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The Diversification of the Hospitality Industry

Diversification strategies in business are nothing new, but the mass acceleration and adoption of innovation that we’ve seen over the course of the past year is. The hospitality business is an excellent case in point.

This industry bore the brunt of the pandemic and has been in survival mode ever since, pivoting and reinventing its core offerings to appeal to dramatically altered consumer demands and expectations.

But with vaccines taking hold and the tail end of the pandemic in sight, the industry will be ‘back to normal soon’, right? Wrong, says Professor Julian Birkinshaw, Professor of Strategy and Entrepreneurship at London Business School.

As Birkshaw writes in Forbes, it’s likely that there will be quite a lot of things that never get back to normal, even after Covid-19 is largely behind us. His reasoning is based on hysteresis – the notion that the impact of a change on a system cannot just be reversed by taking away the force you applied in the first place. 

If the extensive diversification we’ve observed over the past year is here to stay, it’s even more important that hotels and hospitality brands continue to innovate in this space if they want to stay ahead of the game. 

So, let’s explore some of the most impactful changes and what these themes mean for the hospitality industry going forward. 

Re-Imagined Spaces

In June 2020, year-on-year hotel occupancy in Europe fell by 73 per cent, according to STR. With hotel occupancy at an all-time low and legions of us working from home, smart hotels saw an opportunity to increase revenue and relieve the monotony of WFH.

Whether its pivoting rooms as coworking spaces, offering in-suite private dining packages or instigating new incentives such as outdoor cinema screenings (as seen at Luton Hoo), hoteliers have had to get creative.

Five-star properties including The Beverly Hills hotel and Hotel Bel-Air turned empty suites into day-use offices for the first time, luring wealthy remote workers looking for privacy. 

Similar initiatives were seen at MGM Resorts, the Wythe Hotel, Proper and the London West Hollywood, all of which repurposed rooms and suites as offices.

The Dorchester and 45 Park Lane offered guests specific “Working Away” packages that included a host of additional upgrades and services such as an “on call” IT concierge to solve any technical issues and credits to spend at hotels’ bars, restaurants or spa.  At the Rosewood, a Work From Hotel package includes use of the Rosewood Family Concierge, a service that provides babysitter-tutors for children of working parents. 

On the more affordable end of the spectrum, Hyatt has rolled out a ‘work from hotel’ concept across hundreds of its properties in the US for as little as US$65 a day.

With working remotely now the norm, it’s not surprising that 54% of travellers have stated that combining work with travel is now more appealing than it was pre-pandemic. 

What it means for brands

With travel becoming multi-dimensional, and travellers looking for a place that seamlessly combines work and play, brands need to make sure they can cater to new habits and necessities. While far-flung, off-the-grid locations are preferable for travellers in a post-Covid world, it’s vital that people can always access stable wifi and a private place to work. Rethink how to best use your space to accommodate remote workers. A co-working space in larger destinations may be a worthy investment – or consider how you can repurpose what already exists to your advantage.

Tailored Offerings

When Andre Balaz announced that the infamous Chateau Marmont was transitioning to a members-only hotel, the industry gasped. But upgraded exclusivity, collaborations and membership schemes are now burgeoning sector-wide. 

The Freehand Club by Freehand Hotels is a subscription service that gives frequent travellers unlimited stays from US$2,499 per month. Members enjoy access to one private room at any Freehand hotel (some rooms are for groups) on any given night within the month, plus unlimited access to open hotel amenities, a dedicated member concierge for bookings, waived daily facility fees and a Freehand Club welcome package. 

A similar initiative is on offer at Selina, a global hospitality platform with properties in 19 countries that has acquired Remote Year (which organises “work from anywhere” programmes abroad for digital nomads) to combine a global portfolio of hip coworking hotels with a network of thousands of digital nomads. 

Entire nations have plugged into the concept too, with the Maldives the first country to launch a tiered loyalty programme – Maldives Border Miles – whereby members earn points and bonuses as a reward for visiting – or even just passing through for a night.

What it means for brands 

‘Loyalty Programs’, once akin to punch cards and generic points systems, have become truly flexible and innovative. Think about the ideal person you want to attract into your brand community — what do they really want? And what can you offer them which no one else can? Consider what programmes and incentives make becoming a ‘member’ of your brand worthwhile and aim to build long-term communities versus one-off transactions around meaningful benefits and rewards.

Hit the Road

Motivating guests to travel against the odds means plugging in to their needs and concerns. Post pandemic, privacy and social distancing is top of the list and luxury brands are tapping into the trend via diversification into road trips. 

Brand showcases on wheels, these outrageous experiences turn traditional notions of car travel on its head with fully hosted experiences where no expense or thought is spared. 

Marriott International (in partnership with Quintessentially), Kempinski, Four Seasons and Aman are all pitching road trip itineraries to entice guests, complete with bespoke GPS tours, deluxe on-road catering, vintage or super car hire and even support vehicles.

During this time we know that many of our guests are choosing to travel in different ways. They might be staying closer to home, or seeking the personal space that driving between destinations affords,” says Tina Edmundson, global brand and marketing officer for Marriott International.

With this series of exclusive road trips, and with the expertise of Quintessentially, we are thrilled to be able to offer our guests access to unparalleled, luxury focused experiences that meet the moment.”

Starting at $15,000 for two guests, road trips take in destinations such as Lake Tahoe, Bal Harbour and Venice, with access to vintage cars, such as a 1960s Ford Mustang Convertible. 

More California dreamin’ comes courtesy of Black Tomato, which has a variety of driving escapes on its books, including an eight-night grand tour along the US west coast including en route stops for wine tastings and a champagne-fuelled hot air balloon ride.

In Europe-only, Four Seasons is focusing on scenic drives that connect thirteen of its properties across six uniquely curated routes. Aman, meanwhile, is offering three to five-day self-drive road trips in the US, Europe and Japan.

And, while it’s not exactly pedal to the metal, Anantara has unveiled a railway carriage that travels between two of its South Central Vietnamese resorts. 

The Vietage has 12 reservation-only seats and winds its way through the Vietnamese countryside on a fabulous six-hour journey. Dual accommodation packages that include the rail journey are available. 

What it means for brands

Our advice? Tap in to what your customers want now and respond accordingly. Soothe their concerns and prove how you can deliver safe travel aligned with all current rules and guidance. Think about how you can translate your brand into a stellar socially-distanced experience that takes guests out of the ordinary while staying true to your DNA.

More Things to More People

As our list of travel requirements evolves, so too are the facilities and niche offerings being developed by hoteliers. An Ozone pool or an artist in residence aren’t enough for hotels to distinguish themselves these days: sustainability, creativity and culture now top the sophisticated traveller’s list – elements that brands should aim to deliver both on and off-property.

To that end, Potato Head Studios in Bali wants to ‘transcend hospitality’ with a hotel experience that allows guests to borrow from the on-site creative campus. The property already features the Katamama Suites and a signature beach club, and will soon offer zero-waste ‘escapes’ that immerse guests in art, dance and “imagination” from 168 guest rooms.

Newcomer Kingsland Locke, an 124 room apart-hotel in Dalston has its own on-site gin distillery and microbrewery that reduces its drinks’ carbon footprint by 75 per cent, while engaging and entertaining both hotel and day guests. 

Tapping into the multi billion dollar wellness market – with a socially distanced angle – are Keminski’s ‘Fit Rooms’, a collaboration with TechnoGym that sees suites in select hotels upgraded with  “innovative in-room workout solutions and on-demand fitness services” (that’s a smart Technogym bike), plus complimentary in-room virtual fitness training sessions and amenities thrown into the mix.

Hoteliers take note: collaborations support a fresh marketing drive and can add huge value to the guest experience, without any radical alterations.

Long the preserve of tradition and heritage, Grand Dames properties have embraced Covid-inspired diversification with surprising gusto. 

While the likes of Claridges, The Connaught and the Savoy now offer a food delivery service via hospitality eCommerce platform Slerp, The Berkeley also bikes champagne breakfasts to homes across London.

What it means for brands 

This unexpected shift of luxury hotels diversifying into expensive yet accessible initiatives is a true sign of the times. Consider how you can translate your brand experience effectively across new sectors to entertain, engage and inspire customers as well as gain an advantage over the competition. Explore collaborations and partnerships that can take you into new and unexpected places, attract new audiences and help your guests broaden their own horizons.

Growth through Adversity

Yes, the requirements made on the hospitality industry at present are more rigid than ever but creativity thrives within a tight brief. Instead of a threat, it’s imperative that hospitality brands see this period of adversity as an opportunity for growth and development because, while there are positive signs for recovery ahead, the landscape has changed for good – and potentially for the better. 

To discuss how we partner with companies to provide strategic brand, design and tech services, please get in touch via hello@matterofform.com to arrange a time to speak with our team of consultants.

 

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MOF Team

Published by MOF Team

We are a 60-person Experience Design Consultancy with soul. We help timeless brands design what’s next. STRATEGY + DESIGN + TECH + OPTIMISATION