Industry Update
Opinion Article15 April 2015

Why your hotel can’t afford to overlook these emerging economies

By David Chestler, EVP Global Enterprise Sales & Business Development, SiteMinder

By David B. Chestler, Senior Executive in Hospitality and Travel

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When we think about emerging economies China tends to be top of mind. But, while it represents a significant opportunity for hotels, there are other countries out there that have also been growing rapidly and should not be overlooked.

As part of its recent Emerging Consumer Survey 2015, Credit Suisse highlighted the countries, as well as China, with a new segment of the population which now has the means and the desire to travel.

The research points out that while economic growth in these countries – which include Indonesia, Turkey and the BRIC nations of Brazil, India and Russia – might have slowed, there remains pent up demand for both travel within the destinations and outbound from them.

For hotels this means a whole new potential audience with different likes and behaviour that need to be catered for.

Technology remains key

Hotels can be considering a number of factors when eyeing up these new opportunities such as how likely are they to come to the destination where their hotels are located? How will they find out where to stay? And, how will they be booking their accommodation?

To find answers to these questions, we often turn to technology because it can help anticipate demand and highlight guest preferences, behaviour and booking patterns.

The Credit Suisse report reveals, for example, significant smartphone penetration in many of these emerging economies. The devices might be the only way of accessing the web – and, as a result, travel services – which means having a mobile presence is a bare minimum to developing your share of business from new online bookings.

But take note that with rising smartphone penetration and guest expectations alongside it, your hotel will not only need to be found via mobile devices but also offer potential guests an easy booking process. A big part of the booking experience is localisation. According to Forbes, 72% of customers prefer to make a purchase in their own language and remember: English is not the primary language in 57% of the fastest growing markets. Further, research released by SalesCycle earlier this year shows that an overly long booking process/complicated checkout is one of the top four reasons consumers abandon their travel booking.

It's also just one week before Google's algorithm change, where sites are ranked on their mobile friendliness, will begin to have an impact on your rankings and position on the search pages.

The global stage: be in it to win it

The traditional global distribution giants will have a role to play here in terms of the volume of hotels they already provide access to. Indeed, the likes of Amadeus, Sabre and Travelport have already established a presence in many of the emerging economies and all three have hotel content partnerships with China's main distribution system, Travelsky. The emergence of eLong and Ctrip as well as AliBaba, Baidu and TenCent in the online booking environment additionally means there is now greater, often bigger, competition for travellers' eyes and wallets.

Credit Suisse's report also talks about the rise of 'global travel distribution channels' as consumers increasingly turn to web-based booking channels, both direct and third party, and the resulting impact on hotels where profit margins are coming under increasing pressure. With more channels available than ever before, this is where a diversified distribution strategy is crucial for any hotel – to attract, reach and convert consumers from all across the globe and to be where they are looking. Again, technology is key and hotels should look for best-of-breed products they can rely on to centrally, and cost-effectively, manage their inventory and rates.

More and more pieces of the jigsaw puzzle are falling into place when it comes to the opening up of the BRIC and other emerging economies. Ctrip's recent investment in content aggregator Travelfusion is only one example. Another is Expedia's $270 million investment in South America-based online travel agencies Despegar and Decolar, and the year is, without a doubt, only just warming up.

Consolidation continues with the giant OTAs, but smaller regional channels are also emerging, making it more strategic for hotels to identify new markets. These channels, themselves, are evolving to find and convert new business.

A couple of strong themes emerge here, from the need to have a global presence and be able to compete to the importance of having a healthy and effective channel mix. These potential new guests want and have the resources to explore beyond their countries. And, these destinations want to welcome travellers internally.

Are you ready?

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David B. Chestler

    More from David B. Chestler

    In an age of rising choice and accessibility for curious travellers, SiteMinder exists to liberate hoteliers with technology that makes a world of difference. SiteMinder is the global hotel industry's leading guest acquisition platform, ranked among technology pioneers for its smart and simple solutions that put hotels everywhere their guests are, at every stage of their journey. It's this central role that has earned SiteMinder the trust of more than 35,000 hotels, across 160 countries, to generate in excess of 100 million reservations worth over US$35 billion in revenue for hotels each year. For more information, visit www.siteminder.com.

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