Industry Update
Opinion Article18 December 2019

What to expect for 2020 in hospitality and tourism

2019 highlights and reflections

By Linchi Kwok, Associate Professor at The Collins College of Hospitality Management

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Are you ready for the holiday season? Are you excited about 2020 and a new decade too?

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In just two weeks, we are going to welcome a new year and, more importantly, a new decade. I hope everybody is celebrating the fruitful year of 2019.

In 2019, I shared a total of 24 discussions, if not counting this summary piece, covering the topics in food delivery, tech trends, customer loyalty, Airbnb, and other marketing issues. Looking ahead, I believe many of the events we discussed in 2019 will significantly affect the hospitality and tourism industry in the future. Through a review of what happened in 2019, we can get a good idea of what we can expect in 2020 in hospitality and tourism.

Restaurant business and food delivery

In 2019, we discussed two threads about the restaurant business and four threads regarding food delivery, making up 25% of the topics that we talked about in the year. Will those trends have continuous impacts on the restaurant business in 2020?

On the one hand, we have seen more upscale, fine-dining restaurants going out of business. At the same time, more quick-casual dining facilities are entering the market, such as Amazon Go stores and IHOP's new 'Flip'd' stores.

On the other hand, consumers continue demanding sustainable products. Beyond Meat and veggie burgers, for example, turned out to be a big hit in 2019. The challenge for restauranteurs is that they might not necessarily stay on the same page with the consumers when it comes to going green.

Notably, our attention was put on the competition in food delivery (four discussions or 17%). Even though Amazon decided to stop restaurant delivery, which was unlikely a permanent decision for Amazon, other companies, including McDonald's and a startup, are investing big in the food delivery business. Now that drone delivery has been launched in selected markets; we should definitely keep an eye on the updates about food delivery in 2020.

AI and tech trends

Technology plays such a critical role in today's business that we discussed five threads regarding tech trends. That makes up about 21% or one-fifth of the discussions in 2019.

Earlier this year, we discussed an update about Alibaba's futuristic hotel, where machines but not workers are hired to provide guest service. We then looked at AI and facial recognition's impacts on service operations through my observations in the HITEC 2019 (Hospitality Industry Technology Exposition & Conference) and the tour at NEC's headquarter in Tokyo.

Additionally, more companies are using AI in employee recruitment and selection. A good case in point is that a job seeker can now initiate a job application at McDonald's by talking to Alexa.

It is safe to predict that AI will become more crucial to hospitality and tourism businesses in 2020 and beyond. Would you agree?

Nevertheless, as more businesses are using facial recognition in their daily operations and more consumers are opting into such services, privacy concerns also emerge. I urge legislators to regulate the usage of any technology that utilizes consumers' biometric data soon.

Dynamic pricing and customer loyalty

We had four or 17% relevant discussions about customer loyalty in 2019. Specifically, two of them were about hotels introducing dynamic pricing to their loyalty programs.

The first time we talked about the dynamic pricing strategy adopted by hotels, restaurants, and Airbnb was in 2018. It appeared that dynamic pricing had become a more common practice among hotels in 2019, with IHG and Marriott adding dynamic pricing to their loyalty programs this year. It is likely to see other hotel chains will follow such a practice in 2020.

United Airlines expected to change its MileagePlus program substantially starting from 2020. The new program will make it very difficult for economy-class travelers to earn either mileages or elite status. While it makes sense why the airline wants to focus on the top-spending travelers, it is uncertain how such changes will affect the airline's business in the future. Then, United Airlines also announced in early December that its CEO Oscar Munoz would turn over his role to the company's President Scott Kirby in the spring. It definitely deserves our attention in 2020 to see how such changes will affect United's operations. More importantly, will other airlines roll out similar programs that focus on the top spenders only?

Last but not least, I recommend we shall pay special attention to such firms as Google and Amazon in 2020. Both companies have the power of winning customer loyalty by providing travelers the "total travel experience."

Airbnb

All of the three discussions about Airbnb (13% of the discussions) were published before June 2019. Airbnb has a unique charm to attract repeat business, and Airbnb wants to become a mega tourism company that provides total travel experience too. In March 2019, Airbnb acquired HotelTonight. Now, the company also invests more in the real estate market. Airbnb is aiming something big and deserves our continuous attention in 2020.

Product development and other marketing issues

There were three threads about product development and other marketing issues, contributing to 13% of the discussions. The 12 megatrends in travel and tourism revealed by Skift, as well as whether sex still sells in today's business world, certainly have useful implications in product development. I also expect investors will continue favoring boutique stores and hotels in 2020 to embrace the mega travel trends.

Other topics

The rest of the discussions include three threads (13%), namely, promoting student success at the STR Student Market Study Competition, an international student's journal to success in hospitality, and safety tips for traveling in Paris and Europe.

The safety trips we discussed can be applied to all tourist destinations. I know for sure I will work with an undergraduate team and a graduate team for the STR Student Market Study Competition in 2020. I will also continue engaging our alumni in 2020. The year 2020 will be a good year to look forward to.

Is it reasonable to prepare for the future through a review of past events?

In December 2018, we reviewed what we discussed in 2018 as we predict what would happen in the hospitality and tourism industry in 2019. At that time, we anticipated:
  • Airbnb would expand to other markets in 2019 as it wanted to become a mega travel company.
  • Machines would take over more jobs from workers in 2019.
  • When more hotels introduced bigger loyalty programs in 2018, changes could be expected in hotel loyalty programs in 2019.
  • Gen Z was making changes in the workplace and became a prominent force that influences product development in the future.
  • Innovation with the aids of technology, as well as sustainability, would keep our attention in 2019.
  • Dynamic pricing was first brought up in 2018, and we saw more hotels introducing dynamic pricing to their loyalty programs.

It seems what happened in 2018 indeed provided a valid clue of what we could expect in 2019. Now, can you anticipate what will take place in 2020 in hospitality and tourism based on a review of the significant events that happened in 2019? What do you see in 2020?

Note: The picture was downloaded from GovernmentCIOMedia.com.

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Linchi Kwok

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