Top 5 Challenges for the Hotel Industry in 2018

What: Our guest columnist Montserrat Santaella, a hospitality expert with many years of experience in the industry, explains the challenges hotel chains will be facing in 2018.
Why it matters: We all have resolutions and goals we’d like to achieve in the New Year, and the hotel industry is no exception: hotels closed out 2017 with very aggressive budgets, there are several players in the game and no one should get too confident.

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1. Good upgrades justify rate increases

On the one hand, we have large hotel chains or independent hotels that will try to raise their rates this year. In Mexico, the large international hotel chains are putting the price pressure on local hotels. The risk for Mexican hotel chains is that they may be tempted to raise their rates without just cause, only because the competition has jacked up theirs. If they don’t want to be stuck with empty rooms, they will really need to improve their facilities, service, food, and/or spaces to justify the price increase.

Similarly, the groups and conventions business will have to offer amenities, high-end service and facilities that justify their rates if they don’t want to be left out in the cold. In this highly competitive sector, many hotels significantly lower their rates in order to win group business.

2. It’s easy to make mistakes when marketing to millennials

Since millennials make up a large percentage of the population, some hotels feel the need to change their communication strategy to target them exclusively. However, it’s easy to make mistakes when it comes to marketing to younger generations. Hotels often forget that the vast majority of guests who fill their rooms are from other age brackets, or they feel that they already do enough targeting to millennials and put technology aside. The worst thing they can do is forget the importance of using technology for numerous processes that go beyond communication, such as reservations or website speed, to name a few. Instead of getting carried away by “trends”, the hotel industry really needs to listen to its customers.

3. Travel agencies are still in the game

The role of travel agencies should not be overlooked, especially the traditional ones. While it is true that OTAs (Online Travel Agencies) are increasingly getting more traffic, there is a part of the market that still always prefers to go to traditional travel agencies, which means they still have much to offer.

How can a hotel chain compete against a large OTA? In my opinion, they must work together. OTAs are almost exclusively sales channels―as such, hotels should view these online agencies as partners and not as competitors. Taking advantage of their large scope is something that hotels should really take into consideration.

4. Airbnb keeps getting stronger

Some hotels do not fear competition from Airbnb, but its presence is a reality. The number of people who prefer staying at an Airbnb over a traditional hotel grows more and more each day. Airbnb is a very attractive alternative, especially for millennials, because it offers experiences. Airbnb attracts travelers of all ages and socioeconomic status, so hotels should keep an eye on the trend.

5. Excellent service is essential

At the end of the day, the main challenge remains the same: offering an exceptional level of service. The hotels that manage to beat their competitors are those that know the market and translate it into exceptional service, which is what guests are looking for. While not everyone can invest in technological improvements, the ticket to success is offering a great guest experience to both local and international clients.

This year, everyone has to size up the competition and not take things for granted. The most important thing is to listen to your guests from the very beginning of their trip―from the moment they start surfing the net for rooms until the end of their hotel stay, and to everything that happens afterwards. Hotels must take advantage of technology, be in the right media to optimize their marketing budget, and justify their rates by providing the best service, facilities and excellent customer service. They should consider targeting different market segments and demographics. But the most important thing is to have an in-depth knowledge of their customers’ preferences― improving the experience of each of their guests will be their best publicity.

Montserrat Santaella was born in Mexico City. She earned her degree in Business Administration at the Autonomous Technological Institute of Mexico (ITAM), where she majored in marketing. With more than 16 years of experience in marketing and strategic alliances, Santaella has held positions in strategic planning, business intelligence, advertising, public relations, promotions, sponsorships, and digital marketing in local and international markets. She has worked in the hotel industry for many years and given conferences at different marketing events in Mexico and the United States.