The hospitality and tourism sector relatively downbeat on growth prospects for the next 12 months, citing extreme weather events and patchy global recovery affected its revenues, according to the recent Grant Thornton International Business Report.

In its Hotels 2020 report, it said that recent extreme weather events do not help the hospitality and tourism sector while discretionary spending has not yet reached pre-crisis heights during this slow, patchy global recovery.

The report said that less than a third of the sector  expect to increase revenues or 30 percent of the industry, compared to 50 percent or more in all other sectors, and just 14 percent are forecasting an uptick in profits against 43 percent in other sectors.

It cited that terrorist attacks in the tourist areas in Tunisia and Kenya, the AirFrance and German Rail transport strikes, combined with air safety concerns following the incidents in Ukraine and the French Alps, have dampened the demand for non-essential travel.

But it’s not all doom and gloom. Hospitality and tourism businesses are clearly ramping up investment in marketing or about 50 percent of the industry and salesforce effectiveness at 58 percent, both figures sit 13 percentage points above the all-sector average.

“The hotel industry is going through a period of unprecedented, irreversible change and will look very different in 2020 than it does today,” Marivic Espano, P&A Grant Thornton Chairperson and CEO, said during the P&A Grant Thornton 3rd Growth Series held at the Tower Club in Makati.




P&A Grant Thornton CEO Marivic Espano (second to right) with guest speaker, Gillian Saunders of Grant Thornton South Africa, and Audit and Assurance partners Mai Sigue-Bisnar and Nelson Dinio after the P&A Grant Thornton 3rd Growth Series event held at the Philam Life Tower Club. Saunders tackled the future of hotels and the impending digitization of transactions.

The bigwigs in the local hotel and tourism industry discussed some of the big issues  facing the sector, such as on how can they compete in a digital world.

The report said businesses in the sector are not moving fast enough to embrace the age of mass personalization.

Over the next five years, as the so-called ‘digital natives’ or ‘millennials’ become key customers, businesses need to make digital a part of everything they do – from marketing and distribution to in-room entertainment.

“A series of recent events disrupted demand in the short-term, but longer term, the rise of the digital economy is threatening traditional operating models and sales.”

It said that hotels can make their brands stand out in the digital environment by adopting mass personalization to surprise and delight guests.

Businesses also must be wary of de-humanizing the hotel experience and of data security concerns.

“The winners and losers will be separated by those who adapt best to the digital revolution. Investment in sales and marketing on its own will not be enough. It has to be targeted to drive a better customer experience, but not intrusively so,” the report said.

Businesses that can balance automation with a personal touch will also thrive in this new landscape.

Even the established players in the hospitality and tourism sector have to work harder to find and sustain growth.

The rise of sharing economy competitors such as Airbnb may be starting to squeeze some profit margins, but  there is no doubt that the dominance of OTAs is reducing customers’ exposure to branded content and spreading demand over less well known establishments.

“Businesses are therefore looking at how to retain their customers and attract new ones, through better marketing and sales as well as collaborating with strategic partners to offer new services. This can counteract ‘de-branding’ in the digital space caused by OTAs and respond to the perceived benefits of the new low-cost challengers in the sharing economy.”

As published in Manila Bulletin Online by Maricel Burgonio dated 11 November 2015