in and seamless connectivity across

platforms and devices is now expected.

As smartphone penetration increases across ME (64.6% in UAE), hotel customersarefindingincreasingvalue in well-designed apps that enhance their stay and improve the overall experience of the hotel.16

Fewer staff, more technology: As more travellers prefer technology to human beings, bypassing the front-desk, using a digital concierge, all of these digital age concerns and options need to be addressed by hotel operators.

EnvironmentBoth push and pull factors are encouraging ME hotels to improve their sustainability and reduce their ecological impact. Millennial travellers are more concerned with environmental issues and appreciate ecological features incorporated into their stay. Also, increasing water and electricity strain in ME countries presents challenges that must be addressed through improved sustainability.

More “green options” for guests: E.g: frequency of towels/linen being washed, eco-friendly rooms and room equipment choices. Starwood recently introduced $5 gift vouchers for guests who declined housekeeping.17

Increasingenergyefficiencyinroomequipment: Occupancy sensors forlightingsolutions,lowflowshowerheads,LED,energyefficientlight bulbs and televisions.18

Maintaining improved recycling levels: Making recycling as easy

14 Building Design and Construction network, Green hotel trends: Industry expands its sustainability focus beyond laundry, 06/11/201315 Hospitality Net, Top 10 Global Trends that will Impact Hospitality in 2015, 28/01/201516 eMarketer, United Arab Emirates Leads Middle East and Africa in Mobile Phone Penetration, 05/02/201517 Starwood, Global citizenship sustainability programs and initiatives18 Global Stewards, Go Green Hotels: Green Ideas for Hotels and Resorts

Millennials are the fastest growing customer segment in the hospitality industry, and are expected to represent 50% of all travellers by 2025.


as possible for guests and staff with appropriate recycling waste bins in rooms and public areas, along with informative guides where applicable.

Restaurant Trends CulinaryProviding “clean menus”: Tying into health and wellness promotions, hotel restaurants are responding to consumer desires for healthier food. This involves the reduction of unhealthy ingredients and cooking practices in order to sanitise the menu.

Ethical food sourcing: Hotel customers are more willing now than ever before to pay a premium for ethically and responsibly sourced dining experiences. This includes the control of waste, water conservation, humane treatment of animals (and employees), plus other eco-social issues.19

Food & Beverage Greater diversity and quality of in-room snacking options: In 2016, there will be more unexpected flavourcombinationsashotelsnacksmove beyond traditional options to encompass more diverse and discerning consumer tastes and expectations.20

More rooftop bars: Open-air rooftop bars are becoming more popular as they allow guests to enjoy the outdoors and experience better views, adding to their enjoyment of the food and beverages on offer.21

Increased emphasis on vegetables as centrepiece: Rising meat prices, desire for more antioxidants, hormone issues,thisconfluenceoffactorsispushing hotel restaurants towards a greater range of vegetable-based dining options.22

More barista lounges: Global coffee sales up 10.7% year on year, so hotels need to improve their customer experience in order to satisfy growing consumer demand as well as their heightened expectations.

According to research from UCC

Coffee,75%ofhotelguestsfindin-room coffee poor or average, with 30% saying that this would not encourage them to return to the hotel.23

Customer Experience No-tipping policy: Debate is heating up over “No-tipping” policies being employed by restaurants that want to make a more honest representation of the cost of dining out. More restaurants are experimenting with no-tipping, supplementing operational revenues withflatadministrationfeesinordertopay higher wages to all service staff.

TechnologyTech-driven food delivery: High-speed food delivery provided by order-and-pay apps from the likes of Google, uberEats, Amazon Prime Now, Postmates, Grub Hub and Yelp are disrupting the restaurant industry and hotels are quickly incorporating them into their marketing strategies to provide greater convenience for guests.

Increased use of data analytics: Hotel restaurants are becoming more adept at utilising the vast data streams provided by food review sites and other social media channels to accurately gauge public sentiment and address areas for improvement.

Advanced POS and automation technology: Tightening labour markets and higher wages are encouraging restaurants to achieve more with fewer staff, leading to the implementation of more front-of-house technology and back-of-house automation to address the labour gap.

19Forbes, 6 Dining Trends That Will Change The Way You Eat in 2016, 18/11/2015 20 Ibid21 Hotel F&B, Trends: Sky’s the limit with rooftop bars and restaurants 22 Baum & Whiteman, 11 Hottest food and beverage dining trends in restaurants and hotels in 2016, 18/11/2015 23 European Coffee Symposium, The rise of coffee in the hospitality industry, 11/08/2015

According to research from UCC Coffee, 75% of hotel guests find in-room coffee poor or average, with 30% saying that this would not encourage them to return to the hotel.


Sources:http://www.jll-mena.com/mena/en-gb/news/188/investors-interest-for-hotel-sector-in-middle-east-and-africa-remains-strong-according-to-2015-jll-mena-hotel-intelligence-reporthttp://www.jll.eu/emea/en-gb/news/646/2015-record-year-foreign-investment-hotelshttp://www.arabianbusiness.com/dubai-hotels-face-new-challenges-as-occupancy-rates-fall-590432.htmlhttp://ameinfo.com/transport-and-tourism/tourism/hospitality/jeddah-hotels-achieve-highest-occupancy-rates-in-middle-east/http://www.ey.com/EM/en/Newsroom/News-releases/News-EY-mena-hospitality-markets-still-performing-stronglyhttp://gulfnews.com/business/sectors/tourism/middle-east-hotel-room-rates-occupancy-continue-slide-in-october-1.1627225http://www.clarabridge.com/3-ways-cx-leaders-personalize-the-customer-experience/http://www.prnewswire.com/news-releases/customer-experience-management-market-worth-1077-billion-usd-by-2020-560800481.htmlhttp://www.4hoteliers.com/features/article/8736 http://www.emarketer.com/Article/United-Arab-Emirates-Leads-Middle-East-Africa-Mobile-Phone-Penetration/1011971http://www.globalstewards.org/hotel.htmhttp://www.environmentalleader.com/2010/03/18/environmental-mission-statements-a-list-of-hotel-sustainability-policies/http://www.starwoodhotels.com/corporate/about/citizenship/sustainability/programs.html?language=en_UShttp://www.hospitalitynet.org/news/4068829.htmlhttp://www.emarketer.com/Article/United-Arab-Emirates-Leads-Middle-East-Africa-Mobile-Phone-Penetration/1011971http://www.thehotelshow.com/Content/Massive-opportunities-as-hotels-move-towards-sustainabilityhttp://www.bdcnetwork.com/green-hotel-trends-industry-expands-its-sustainability-focus-beyond-laundryhttp://www.thehotelshow.com/Content/Massive-opportunities-as-hotels-move-towards-sustainabilityhttp://architectureau.com/articles/the-future-of-hotels/http://www.hospitalitynet.org/news/4063112.htmlhttp://www.aurecongroup.com/en/thinking/themes/aurecons-successful-hotels/technology-in-the-hospitality-industry-exploring-the-very-latest-trends.aspxhttp://www.arena-international.com/ihtf/3-hotel-technology-trends-for-2016/3273.articlehttp://www.baumwhiteman.com/2016Trends.pdfhttp://www.europeancoffeesymposium.com/the-rise-of-coffee-in-the-hospitality-industry/http://www.4hoteliers.com/features/article/9374http://www.forbes.com/sites/eustaciahuen/2015/11/18/top-6-dining-trends-that-will-change-the-way-you-eat-in-2016/3/http://www.hotelnewsresource.com/article86516.html


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