A part of the tourism industry is immersed in recent days in some convulsive moments following the bankruptcy of one of the biggest companies in the Tour Operation sector: Thomas Cook. The company, born in the United Kingdom during the second half of the 19th century by the hand of the businessman after whom it was named, disappeared on September 23, leaving in the lurch not only hundreds of hotelier managers, but also about six hundred thousand customers, giving way to what is already considered the largest repatriation operation since the Second World War. Much has been said in the last years about the lack of vision of certain companies specialized in the travel business to adapt to the changes that new technologies have caused in the last decade and, in the end, Thomas Cook has not been able to resist the assault of these progresses. In the following lines, I present my opinion about some of the challenges that I think are affecting or will affect the hotel sector. Of course, only those that seem most relevant to me.
In the last years, new technologies have been introducing changes that affect the traditional hospitality sector, in particular the booking processes. Online Travel Agencies have not only displaced traditional tour operators, but they have also altered the habits of their customers. This could be one of the reasons why tour operators have started a frantic career in recent years to develop new brands, with the aim to better adapt to the current needs of their customers.
It should not be easy for them to design a product that suits some needs and expectations that evolve constantly. Every new brand tries to offer the best design, the best service and the best experience, in order to last in the memory of its customers and achieve a loyalty that already seems an outdated goal.
If until recently it was usual to redesign a brand after 10, 15 or 20 years, with the consequent CAPEX every five-year period, in addition to the annual maintenance, today, this lapse of time has been shortened. Brands see the impact of new technologies making their customers more demanding, pushing them to redefine their products so as not to be left behind. The ability to adapt new brands to an ever-changing environment is one of the biggest challenges facing global hospitality. When it comes to (re)designing their new establishments, the operators should be able to turn them inside out like a sock so that they are still an attractive option for their users, increasingly impatient and with higher expectations.
Thomas Cook's bankruptcy forces many hoteliers to rethink their reliance on quotas and reservations made months in advance, whether they come from the classic tour operators or the new online travel agencies that have replaced them. One of the challenges of the holiday sector is that there are enough aircraft with capacity to move tourists to their destinations. We have already witnessed in recent years the bankruptcy of several airlines specializing in such travel, which, together with the temperature bonanza arising from the climate crisis and the dreaded new economic recession, could lead to a decline in the number of travelers in the coming years? And while, compared to other sectors, the hotelier is doing well to adapt to the environmental demands of countries and users, new trends such as the shame to fly can have still unknown repercussions on a sector whose KPI's accumulate years of positive growth after overcoming the great crisis of the first half of this century. On the other hand, more and more cities want to protect themselves, with more or less reason, from the excess of visitors which can turn them into a theme park without personality. Such protection is leading to the application of planning restrictions that have a direct impact on hotel operators. The exponential growth of alternative accommodation models in recent years is directly related to the gentrification suffered by many urban destinations, which administrations try to curb by imposing restrictions on traditional hospitality. The speed at which new technologies are advancing exceeds the capacity of action of administrations that, limited by their own processes, are unable to regulate new players with the same level of demand that they require from the companies that were born before the fifth technological revolution.
And all this without forgetting phenomena such as the possible consequences of an undealt Brexit, the trade war between the US and China, or other political seizures that we face being the governance of the greatest powers in the hands of leaders who do not seem to seek solutions for the common good, but who advance unstoppable in their struggle of egos, perhaps too dominated by testosterone, of consequences still unknown.
Therefore, among many other challenges, the hotel and tourism industry should rethink its competition-based model oriented to retaining the largest number of customers in their respective establishments, and start seeking creative solutions, which will involve agreeing collaboration spaces and finding a way out to problems they all share. If we didn't, we could see how other Icebergs in the sector could melt just as quickly as the ice in the Antarctica is doing...
Managing Director Spain and Portugal
Christie & Co
Article published on October 1st in Hosteltur