How to be Successful in the Future Hotel Business in Switzerland?
By Thouraya Gherissi-Labben, Pascale Nicod and Andrew Mungall
This article aims to determine future strategies for hoteliers concerning their products and services by identifying the main tendencies in consumer behaviour on these issues. To that purpose, it describes and explains the similarities in the needs of the extreme age groups represented by young people and senior citizens in hotel products and services, taking into account Switzerland as an example.The needs of young tourist is important because it has been estimated that approximately 20% of all international travellers are young people (Carr, 1998), and that in 2000 there were 182 million tourism trips by European young tourists within their own countries, as well as 53 million international trips within Europe and 7 million inter-continental trips. Young people from other continents contributed 4 million international trips to Europe. This represents an 11% increase in the number of trips over 1993.
Senior citizens are also important for the tourism market. Its share is significantly increasing and this evolution is expected to continue in the future. It reflects firstly the demographic evolution in the industrialised countries. According to the United Nations (UN Population Division 2000)2, the share of persons of 60 years and more already represents 20% of the total population in the industrialised countries while it was only 12% in 1950. By 2050, it is expected to reach a third of the population, and even 40% in Japan. This demographic evolution is explained by an increasing life expectancy and a decreasing birth rate. Secondly, this growing share of the population is often characterized in Europe by a purchasing power higher than the average.
Six main aspects will be covered: quality/price ratio, importance of information and technology, needs in accommodation and services, entertainment expectations, environmental awareness and destination loyalty.
OPTIMIZE THE QUALITY/PRICE RATIO
According to an annual survey undertaken by IPK International in Munich (European Travel Monitor, 1997) the average of expenditure of young people on international tourism travel is very similar to the overall average expenditure of all tourists in such travel. According to several studies led by the Lausanne Institute for Hospitality Research (LIHR) in Switzerland, the same observation has been shown. Accommodation is predictably the main item of expenditure for young tourists. Young people staying in hotels and motels spend the most. While the country has long laboured under the image of a chic but expensive destination, only 22% of the sample perceived that the accommodation was dear. What is interesting to raise here is that the above percentage corresponds to young tourists staying in hotels, mainly 3-stars ones.
The “grey” tourists who generally prefer to spend their holidays in upper standing hotels perceive the quality/price ratio as “unfair”. Indeed, the quality of the offered products doesn’t meet the quality expected and so the price paid. The elder tourists declare that they don’t mind to pay more for better quality. This comparison prove on one hand that the young people, the client of tomorrow, and the grey tourists which represent an important market share in the world on the other hand have both less financial constrains and a higher standards of life, and ask for better quality. That means that the hotels which will survive are those having upper standard and offering the highest quality. In the Swiss context, we can assume that the lower hotel categories such as 1- and some of 2-stars hotels are going to have less success, because at the same time they compete with new lodging concepts offering differentiated products such as “backpackers”. These establishments, by an attractive quality/price ratio, attract a multitude of customers of different age as they are considered in hotel industry in the same light as the “low cost” companies are in the airline sector.
INTRODUCE MORE TECHNOLOGY AND INFORMATION
Nowadays, Internet represents a tool which is more and more used by customers, in particular for destinations’ information gathering (general information, leisure supply, lodging opportunities). Moreover, it makes it possible to book online a hotel room and to benefit from Internet special packages. Thanks to this extraordinary invention, hotels are accessible to the potential clients 24 hours a day.
The elderly tourists grew up in a less technological environment which means that Internet was not widely used at the private and professional level. Thus, elderly tourists are those who use Internet the less compared to other tourist categories. However, initiation courses and trainings concerning this electronic tool are seen more and more as exciting experience by elderly tourists. In addition a lot of these people pass through their children and grandchildren in order to gather the relevant information and to book hotel rooms through Internet.
Information is considered important by young tourists before their travel and when they are on the site. This observation is consistent with previous surveys, especially those undertaken by HarrisInteractive3, stressing the importance of information to young tourists and their ease in using the Web. For young tourists visiting Switzerland, the Net is by far the most popular choice of information source (more than a third higher than the next choice, that of travel agencies). Internet is also gaining importance for reservations. It’s only slightly less popular than the classical way of reservation which is travel agencies. This second position of Internet as a tool of reservation is due to the fact that there is still restricted functionality in certain Swiss hotel Web-sites and it is not always possible to reserve directly via the Web.
IMPROVE ACCOMMODATION AND SERVICES STANDARDS
In terms of accommodation and services standards, four main trends can be observed.
Firstly, cleanliness and comfort are important for both young and older tourists. This observation is not surprising for seniors, as in many studies, they have often put forward their expectations concerning comfortable furniture (adaptable beds), sanitary installations (showers and baths with easy access by means of handles and anti-skid rubber mats), easy utilisation of electronic installations and further comfort with sound-proof rooms, special lighting, etc.
For young tourists it contradicts the idea that they do not need investment in infrastructure and facilities. This notion of a certain level of standard of living is also demonstrated in a study led by the Lausanne Institute for Hospitality Research (LIHR) where young tourists place, in order of importance, individual bathrooms and facilities, and then television, telephone and much further down the line minibars and access to the Net in individual guest rooms.
These trends are typical of the overall changes in social structures which reveal that young people believe more and more that they belong to the middle classes. They consequently make a point of demanding equivalent standards to their life style whilst travelling (Horak and Weber, 2000). This trend has accelerated due in part to increased travelling while studying, increased numbers of scholarships and students working part-time as well as improvement in standards of living of their parents.
Secondly, both age groups require specific public rooms in their hotels where they can meet socially. For young tourists, these are places where they can enjoy the feeling of belonging to a group, which is important for them when travelling. These places could be multimedia centres and others types of leisure and recreation rooms. For seniors, these would be places where they could meet in order to have social conversion with other guests in the hotel.
Comfortable common spaces, enabling people to meet and spend time together, playing parlour games, or just having a discussion, are facilities highly requested by the elderly generations as by the younger ones. For it is interesting to notice that this need of community belonging, proximity and exchange with people of the same generation, is a strong reality at both ends of the generation scale—the young and the elderly.
Thirdly, the two groups wish for a high standard of services adapted to their specific needs. For seniors, this could cover menus coping with special diets, medical care as well as specific sporting and cultural activities available either in the hotel itself or nearby. To that direction, products and services related to wellness tourism should be developed.
Fourthly, both groups look for security in the hotel. For example, many seniors wish to have a safe in their hotel room to enable them to leave their cash and valuables in safety, as a high proportion of them do not use credit cards. Young tourists also wish to have a safe place to leave their belongings without fear of theft as they grew up in a world where violence and dishonesty are highly publicised.
MEET ENTERTAINMENT EXPECTATIONS
Discovery and curiosity are important components of tourism, together with relaxation. From that point of view, it is encouraging to notice that interest for culture in a large acceptation is a permanent factor across the generations. If the young need to discover new cultures in order to build themselves a personality, the elderly don’t intend to be passive during their holidays and, on the contrary, they often use the time of their retirement to learn things they never had time to get interested in before. In that sense, the geographical position of a hotel in an agglomeration seems to be an important criteria of choice for young as for elderly tourists. Indeed, for both generations, it has to be central in order to be as close as possible to most of the entertainment facilities, namely restaurants, bars, nightclubs, cinemas, theatres and museums.
If the elderly tend to be generally more attracted by these various facilities during the day, the young, on the contrary, tend to be much more nocturnal in their external activities. The need to sleep lowers with age and there is a strong tendency for elderly people to go to bed rather early in the evening and to start their day earlier as well. Consequently, there is a bigger expectation from the elderly customers for entertainment facilities, together with restaurants services, available within the hotel from an early hour in the evening.
Tourism market nowadays is a highly competitive sector. Due to the extraordinary explosion of mobility, the access to international destinations becomes more and more accessible to a growing part of the developed countries’ populations. Therefore, most of the world tourism destinations come into a serious competition. In such a context, these destinations have no other choice than trying to distinguish one from another by developing specific attractions. Cultural events and local festivals are a good mean to characterize a destination and attract people, even during the low seasons.
Concurrently, today’s tourists become more demanding in entertainment and cultural events. In a period where time is so precious, people are looking for emotionally intense experiences. Event-driven tourism is quickly developing to answer this need and represents without doubt an important opportunity for hoteliers to highly improve their overnight stays’ rate. Consequently, hoteliers should constantly keep contact with the local tourism professionals and propose their support, in order to benefit as much as possible of these events’ positive impacts.
ACQUIRE MORE ENVIRONMENTAL AWARENESS
Natural and human heritage, together with the landscapes that they provide, are an important component of tourism today. To guarantee the quality of this tourism, it is an absolute priority to preserve the environment, and therefore, to try minimizing the negative impacts that our industries, the hospitality sector included, can generate. Even if the idea of sustainability is rather recent in our civilization history, it will probably become more and more important in the future.
The development of various “ecolabels”, ecological certifications, and green initiatives or programs, clearly demonstrates this necessary environmental management orientation.
Savings in energy and water consumption, CO2 emission, and waste production are some objectives that can be aimed by installing specific measures in hotels. If today, most of the hotels who effectively apply these measures belong to higher categories (4- and 5-stars), smaller establishments of lower categories will probably be able to join the movement in the next decades.
Concurrently, growing parts of tourist progressively show a concern for the environment preservation and agree to participate to some of these environmental measures adopted in hotels. Indeed, several studies showed that if they are ready to use the same towels for more than one day and replace a bath by a shower or use showers with a lowered water pressure, on the other hand, they are more reluctant to use recycled paper or to accept air-conditioning restrictions.
Nevertheless, today’s tourists tend to demonstrate a clear interest and attraction for nature and outdoor recreation. The development of various mountain hiking itineraries and of nature leisure activities such as mountain-biking, trekking, and various outdoor sports confirm this trend.
DEVELOP GUESTS’ LOYALTY
The elderly people of today are characterised by a strong dynamism and a taste for discovery which encourage them to change their holiday destination more frequently. Even if they still show a certain attachment to places they appreciated and which satisfactorily met their expectations, they probably tend to come back less often than before to the same places.
Even though repeat visits of elderly tourists tend to decrease, most of them are seeking specific experiences during the trip. That’s why they are very sensitive to personalized services and products. As the latter constitute the basis of the customer relationship management (CRM), a process allowing hotels to collect personal data, characteristics (age, expenses, meals preferences, daily behaviour, etc.) and needs could significantly make them to decide to come back to the same place more frequently.
Most important to bear in mind, is that young people are significantly influential trendsetters; they can create demand for new attractions and directly help to establish new destinations (Horak & Weber, 2000). For that reason it is important to provide genuine customer satisfaction, thereby encouraging customer loyalty towards firstly the destination and secondly the accommodation.
According to two recent research surveys, young people seem to undertake twice as much holidays within Switzerland than their compatriots of older generations and the duration of their stays appear to be longer as well. Moreover, contrary to what is generally admitted as a stereotype for that segment, i.e. irresponsibility and disloyalty among them, in Switzerland young tourists declare wishing to come back, as soon as possible. So, working on the satisfaction of these clients, constitute an opportunity for hoteliers to increase their long-term repeat businesses.
This represents the key to Switzerland to be able to renewal its clients. In fact, young customers who are satisfied today have the potential to live and visit for at least another half-a-century and could be the “golden” tourists of tomorrow, provided that the destination and accommodation have left a positive image in their memory.
But to achieve this objective, it is crucial for hoteliers to follow regularly the evolution of these needs, from youth phase to elderly phase.
This article clearly shows that potential customers of Swiss hotels are looking for a good quality of products and services to match the prices they are asked to pay. At the moment this quality does not meet the level of prices asked. Therefore, in order to attract more customers belonging to these two age groups, hotels should endeavour to improve the quality of their infrastructure and services.
As one of the tendencies observed is that both young and older tourists tend increasingly to use the Net for obtaining information on specific hotels and their various services they provide, these hotels should also have a user-friendly Web page showing specific products and services which differentiate them from other hotels in the same category.
In terms of accommodation and services hoteliers must put efforts on innovation (organization of cultural and entertainment events) and on the improvement of the quality standards. It will allow them to meet clients’ specific expectations by offering personalized and differentiated products and services. This need for differentiation should also encourage hotels to collaborate with each other as well as to make use of other tourist amenities to provide complementary products and services. Furthermore, as customers are more and more sensitive to environmental issues hoteliers should take into consideration more systematically this dimension in their strategic planning.
Nevertheless, all of these efforts will not be efficient without knowing beforehand the customer specific characteristics and needs. Indeed, the implementation of a process allowing the hoteliers to meet these objectives will both develop clients’ loyalty and repeat-bookings.