Changes are afoot. Changes that are having an impact on consumers, commerce, and certainly the hospitality industry. They say that with upheaval comes the greatest and most important changes in our history. With that said, let's talk about biking and how it relates to our changing environment.
In 2007, a rocket scientist named Destin Sandlin launched his own YouTube channel called Smarter Every Day. A few years ago, Dustin and his geeky friends built a bike they called the “Backwards Bike.” Dustin’s goal was to create something that would demonstrate what it takes to unlearn the old and learn the new. The bike was designed to go left when you turned it right and vice versa. As you can imagine, the first time Dustin rode the Backwards Bike, it wasn’t a good time. It took eight months for him to unlearn the old way of biking and re-learn skills that were burned into his consciousness. After he had accomplished his goal, someone asked him if he could still ride a real bike. He couldn't do it right away. It took him 20 minutes to re-train his brain to get back to the old way of biking.
What does this demonstrate? Eight months to learn a new behavior and 20 minutes to “kind of” regain the old behavior. This is a perfect example of what we are all experiencing today – the Great Unlearning.
Everything has changed
Everything we believed in, are accustomed to and thought would be true is no longer true. Let’s look at some of the significant ways our world has shifted in the past three to four years.
Work has changed. We don't work the same way as before. For several years now, many of us were able to conduct business from anywhere. Then, when we came back to the office, we were surprised to find that as many employees that could do so chose to continue to work from home.
Subscribe to our newsletter below
Remote viewing platforms are the norm, corporate offices are closing, and milling around the water cooler is a thing of the past (for now).
Shopping has changed. Amazon is no longer the only way to get deliveries today. Delivery services such as Deliveroo, a service in the United Kingdom, or Uber Eats bring you restaurant food and groceries. We became accustomed to shopping online and the convenience it provides. Then there are shopping apps that will sell us anything we like at the touch of a button.
How we interact with people has changed. We have begun to interact less face to face and more through digital means. How many people have you interacted with in person over the past three or four years? Most of us appreciate the fact that we can now see everyone face to face, but the fact is, this has changed too. According to a study by the American Psychological Association, the average time young people spent with each other has decreased from six hours a week to two hours a week.
These changes are having a profound impact on consumers. How we work, how we shop, and how we interact are different from what we did in 2019. So instead of comparing today with 2019, we should be talking about what’s changed and what we need to do to unlearn old behaviors and relearn new ones.
What do we do to adapt to these new behaviors? We continue to look at our competitors and wonder what they are doing, what their pricing is, and what their marketing department is up to.
But while this is valid, it isn’t the competitors that should be top of mind today. It is the customers who are important, and customers have changed. What we should be asking: What do our customers want us to do? How are our customers different today? How are they acting, and how can we attract them better? More importantly, how do we convert them?
Shifting travel demographics
While not a new addition to travel segmentation, the post-pandemic “bleisure” segment (business and leisure travel combined) has become more recognizable. As we know, business travel post-pandemic has become less relevant due to the work-from-home, technologically dependent structure implemented during the pandemic. And certainly, the rise in transportation costs is a key factor.
Today 30% of Americans still work remotely. However, this has the potential to be a boon for the travel industry. Travelers who intend to work while traveling plan on taking two times the number of trips than they would if not planning to work away from home. Of these working vacationers, nearly half add three or more travel days to their working trip. Eighty-two percent of bleisure travelers choose to stay in their current accommodation rather than change between leisure and business. This means longer travel trips and mean hoteliers must reassess where their market mix is coming from.
The other significant demographic is the rise of the young and wealthy. Eighteen-to-34-year-olds have quickly become the demographic taking the greatest number of trips, on average 2.7 a year. That means 45% of that demographic is traveling.
According to a survey conducted by the American Affluence Research Center in spring 2021, 68% of affluent Americans (those with household incomes of $200,000 or more) planned to travel during the next 12 months, up from 59% in the fall of 2020. Whether it is for pleasure or leisure, the second biggest demographic shift over the next few years is the 3 billion people around the world who will enter the middle class. What we know is that when people enter the middle class, they tend to spend money on experiences. Travel is one of those experiences.
So as 3 billion people reach middle class, have the money to spend, and the means to travel, think about what that will do to our industry over the next few years.
The digitization of the travel world
While many of us in the industry are very bullish about the next few years, it is imperative to understand how customers are shopping. Three big behavioral shifts are happening that will impact everyone in hospitality because they are already impacting our customers.
One is digitization. Everything we do is now digitized and leaves a digital breadcrumb.
Everything we do can be tracked and measured and provide information. Ten years ago, if you told someone you could speak into a phone, and no matter where you were in the world, you could tell the phone to switch on your lights at home, they probably would have told you that you were crazy.
This simple example is a part of the growing, global digitization trend. Our use of this data is present in much of our daily lives. We don’t even think about it anymore. We use data to personalize our experiences and how people interact with our brands. It changes how we engage with our customers to personalize their experience.
With that digitization comes a huge amount of data resulting in more than 163 zettabytes of data being generated and collected, and with it today’s customers expect us to make their experience more effortless.
The second behavioral shift is personalization. Through the digitization of our preferences, companies such as Nike, for example, know what their customers want. Nike understands what kind of color schemes or combinations you prefer, so much so that now the company provides a portal whereby you can design your own shoes seamlessly.
Of course, there are privacy concerns, and we need to ensure that any collected data is safe. But over and over, consumers are telling us that if the value they are receiving is significant enough, they are willing to trade privacy (to a degree) for convenience.
The third thing to note is merchandising. Because we collect a lot of data, we can personalize the experience. From there, we can sell anything we want to anyone within our reach if we understand the data. Chief commercial officers of big brands around the world understand that the ultimate objective is to sell personalized experiences, and today’s hoteliers have become savvy in investigating ways to sell above and beyond the room. Not just the meeting room, the restaurant, or the spa but also experiences beyond the hotel, such as the restaurant down the street, a car service or other off-site activities.
Merchandising to meet guest expectations is the goal. While we are moving towards these goals quickly, the trends of digitization, personalization, and merchandising are going to impact many of us in the industry, including revenue managers, digital commercial leaders, and digital marketers.
Relearning how to manage hotel revenue
Digitization is driving a shift in the industry. The amount of tech spending in our industry over the last few years is at record levels. For instance, we have all had to unlearn what we thought revenue management should look like. We thought it had to be for revenue managers, or that it meant sitting at a desk, or that using revenue management required a Ph.D. But that is not the case.
Every day, we are unlearning what it means to manage revenue in a hotel or revenue management business. Profit optimization will become critical in understanding your revenue streams, cost factors, channel costs and profit margins.
So what should we do over the next 12 months to learn or adapt to the new reality? Maybe learning how to ride a backward bike is the key. After all, it is a backward world we are living in, and we need to recognize that the world has changed. Let’s stop referring to 2019. This is 2023; let’s move forward to recognize these changes and reorganize how we think and how we work.
Internalize the processes that you want to change and live in the new reality.
Then reinforce the new learning. If you are not reinforcing it, as Daniel did for eight months getting on the bike every day to unlearn the old way, you won’t see the results of unlearning.
More importantly, you are not going to instill a new way of working and a new way of thinking within your organization.
The greatest opportunity for hotels today is to leverage the digital data being collected from guests around the world. We all shop, work and interact differently. The hotels of the future are going to be the ones that know how to leverage the millions and millions of datapoints that are being collected, incorporate that into their decision-making and automate the decisions as they market, distribute, price and sell.