TRENDS AND ISSUES IN HOSPITALITY INDUSTRY

2011

Hospitality Industry Trends for 2012

Greater Investment in Property Renovation – 

As hotels start to see the light at the end of the recession, expect an increase in investments to refresh
and revamp all aspects of properties. Many hotels have already started on major renovations to lobbies
and restaurants, as well as smaller upgrades to bedding and in-room amenities. As the market continues
to improve, hotels will make additional upgrades to remain attractive and competitive.

Few Development Dollars on the Debt or Equity Side – 

While developers may have attractive sites for hotels, they need to wait a little longer to feel the effects
of the recovery. Still, developers remain hopeful and know that worthwhile deals will always get done.

 Moderate Growth for Online Booking –

 More than half of all travel bookings today are made online and industry experts predict that number to
modestly, yet steadily, grow. With 94 million people expected to book online this year, hotels need to
embrace this digital direction and incorporate it into their marketing strategies.

 Higher Demand in Most Markets –

 The greatest recovery has been made in the top 25 U.S. markets, as well as those most devastated by
the recession. Other markets have made small gains, but are still awaiting a strong comeback.

 More Mobile Booking and Comparison Shopping – 

Forrester Research reported that mobile booking quadrupled from 2008 to 2010, while Google forecast
that mobile will exceed PCs as the most common Web-access devices by 2013. Expect mobile devices to
be used more and more for everything related to travel, from researching hotels to online booking and
communicating preferences to hotel staff. To stay competitive, hotels must make sure that their
websites are optimized for tablet and smartphone use to make the mobile experience as easy and
enjoyable as possible.

More Complex Revenue Management –

 The development of high-tech market intelligence tools now enables hotels to make daily price updates
for any upcoming date to match market demand. In addition, companies are continuing to create
reports to help hotels plan for future bookings.

Pricing Impacted by Distribution Channel Management –

 In order to maintain rate parity and uphold a brand image, hotels will need to understand all aspects of
the numerous distribution channels and the returns expected from each. Now more than ever, it is
essential that hotels stay on top of the ever-evolving distribution landscape.

Brands Competition for Development Deals – 

Looking ahead, hotels are starting to focus on expansion projects as the economy continues to recover.
Smaller hotels will vie for a larger piece of the hospitality industry as they prepare to compete with
bigger brands.

Social Media to Transform Travel – 

Today, 22 percent of the travel industry uses social media to generate bookings and revenue, with an
additional 27 percent planning to begin over the next five years. Consumers are already embracing this
social media technology, so it’s high time for hotels to follow their lead in order to connect with their
customers. Plus, the increasing integration of search and social will make these popular platforms into
major traffic-driving opportunities for hospitality marketers.

Preparation for Growth – 

 Industry experts predict growth to peak in 2016, followed by a more cautious period in 2017. This year,
hotels can expect demand to stabilize but for rates to grow beyond the rate of inflation. This means that
hoteliers will see hotel values with annualized double-digit growth over the next few years.

The coming year appears bright for the hospitality industry as consumers continue to return to the
travel experiences they’ve been wanting and waiting to enjoy again.

ISSUES IN 2012

On March 15, 2012, hospitality establishments will be required to be in compliance with the standards
for accessibility set by the Department of Justice’s final regulations under Title III of the ADA (2010 ADA
Standards). The regulations made significant changes to the requirements for accessible facilities and
will require additional training of staff on updated policies and procedures in response to inquiries from
guests with disabilities. Among the most significant changes for hospitality businesses are:

-Tip Credit and Tip Pooling Lawsuits Remain The Lawsuit Du Jour
 In recent years, the number of individual and collective action lawsuits involving allegations of
tip credit and tip-pooling violations by hospitality businesses has significantly increased. Given
the ever-changing web of state, federal, and local laws regarding tip credit and tip pooling
arrangements, it is important that hospitality employers with tipped employees periodically audit
their pay practices to ensure compliance with all applicable rules.
 Increase In Organizing Efforts By UNITE

The NLRB’s new rule amending the procedures for union election cases introduces a
number of union-friendly changes to the election process, including the elimination of
the right to seek NLRB review of regional directors’ pre-election rulings. These changes
increase the risk that unions will seek approval of smaller units for elections that are
based on the extent to which employees in such units support union representation. 

Social Media Remains A Hot Topic With The NLRB

As the use of social media has steadily grown among restaurants and hoteliers, so too
has the NLRB’s interest in cases involving social media policies and social media-
related discipline. While employees do not receive protection under the NLRA merely by
posting a work-related complaint on a social media website, under some circumstances
employee complaints made using social media may be found to constitute protected
concerted activity. 

As such, hospitality employers need to remain cautious when crafting social media
policies and any time they contemplate taking adverse action against an employee for
social media activity.

U.S. Supreme Court to Address The Patient Protection and Affordable Care Act (PPACA)
The U.S. Supreme Court is scheduled to address the challenges to the constitutionality of
PPACA in 2012 and it is possible that the Court will issue an opinion on the matter before its
June break. If the statute, or at least the portion of the statute that applies to employers and
insurance companies, is found to be constitutional, hospitality employers with more than 50
employees will be required to provide certain mandated levels of healthcare coverage to all
employees who regularly work more than 30 hours per week by 2014 or face penalty.
Lessons Learned
In light of these issues, it is important that hospitality employers take action to evaluate their
policies and practices, including those related to pay, social media, employee handbooks, and
health insurance to ensure that they are compliant with applicable legal requirements. It is
equally important that they plan proactively to address the potential business challenges posed
by the NLRB’s new union-friendly election and notice rules and PPACA.

GENERATION

Gen Z- Generations defined by name, birth year, and ages in 2021.

TECHNOLOGY IN 2012
The iPad Revolution
This device in my opinion is going to redefine how guests are going to use technology in hotels
in the future. Consider these points:
It is the fastest selling consumer electronic device in history with Gartner Group predicting that
Apple will sell 100 million units by 2012
iPad is the first video centric guest internet device
It is designed for viewing video and according to Cisco is 600,000 times more data intensive
than traditional text
It has a very simple GUI ( Guest User Interface ) and new users both young and old and able to
use it almost immediately with little or no training
iPad is already placing huge demands on Hotel Wi-Fi systems consuming much more than Wi-
Fi data
What does this mean for hoteliers?
most hotels Wi-Fi system is overloaded with many guests complaining about poor download
experience
guests want the same technology experience they have at home or office and if they have a bad
experience may not return to hotel
with the increasing demand for more bandwidth and the subsequent costs to provide this it is
going to be difficult for hotels to agree to offer free Wi-Fi as many guests are demanding
IPads open up a world of new opportunities for hotels to deploy in guestrooms to handle the
following applications
Room Service ordering
Concierge services
Simple device to access all in room facilities such as lights, air conditioning, TV, curtains etc.
With the above application now available on iPad what does this mean to hotels that are
upgrading their guestrooms?
As we move to more Wi-Fi is there now a requirement for multiple Cat 6 cabling to each room?
Many guests are bringing their own content on the ipad and are happy to watch it on the iPod
screen so does that mean less watching of traditional TV or do hotels need to install IPTV at all?
I recently came across this statement which I think sums up the current situation.
“Customers will arrive at your hotel and will want what they want when they want it and the key
for hotels is to provide them with the infrastructure and the bandwidth to achieve this”
If this is indeed what guests want then how can hotelier’s monetise the investment they make in
new wireless access points, increased bandwidth etc. – The answer i believe is to offer tiered
bandwidth where guests are offered a range or fees directly related to the amount of bandwidth
they require. In other words the bigger the pipe a guest wants the more they should pay?
In summary the iPad has changed the way customers are using technology on the road and
while it creates a great challenge for hotels it is now up to the industry to embrace this device so
guests can have the same download experience they have at home.
Cloud Computing
There has been a lot of talk about this subject and I believe 2012 will be when this technology
takes off as a number of PMS vendors release their cloud version where hotels will have the
ability to access their major software applications on a web browser. Cloud computing offers
many benefits to hotels not the least is a more cost effective way to deploy technology without
the large up front capital expenditure and the need for a lot of hardware on premise.
Social Media
The reach of Social Media is growing substantially and now hotels are using it more than ever to
engage with both new and existing customers. Facebook has created enormous changes in
social networks and now with the release of their latest version it is now possible to use
Facebook as a booking channel. Recent research from PhocusWright reveals that 66% of
travellers are on Facebook but more importantly is that referrals from Facebook are more likely
to convert into bookings than are referrals from travel review sites.
Hotels need to harness the power of social media in order to stay ahead of their competitors.
Hosted PABX
For many hotels one of the largest capital expenditure has been the PABX. In the past revenue
from guest phone calls justified this large capital outlay but the advent of mobile phones and the
cost of making calls from a hotel guest room have left hotels reeling from the costs of providing
and maintaining this service .
Hosted PABX provides many benefits not the least is that a new PABX requires minimal upfront
costs and a monthly subscription based fee which can be based on the preceding month’s
occupancy. There are still some challenges in putting this model together but for the first time it
offer an alternative to hotel owners who have a very old PABX which has passed it use by date.
Energy Management (EMS)
With the cost of electricity continuing to raise hotels have to start looking seriously at more
sophisticated systems than the traditional magnetic stripe cards in the slot.
Hotels that have invested in sensor based occupancy systems or those where the door lock
systems are integrated to the PMS have shown dramatic reductions in energy bills as when a
person leaves a room the EMS via an occupancy sensor can detect that no one is in the room
and then automatically lowers the air conditioning to a designated set back position and also
turns all the lights off.
ROI on these system has shown pay back on the investment can be between 2 and 3 years
and can be less if hotels can qualify for government rebates on the original investment.
Lighting
Another major contributor to excessive power bills is he type of lighting that is installed in hotels.
With replacement of lights to LED and Halogen hotels can save up to 30% and have lights that
have a long life up to 12,000 Hours. While the costs of these lights are more expensive in the
first instance their shelf life and the energy savings they generate more than compensate for the
initial costs.
MARKETING AND DISTRIB UTION IN 2012
1. MOBILE: This trend is number one for a reason: as computing and communications become
increasingly personal and user-customized, the term refers to more than just smartphones with internet
browsers. Obviously hoteliers must consider mobile as an important marketing channel, but must also be
 aware of the trend to expand on-property with the advent of NFC and other device-activated services.
Below is a list of five tips to help maximize your mobile-marketing strategy:

 Start with an optimized mobile website and booking engine which considers user
experience across multiple mobile devices, including tablets. Take advantage of this trend with an
excellent mobile site designed to get your mobile visitors to the answers they are looking for quickly
and efficiently, with the ability to book on every page.
 Think of mobile as its own channel so you can offer special rates, promotions, product
descriptions as well as tracking specifically for this market.
 Take advantage of SMS/text message marketing programs. Guest can opt-in and receive
messages pre- post- and during their stays at your property.
 Work with sites with geo-location services such as Foursquare, Facebook, Gowalla, and
Yelp to offer promotions. Participate in the free marketing programs that many of these sites offer,
such as adding links to your website and other social media accounts, uploading pictures or offering
check-in deals and specials.
 Optimize your location for mapping and mobile search. Consider running a mobile targeted
AdWords campaign with click to call and tailor your message to mobile users.

2. SOCIAL MEDIA: By now you have hopefully initiated conversations and established relationships
with your customer base through various social media channels. If you’re a hotel or a hotel group, you will
have an active presence on at least Facebook and Twitter, if not other channels, and use these to engage
and retain fans of your brand. The next question is, are you using social media to convert?
In the past year, social media channels such as Facebook have created more and more opportunities for
hotel marketers to use social media as an extension of their direct-to-consumer strategy.  Some areas to
consider to help your business grow through your social media efforts:

 Leverage Facebook as an extended booking engine and include call to actions just as you
would on your own website to prompt fans and new customers to book directly.
 Take advantage of push-marketing opportunities on Facebook and include a specially
designed optimized landing page that encourages interaction and engagement.
 Update your own content with targeted tags for the channels that are right for your brand.
Consider including new tags such as Facebook send and Google +1 to leverage your customers’
networks on the larger social networks.
 Plan your social media advertising campaigns with your marketing efforts on these channels,
giving new fans and viewers the opportunity to easily convert and engage with your brand.
 Are you investing in remarketing to capture interested consumers? Remarketing is an
advertising campaign directing users back to your website or social media profile after they have
already viewed your content and clicked away, and can help you capture a segment that may not
have otherwise converted using your channels.

3. CHANNEL MANAGEMENT: Even though hotels do not want to be dependent on third parties/OTAs,
there is still a value to these partnerships in the overall marketing and distribution landscape. The
Billboard Effect trend has been one that we have been telling customers to pay attention to throughout the
year, and it is still relevant for 2012. Managing and maximizing your presence across channels, including
OTAs, can help you use third-party relationships to drive business back to your own property website.
The Billboard Effect tells us that 23% more bookings direct to brand website when present on OTAs
(Cornell study).
The average online travel consumer spends 10 searching sessions over and average of five weeks
before a reservation is finally made, accessing at least 20 websites in total. Your strategy should embrace
their research – but ensure that you offer rate parity across channels, and that your own property is
optimized to convert and be the place that more customers choose to make their bookings.

Trends in 2013

Increase in Travel's Personal Value | Despite the recent years of a contentious and challenging
economic climate, we're seeing the revival of the most powerful motivation for traveling — the
emotional connection between vacations and quality of life. Leisure travelers are doing less of the things
that characterized the economic hardship of recent years and are now adopting more behaviors that
confirm the importance of travel in their emerging lifestyles, according to the newly released MMGY
Global/Harrison Group 2012 Portrait of American Travelers, a nationally-representative survey of 2,527
U.S. households. This annual survey shows that while the number of overnight leisure trips is almost
equal to that of last year, the drivers of these vacations are changing. Cost-effective "staycations" and
other money-saving getaways that emerged in the midst of the recession have weakened. This year,
expect a boost in travel spending due to a renewed belief in quality experiences that are worth the
splurge.

Expect More International Visitors | Average rates and occupancy levels in the US are likely to increase
over the next few years for a very new reason. "Leisure demand from abroad, fueled in part by the new
Discover America campaign, will stimulate new demand" according to Arne Sorenson, president and
CEO of Marriott Hotels & Resorts during a GBTA panel discussion in Boston last month. Brand USA, the
DMO behind Discover America, is the national marketing engine promoting US travel to international
visitors. The U.S. has about 5 million hotel rooms and almost no new supply in the construction pipeline,
Sorenson noted. At the same time, China is ramping up to send about 100 million leisure tourists into
the international market every year. If the U.S. gets its typical share, that will mean an additional 10
million visitors from China alone. The average Chinese leisure traveler spends a week in the U.S.,
Sorenson said. That means an additional 70 million room nights in a market where prices are already
rising due to growing domestic demand. And that doesn't count growth from other inbound markets,
such as Brazil and India, Sorenson said. "The globalization of travel is a massive force."

A Second Look at Refinancing | When moving from your business plan to your actual budget, remember
that while a zero-based budget is time consuming, it will save you tens of thousands of dollars on your
bottom line. Each dollar on the bottom line increases the value of your asset by about $16 depending on
capitalization rates. So a savings of $60,000 means an increase in value of about $1M! If refinancing is an
option, remember that interest rates are unbelievably low right now and that debt is actually available!
As a matter of fact, though it is limited, there is even some new development activity in the pipeline.
While there is still some economic uncertainty, this industry is cyclical and we are already in the fourth
inning of the recovery. Look back and remember 1996-2000 and 2004-2008. Compare them to 2012-
2016. The money is made in the middle innings and we are there.
Social Media and Mobile Will Be Inseparable Social media and mobile already live in symbiosis and this
year we will continue to see them merge. Now, people can create social media updates from their
phone, while tagging friends or checking in. Mobile has allowed social media to truly become real time.
Smartphones represent more than 50 percent of new mobile devices being purchased. And, the growth
of connected devices will only continue to soar throughout 2013. In fact, Ericsson estimates there will be
over 50 billion connected devices in circulation by 2020, including laptops, tablets and smartphones. In
North America, 2013 will mark the first year that online access is greater from mobile devices than
desktop or laptop. Smart hotel marketers will keep their eye out for authentic ways to make use of
emerging social/mobile applications in 2013.

Photo-Sharing Will Dominate| Photo-sharing sites like Pinterest and Instagram saw their coming of age
this year. By curating cool content through images, the Pinterest provides a powerful way to visually
communicate lifestyle messages exuding from brands in the hospitality business. Pinterest is, at its core,
a master of content curation. And with Pinterest API coming sooner rather than later, hotels will be
presented a unique opportunity to curate, collect and highlight the very best of the pinning service
through their own digital channels. Copycats are bound to arise, but 2013 will certainly provide us with
new players on this field.

More Unrehearsed Marketing Videos | Video is one of the most effective ways to make an impact on
web visitors and the opportunities to use videos are endless. In 2013, video is predicted to be an even
more vital element in a hotel marketer's arsenal with more and more people viewing and sharing videos
online, including hundreds of thousands of consumers regularly streaming videos on their mobile
devices. These videos can strengthen your organic SEO efforts and your video doesn't have to "go viral"
to be effective. More importantly, it doesn't have to be a literal walk-through of your lobby and rooms.
First and foremost, your social videos should showcase interesting and useful information. The content
featured in your videos should highlight the uniqueness of your property, as well as the destination and
area attractions. Plus, try different ways of presenting, including interviews, instructions, demos,
reviews, or coverage of special events, activities or nearby attractions.

Content Marketing Will Replace Traditional Advertising| Traditional advertising is rapidly losing out as
hotel marketing professionals begin to realize the advantages and effectiveness of content marketing.
Marketing's new mantra of "Brands must now acts as publishers," has arrived in part because of social
media and its potential to engage in meaningful conversations with their loyal fan base and potential
clients alike. In short, content marketing is the new advertising. By investing in the sharpest media tools
like blogs, social media, newsletters, webinars, ebooks, photo-sharing, or videos and shared media,
you'll drastically reduce the hefty investments in traditional paid media. Plus, your SEO efforts will be
affected if you "opt out" of being a producer. Google is now weighing current content, social proof and
author scores in their results ranking. Simply put, you need to create and share content, while being of
interest to lots of people to even be a player going forward.

Renewed Focus on Property Websites | Direct bookings are king. And, finding ways of encouraging
direct bookings will be one of the most important parts of a marketing director's job in 2013. As
travelers are increasingly taking their transactions online, the hotel's own Website has grown into the
most important avenue for them to gain the highest ROI. In 2010, American hotels spent an estimated
$2.7 billion on OTA commissions. Now, as those rates rise and rate parity restrictions tighten, hotels are
looking at any and all ways to increase direct bookings through their websites. To achieve this, hotel
Web sites must find compelling ways to convey the advantages of going through them, rather than the
OTA's. Today's hotel website needs fresh content, constantly updated promotions and rich media. Then
all of this content needs to be marketed across all channels, including desktop Web site, the mobile site
and social media profiles.

Guests Will Crave Food, Not Celebrity Chefs| Foodies have driven hotel culinary offerings these past
few years, with chefs creating meals like pieces of carefully crafted art. Plus, investments to woo
celebrity chefs to helm hotel kitchens have skyrocketed because of the rise of big-name chefs emerging
from Food Network shows. Hotel owners used these chefs' newfound celebrity status to bring in F&B
business. However, now meeting planners and leisure guests aren't focused so much on the chef in the
kitchen, but the food on the table. What they'll care about now are menus filled with healthy and
organic options, and more options for diet restrictions. F&B directors should reevaluate where their
ingredients are coming from, and highly consider procuring from local farmers and vendors if they're not
already. Showcasing where your food is coming from will allow guests to connect more with the
property, the restaurant and their experience overall.

More Meeting Planners via Social Networks | More and more, meeting planners are utilizing social
media tools to research, compare and read reviews of hotels and conference centers. Plus, they are
using social networks to strengthen professional relationships like the rest of us. Hotels should designate
a sales team member to oversee the property's LinkedIn profile and engage the entire sales team to
actively connect with planners online on a daily basis. Some ways hotels can attract meeting planners
with their own social media? Have a separate customer service-focused Twitter account to manage
questions or issues during conferences. Use webinars to educate planners about things that matter to
them. Share positive reviews from other planners on all your sites. Last but not least, make sure you're
monitoring and answering review sites like TripAdvisor. Use your hotel blog to write about meeting
ideas. Planners are increasingly using former guests' reviews to see if they want their attendees staying
with you.

Marketing & Distribution in 2013

Mobile Booking Functionality

Enabling reservations via the hotel mobile site is another very important, though more complicated,
issue. Today all major hotel brands’ mobile sites have booking capabilities. Independent hotels and
resorts are usually at the mercy of their third-party PMS or booking engine vendors. Unfortunately, only
a handful of these vendors have developed mobile booking capabilities, most recently SynXis and
InnLink.

To facilitate mobile reservations due to the mobile devices' limited functionality for data input, secure
customer profiles need to be stored either via the hotel mobile site, the mobile booking engine vendor,
or a subscription to specialized m-commerce digital wallet services. For example, for the major hotel
brands, the reward program guest ID number should be sufficient to pull up all customer data and
preferences needed for a hotel booking. The property selection, arrival date, number of room nights and
number of rooms, all selected from easy to use drop-down lists and calendars, should be the only
missing parameters.
M-CRM and Customer Service

M-CRM or mobile CRM will rule the mobile Internet. Customer relationship management (CRM) and
mobile services were meant for each other: mobile devices are constantly present, always on and
usually used by only one person. Hence, using the mobile space to provide intelligent, unobtrusive and
highly personalized services convinces customers that this is their service. Custom-tailored services and
offerings, based on knowing your customers, matching customer preferences, and predicting behavioral
techniques are only part of personalizing the customer service in this space.

M-Lists: Opt-in Customer Mobile Text List Creation

Text messaging is huge and growing. In 2008, over a trillion text messages were sent worldwide, and on
average there were 357 texts vs. 204 phone calls/per month per cell phone subscriber.

Unlike email marketing, which is free, unregulated (except the toothless CAN SPAM Act of 2003) and
susceptible to massive abuses in the form of unsolicited spam, mobile text marketing has to overcome
two very serious obstacles:

 Mobile users, all of them burned by the email spam experience, are vehemently guarding their
privacy and protecting their cell phone/PDA numbers. People are willing to share their email
with just about anybody, while entrusting their mobile number only to close friends and
relatives.

 Wireless carriers are taking the privacy of their subscribers very seriously and reacting fiercely to
any attempts of cold calling or unsolicited text campaigns.

Therefore it is not an easy task for the hotel to create an opt-in list of existing guests and potential
customers’ cell phone numbers (m-list). These guests would have to provide the hotel with explicit
consent to receive special promotions or event announcements via their mobile devices—many people
are wary of this.

How should you create and expand the hotel m-list? Here are some techniques and approaches to solicit
opt-ins for the hotel’s m-list, all of which require a very carefully thought-out solicitation of the mobile
user’s consent:

 Guest check-in/check-out solicitations

 Website sign-ups

 Interactive sweepstakes, contests, games that require the input of a cell phone number or
sending a text message to a shortcode

 Mobile barcode coupons and initiatives

 Social media initiatives

 Quizzes and polls

Mobile Advertising

eMarketer projects that mobile advertising will rise from $648 million in 2008 to $3.3 billion in 2013.
This year alone marketers will spend $760 million in mobile advertising (+17.3%) and almost a billion
dollars in 2010 ($995 million or an increase of 30.9% vs. 2009). Forrester projects mobile marketing to
grow from 2009 through 2014 with a CAGR (compound annual growth rate) of 27%, second only to the
growth rates projected in social media.

Mobile advertisers should take into account several unwritten rules that differentiate the mobile space
from general online advertising.

Mobile advertising should:

 Deliver real value that goes beyond price

 Provide real convenience for the mobile travel consumer
 Be conceptualized in a way that puts the mobile travel consumer in charge

Google Mobile Ads

More and more people are browsing the mobile Internet via their mobile devices and are being exposed
to Google mobile ads, which results in visits to the hotel mobile site or reservation calls via the 1-800
number. Here are the Google mobile ad views/impressions for sample hotels across the U.S. from
January-July 2009, which constitutes a significant increase of 35%-50% vs. the same period of 2008:

Hoteliers have to be prepared to work with conversion rates and campaign tracking technology that are
different from the Internet world. Website analytical vendors like Omniture and ad delivery and tracking
technology vendors like DoubleClick have already deployed mobile campaign and conversion tracking
technology. For example, DoubleClick Mobile provides full compliance with Mobile Marketing
Association (MMA) standards, reports on impressions, clicks, jump pages and third-party metrics,
dynamically displayed ads, and handles custom executions for jump pages - coupons, media downloads
and more.

Trend in 2014

Millennials will become the core customer within the hospitality and travel industries over the next five
to ten years. The majority of airlines, hotels and travel companies will benefit from this sector as they
enter into their peak earning, spending and travel years. Within this group of GenY travelers, there are
many different markets considering the fact that exploration, interaction and experience are the major
focus of Millennials. Willing to pay more for a greater experience, "foodies" are a prevalent subset of
this market; looking for an overall gourmet experience for a reasonable price will cause the industry to
revamp their lobby bars, restaurants and food service. Internet bloggers, culture buffs, LGBT and Multi-
generational travelers all looking for a unique, novel experience will command change within the
market.

Speed and precision will be a requirement when it comes to accommodating Millennials in upcoming
years according to Hotels.com's latest Hotel Price Index report. Fast booking, fast check-in, fast WiFi and
fast responses to customer service needs will need to be implemented within hotels. Considering
Millennials have no problems speaking up, if what they are seeking is not quick enough, they will turn to
Twitter, Facebook, Yelp or TripAdvisor to voice their complaints.

WOW customer service will become even more influential this year. Service today consists of four
levels: basic, expected, desired and WOW. Basic service can be found at the post office whereas
expected service can be found at most fast food restaurants and many businesses. Desired service is
often found at good hotels and restaurants but WOW Service is the only way to ensure repeat business.
By creating an impressive, unique guest experience that exceeds all expectations, you are able to
capture the customer.

Leadership is modeling the way and showing your management team how critical it is to "walk the talk."
Each and every employee, including myself, all have something we can work on. Forming a connection
with guests can improve dramatically with genuine, individual interaction. It is my goal as a leader to
instill the value of building relationships by sharing the knowledge I have and learning from them as
well. For instance, I run with our guests staying at the Hilton Garden Inn and Homewood Suites San
Diego/Del Mar and offer personal training sessions for others.

Expectation of more international visitors. Average rates and occupancy levels in the U.S. are likely to
increase over the next few years, influenced by a very new market. "Leisure demand from abroad,
fueled in part by the new Discover America campaign, will stimulate a new demand" according to Arne
Sorenson, President and CEO of Marriott Hotels & Resorts. China is preparing to send about 100 million
leisure tourists into the international market every year. If the U.S. gets its typical share, that will mean
an additional 10 million visitors from China alone. Considering the average Chinese traveler spends a
week in the U.S., demand is created for an additional 70 million room nights in a market where prices
are steadily rising. The globalization of travel will prove to be a massive force.

Social media and mobile will be inseparable. Social media and mobile already live in symbiosis and we
will only continue to see them merge over the course of this year. Mobile activity has allowed social
media to live in real time by allowing users to create updates, tag friends and check in on their mobile
devices. Smartphones represent 50 percent of new mobile devices being purchased and the growth of
connected devices will only continue to rise. Ericsson estimates that there will be over 50 billion
connected devices in circulation by 2020, including laptops, tablets and smartphones. In North America,
2014 will mark the first year that online access is greater from mobile devices than a desktop or laptop.
Keeping an eye out for authentic ways to make use of emerging social/mobile applications will be of
great value to those in hotel marketing.

Content marketing will replace traditional advertising. Traditional advertising is rapidly losing value as
hotel marketing professionals begin to take advantage of effective content marketing. Marketing's new
mantra, "Brands must now act as publishers," has come about due to social media and its potential to
engage in meaningful conversations with loyal fans and clients alike. You will be able to drastically
reduce investments in traditional paid media by implementing media tools such as blogs, social media,
newsletters, webinars, eBooks, photo or video sharing and shared media. If brands begin to "opt out" of
being a producer, SEO efforts will be affected. Google is now weighing current content, social proof and
author scores in their results ranking. Simply put, you need to create and share content while engaging
people if you want to be recognized moving forward.
Renewed focus on property websites. Finding ways of encouraging direct bookings will be one of the
most important parts of a marketing director's job in 2014. Considering travelers are increasingly taking
their transactions online, the hotel's own website needs to become the most important avenue for
bookings to gain the highest ROI. After American hotels spent an estimated $2.7 billion on OTA
commissions, the rates rose and restrictions tightened. Hotels are looking at any and all ways to increase
direct bookings in 2014. This means that hotel websites will need to create incentives through booking
with them directly rather than via the OTAs. Fresh content, consistent updates of promotions and rich
media will draw in the guests.

Review site tactics. According to The Wall Street Journal, Yelp reports 50 million users across its web
and mobile platforms. TripAdvisor has become the world's most popular travel website with 34 million
unique users each month. Google Places is the Yellow Pages of the digital age meaning that business
listings also show up on iPhone searches as well as on Google Maps. In 2014 there is a need to:

Reputation Management. There is much anticipation that reputation management will begin to dictate
the hotel industry in upcoming years. Considering there are millions of reviews written each day across a
plethora of different platforms, the world wide web has the power of influencing one's decision making
process; being able to manage your businesses reputation will determine success or failure. TrustYou
had made it their mission to influence travel decisions in a positive way, developing a technology and
software making it simple to monitor, manage and market a businesses reputation. Another company,
Flip.to, has been making strides to tap into the market of potential travelers' family and friends
considering 70% of customers take recommendations from their family or friends when choosing a
product, brand or business.

TECHNOLOGY IN 2014

Smart Rooms, Smart Controls

One of the key factors in guest experience is about digitizing room service to enhance your guests’ stay.
For example, allowing guests to set the room temperature using their smartphones enables them to
create a perfect ambience that is customized according to their requirement.

A leading hotel brand has used the concept of a virtual concierge that was quick to step up to cater to
the guest requirements. Hoteliers who invest to enhance the in-room experience will have happier
guests and repeat customers. Interactive walls/mirrors that are gesture-controlled are defining trends in
the hotel industry.

Adopt Technology for Energy Conservation

Energy management can certainly help hotel owners save massively on electricity bills. The challenge
lies in ensuring your use of energy is not eating up into your profits and guest experience is not
compromised upon. Although guests want a “green hotel”, luxury is something they cannot forego, and
this poses a problem for hotel owners. *According to Booking.com’s ‘Global Sustainable Travel report,’
65% of global travelers show a strong preference for eco-friendly accommodation. With the help of
technology, hotel owners can use this strategy to market their brand and increase revenue using energy-
efficient practices.
The correct use of energy with the new technology in hotels such as smart thermostats, LED lighting,
ozone water treatments, eco-friendly laundry units that save water, motion sensor lighting systems,
energy-efficient appliances in the kitchen area, and more help cut down costs on energy consumption

Using Mobiles for Keyless Entry

Another trend in the hospitality industry that is ruling the roost is the use of mobiles to lock/unlock
rooms! This is currently an emerging hotel technology trends which is known as keyless entry. A guest
can use his/her phone to swipe across the keyless pad which must include the required mobile app to
unlock the room. Guests no longer have to rummage through their pockets or bags for cards or keys to
unlock rooms. This access is encrypted and is linked to the phone number that belongs to the registered
guest. The technology also ensures the room access cannot be transferred to another number or device.

A mobile device has forever changed the way travelers interact online. With mobile bookings on the
rise, its dominance is felt in every market. Therefore, any hotelier who is keen on embracing this change
and wants to introduce apps will soon see a massive transformation in the way the business functions.
Apart from increased revenue, a hotel also has information about the guest. This may not be the case
when the booking is made from an Online Travel Agent (OTA).

Automation with Cloud Services

Hotels that have moved to the cloud from on-premise have loads to cheer. If you haven’t already
upgraded to the cloud, you would be running high costs on IT maintenance and support. Adoption of the
cloud-based technology is on rise globally, across hotels of all sizes. It not only brings down the initial
capital investment as compared to the traditional methods, it also gives the required operational
flexibility to run your hotel from anywhere, anytime, and within a few clicks.

The importance of a Cloud-based Hotel Technology: Using a cloud-based property management

system(PMS) allows you to run your hotel operations, manage reservations, allot room bookings and do
much more from a single dashboard. It’s easy to check data, assign duties, manage folios, run your
additional Point of Sale (POS) counters and reduce time spent on manual updates.

The Hype around Data

There are huge amounts of data collection happening via mobile bookings, guest reviews, the internet
search engines and even a cloud-based PMS as integrated by the hotel. The key here lies in
understanding and prioritizing data. Data collected and analyzed properly will help a hotel to boost
guest experiences and increase revenues. For hoteliers, being able to store and analyze such huge
amount of data enables them to have a competitive edge when it comes to taking vital decision
pertaining the business.

“Data” has been a global trend (if not phenomenon) for a few decades now, but with technology
guaranteeing us such an exciting suture, it is all the more likely that Data will rule the hotel technology
space with more vigor and will remain a hospitality industry trend indefinitely!

Predictive Analytics

The use of predictive analytics is one of the most important trends in the hospitality industry. It provides
a sure shot way to increase hotel revenue. Before we proceed, let’s try to simplify this.
What if you could predict which item on the menu card sells faster during the Christmas vacations?

Wouldn’t it be great if you could send tailor-made updates via emails, SMSs to customers based on their
preferences? For e.g.: A spa coupon can be targeted particularly for guests who have used this service in
your hotel earlier. It empowers hoteliers to make informed decisions by understanding what kind of
problems they may face tomorrow.

Investing in the right kind of technology in hospitality industry will help you to be prepared and improve
a hotel’s management in all aspects. For e.g. any hotel that includes multiple POS outlets needs to focus
on providing a personalized service to their guests. This will ensure you have a higher chance of getting
repeat customers.

Any data that helps you to understand a guests’ preference is considered to be the best use of data.
Guests are interested in knowing about the choices relevant to them rather than looking at a plethora of
choices. Technology will be helpful to suggest which guest is suitable for any specific promotion, offers,
and discounts. Usage of this information gives a holistic view into the customer’s requirements.

Virtual Reality

Hoteliers, marketers, advertisers have been struggling to grab the attention of customers in this
competitive market. This is when virtual reality brings a massive change to the way properties are
advertised and customers are informed. This is going beyond images, text, and audio-visual ads. You can
use virtual reality to give the guest a view of the conference room, amenities, guest rooms and even
offer a quick trip to interesting locations nearby.

Virtual reality technology in the hotel industry allows guests to make better decisions by knowing what
to expect during their stay. It’s important to use this technology to tell an engaging story to ensure
guests enjoy the experience and give preference to your hotel over others.

Chatbots and Robotics

Chatbots feature as one of the continuing hospitality trends when it comes to technology. Chatbots have
already taken over the basic tasks that save time and improve efficiency for professionals. Chatbots are
helping to enhance communication and provide guests with quick answers to their queries online. The
basic questions asked on a hotel’s website such as “What is the menu of the day?” can be answered
with the use of chatbots. Chatbots help to automate responses and act as an important channel of
communication between the guest and the hotel.

Several hotels the world over have begun deploying robots at their properties. These are useful in
various departments such as to play the role of a virtual concierge or even at the front desk.
The fascination of robotics continues this year as this largely brings down costs and offers service 24X7.
The interaction between the robot and the guests assists hoteliers to analyze cognitive behavior to
understand guests’ preferences, and more.

Beacons and Augmented Reality

In the fast-evolving technology landscape, beacons bring with it multiple opportunities to improve
revenue and is a popular technology in hospitality industry. These augmented reality technologies are
used to communicate with devices such as tablets and smartphones. Beacons are effective in pushing an
offer to a customer’s smartphone device for indoor locations such as a hotel lobby. Hotels can use the
beacon technology to help guests navigate across the hotel and speed up services for guest requests
(e.g. extra towels, or request for food).

It’s also useful to send automatic notifications to a smartphone and personalize services (e.g:
notification that enables a guest to control temperature of the room). Other benefits include automated
check-in and check-out service and safety maintenance of large hotel premises. Beacons use low-energy
Bluetooth connections to send across information to the chosen device such as sending a virtual key
that makes unlocking doors so easy with just a smartphone in hand!

Augmented reality is one of the popular hospitality industry trends that is indeed a powerful tool for
hotel owners. This technology alters or enhances the way a guest perceives the physical surroundings.
Hotel owners can enhance the physical space they are selling with AR. Rooms are now interactive (e.g.
guests could use their smartphone to see realistic depictions of celebrities at Holiday Inn.) and guests
can even point their smartphones to a map to view information related to local places of interest. The
Hub Hotel from Premier Inn (UK) used AR by placing such maps in all its hotel rooms.

Blockchain

This technology can make things a lot easier for hotel owners. While there’s a whole lot of excitement
happening around this new technology in hotel industry, experts warn to avoid getting carried away
with all the hype. It’s evident the technology has shaken up the system, but the buzz in travel and
hospitality continues with big players opting to deploy the use of the same. Nordic Choice hotels are
toying with the blockchain distribution idea that may shed light whether this technology will indeed be
helpful for the industry.

Simply put, blockchain is a growing list of records. These records, also named as blocks are
“transactions” records. The Harvard Business Review defines it as “an open, distributed ledger that can
record transactions between two parties efficiently and in a verifiable and permanent way.”

Blockchain for the hotel industry claims to make this data accessible while providing hotel owners with
ample opportunities for their room distribution. This open access distributed ledger of a hotel’s
inventory will give the flexibility to hotel owners to discover more options. Faced with the challenge of
commissions by OTAs, blockchain brings with it a ray of hope for hotel owners.

Embrace the Hotel Technology Trends

When any new technology in hospitality industry arrives on the scene, it brings with it the need to
implement a plan to make your hotel staff comfortable with the changes. Your focus should be on a
smooth transition that should make it easy to convey all the changes in the existing system without
hampering their daily tasks. Any change is bound to bring about a new set of worries and challenges.
This is perfectly natural but should not act as a deterrent for change.
MARKETING & DISTRIBUTION 2014

Protect your Brand

I have been speaking with many marketers over the last weeks and all seem to conclude the same. It is
essential to reduce dilution of branded search traffic to OTA. The leakage caused by advertising on your
trademark (hotel name) by third party websites is turning out to be extremely costly for hotels.

Of course OTA’s will not stop this practice. It is their highest profit margin source of business. You can’t
blame them for stepping in where hotels are not investing. They are in business to make money and
profit.

Meta-Search Domination

The internet has moved way beyond search engines like Google being the main platform driving
consumers to either hotel or travel agency websites. A new layer has gradually moved into and
established itself and a key force in the vertical business column of our sector.

The distribution landscape as we know it has changed drastically over the last year. The 3rd party OTA
websites have to increasingly deal with an intermediary themselves. The meta-search phenomenon has
really taken off. The platforms in this new level in the distribution chain are nothing less than a price
comparison websites, benchmarking which channel has the best price for a hotel for your travel dates.

Multi Device Strategy

As we all know by now mobile is on the rise. Consumers do research travel options and book them over
multiple devices. We have to adapt our strategies to this.

Looking at myself, I fit the behavior of the new consumer. In the train to and from work I am on my
mobile phone looking for new stuff, and as well hotels when wanting to go away on a trip. In the
evening on the sofa or in bed I show my wife on a tablet what wonderful hotels I have found for our
next escape. The day after on my desktop I book a flight and a hotel room, as I find it easier to type all
details on a real keyboard.

BRIC and beyond

BRIC has been hot acronym of the last few years. Brazil, Russia, India and China were the emerging
markets. New source markets which are now getting on the hot lists are Peru Argentina, Colombia,
Indonesia, Thailand, Malaysia, Vietnam etc …

Xotels’ Tips:

 Offer your website and booking engine in the languages for secondary emerging feeder markets
relevant for your destination.
 Identify distribution channels that can help you capture travelers from these markets.
Flash Sales is not Dead

I have heard many fellow industry colleagues proclaim that flash sales is dead or on the demise. From
our experience this year I would say the contrary. Flash sales is here to stay.

Mind you, we have to be ever so cautious not to undermine our current hotel distribution strategies.

Xotels’ Tips:

 Use flash sales only in low demand periods to offset distressed inventory.
 Package the offer with added value and include restrictions and fences in order not to dilute
your regular room only sales.
 Make sure the lead time does not overlap with your normal booking window.
 Work with smaller Flash sales websites that are more flexible and do not dictate crazy
conditions. We like to come out of a business negotiation with our clothes still on, instead of
only in our underpants and socks.
 Also do direct flash sales to continue to build your own brand.

Target Niche Market Segments

Niche market segments are easily identifiable and targetable. Think about the specific individual reasons
why people are coming to your destination and build a sales strategy only for them.

OTA are large companies and generally cannot compete on such a micro-level. So it is an effective way
to drive extra direct sales.

Xotels’ Tips:

 Indentify niche target markets for your destinations and hotel by looking at travel motive or
demographics. Here some examples; culinary and gastronomy, incentive, active break,
museums, live music, travelling with their pet, senior citizens, families, etc.
 Identify related keywords they might search on for your destination. (use Google Adwords as a
resource)
 Build a package for each individual niche target market and upload it in your website booking
engine.
 Build optimized landing pages to attract these niche market segments and convert more direct
sales.
 Segment your mailing list based on information preferences, so you can market each packages
as well to the right audience.
 Retargeting through Google Adwords to these specific consumers after they have visited your
landing page to increase conversion.

GDS is making a Comeback

Over the last few years we have been able to increase our GDS sales, which in turn lead to more direct
corporate accounts. The Global Distribution System is not dead. It is making a ‘small’ comeback, and is
still an imporant channel to help diversify your business mix.
A lot of work to do next year as you can see. In any case I hope these tips for 2014 will help you with
your hotel distribution and revenue management strategies.

Because it will be the year of the Battle for Direct Sales!

Trends in 2015

Millennials -have become the fastest growing customer segment within the hospitality industry.
Exploration, interaction and experience are the major focus of Millennials who are willing to pay more
for a greater experience. Many of them are looking for an overall gourmet experience for a reasonable
price and this has produced all new lobby designs in the hotel sector. Lobby bars and hotel restaurants
are wide open with combination work, play and eat/drink spaces designed with this Millennial customer
in mind, one who is a "party of one" but "hanging out together." They are looking for a unique and novel
experience and this has and will continue to command change within the market.

Customer service - will make the list every year but this year it must be a combination of "high tech,
high touch" as coined by John Naisbitt in his best seller "Megatrends" in 1985. Service today must
include enabling guests to be self-sufficient. As an example, if a guest wants to find information using
his/her smart phone, providing an app or mobile website that accommodates that information will
appeal to many. The rise of this digital traveler requires the hotel industry to balance the expectation of
personalization while enhancing the need to remain independent. For those who are either tech-
challenged or prefer more service, that service must be genuine and of a high quality – good
recommendations whether they be for food, shopping or activities delivered by a truly caring team
member. "WOW" Service is the only way to ensure repeat business.

Expectation of more international visitors has been talked about for two years but these travelers are
here now. International leisure travel has increased markedly due to the visa waiver program introduced
by President Obama in 2012 and this is moving more international tourists to travel to the United States.
The U.S. Department of Commerce projects an annual growth rate of approximately 4 percent in
international travel. This represents over 80 million visitors. China is preparing to send tens of millions of
leisure tourists into the international market every year. With the new "10 year visa" agreement
between the U.S. and China signed earlier this year, we will be getting more than our fair share of
Chinese travelers. Considering the average Chinese traveler spends a week in the U.S., huge incremental
demand is created.

Booking more profitable business is critical as more revenues result from strong increases in occupancy
levels, average rates and revenue per available room (RevPAR). This may suggest more profits, but the
growth in distribution costs as well as other operating costs such as health care and the minimum wage
increases can stunt profit growth. While the revenues are coming first and foremost from RevPAR
growth, there are additional ways to increase both revenue and net income. One is by less reliance on
the online travel agencies (OTAs). By directing guests to your hotel's website and telephones, the
savings are abundant. The digital distribution costs are soaring and the number of players entering the
market to compete with OTAs is rapidly rising (think Google, Facebook, Apple, TripAdvisor, Amazon and
more). The key is to negotiate with your distribution team (yes, the OTAs can be an integral part of your
team) and reduce your commissions. Then make certain that you have a strategy in place to earn the
repeat business of every single guest...and get them to book direct next time. Think incentives!
Innovative technology, mobile check-in, and seamless connectivity across platforms and devices are
no longer the future, they are the present. Today, mobile apps are being used as everything from a
digital concierge to accessing big data. Geo-location can make it easy to sell guests something that is
literally right in front of them. In a recent survey by Software Advice, guests desired local restaurant and
hotel restaurant discounts when looking for deals as well as maps with coupons for other deals. At our
hotels, we use 1App, which sends guests deals to do everything related to eating, playing and shopping.
Additionally, monitoring guest use of the Internet relative to bandwidth can provide a different data set,
perhaps one that will drive down your ever increasing costs of providing ridiculous levels of said
bandwidth. Most importantly, when looking at the face of a changing consumer today, technology
innovation is paramount. As most have heard, Starwood and Hilton will be having guests check in via
mobile phone in 2015.

The sharing economy is a new reality hoteliers are still grasping to embrace. Over the past few weeks
we have seen jurisdictions attempt to regulate this reality as evidenced by the San Francisco City Council
implementing new legislation providing a legal avenue for Airbnb. Uber, Lyft, and other ride sharing
companies are also in uncharted legal territory that will be legislated over the next few years. The
challenge here is that users like these services, government legislation is not generally keeping up with
these rapid developments, and hoteliers are unsure of how to react.

Political uncertainty will continue to be an unfortunate reality because at the national level, it is unclear
that the President and the new Republican Congress will be willing to compromise on anything leading
into the 2016 presidential campaign. This impacts hoteliers on many levels but most crucially as it
impacts two areas of vital importance to the hospitality industry: healthcare and the re-authorization of
Brand USA legislation. Whether or not you agree with Obamacare and its implementation, now that it is
reality the hotel industry is just getting its arms around incorporating the demands of the legislation into
HR policies, legal ramifications, and the impact it has on the healthcare options available to employees.
Continuing threats of repealing the legislation or defunding Obamacare create uncertainty about what
resources may or may not need to be allocated in the coming years.

Reputation management continues its importance because it is no longer all about TripAdvisor.
Although this platform continues to dominate in the hotel industry, it is easy to skip over the increasing
importance of Yelp, Yahoo, Facebook, and Expedia for guest reviews and comments. Managing a
property's reputation is increasingly important and using tools to help this process is crucial. Many of
our properties use Revinate as a complete, one-stop solution for reputation management instead of the
cumbersome process of logging into each platform and spending an exorbitant amount of time on a
crucial yet time consuming aspect of the hotel industry. Engaging with guests and responding to their
needs publicly through these forums can go a long way in driving future bookings to your property.

Real time marketing and providing content on an ongoing basis will dominate the industry. Although it
would be unwise to discount the impact of traditional marketing, real time marketing must take place
on a regular basis and incorporate guest-generated content, especially via social media. This must be a
crucial component of the marketing mix. Think of your property's Facebook page as a second website
with the option for guests to contact hotel staff and make reservations. At RAR we use a Facebook app
provided by buuteeq, one of our digital marketing providers, that pulls information about the property
from the hotel's website onto its Facebook page. This app also provides a link through which guests can
book a room directly on the property's website. Facebook pages also need to take advantage of custom
apps that can highlight a hotel's unique features, characteristics, and charm. Whether it is Facebook or
another social media outlet, guests should be able to contact the hotel with an expectation that they
will receive a response in a timely manner.

Health and wellness trends will continue to drive customer decisions. Healthy food options are one of
the easiest ways to cater to this trend. The Chicago Marriott O'Hare recently implemented a test pilot in
partnership with Farmer's Fridge, a Chicago start-up, to provide a healthy vending machine. At the
suggestion of a guest, soda, candy bars, and ice cream were replaced with a "detox salad" made of kale,
quinoa, Greek yogurt, berries and locally sourced honey. Although the response to the healthy vending
machine has been positive, the hotel's best-selling food item is still the Marriott burger. There is a need
to balance health and wellness with tasty options that are cost effective. One of the successful ways I
catered to the health and wellness of my guests was through a weekly "Run with the Owner." Repeat
guests especially enjoyed the opportunity to provide a consistent program to maintain their exercise
routine while away on business, not to mention having a nice "chat."

Issues in 2015

1. Catering to millennials

Millennials (those ages 18-34) are expected to represent 50% of all travelers to the USA by 2025,
according to the Cornell Center for Hospitality Research. Companies need to define their strategies
based on this demographic group’s personality traits and habits—they travel a lot; are early adopters of
technology; like personalized interactions and are spontaneous. Hotels will want to please them with
easy check-in and gourmet dining experiences at reasonable prices. In return, satisfied millennials will
actively promote their businesses on social media channels.

2. Tech explosion

The majority of guests today are self-sufficient, tech-savvy travelers who are comfortable using apps or
mobile websites. Hotels need to make sure their offerings are up-to-date and user-friendly. At business
meetings and conferences, travelers expect hotels and conference centers to have high quality tech
equipment and a knowledgeable support staff.

3. Influx of international visitors

International leisure travel is on the rise—Dubai International Airport has become the busiest airport in
the world. Hotels must be able to provide services in a multitude of languages, and tailored experiences
properly suited to the culture and unique needs of their international visitors.

4. Increased emphasis on health and well-being

Guests today are taking charge of their health; hotels are responding with well-equipped fitness centers,
pools and spas. Increasingly, travelers are expecting innovative wellness options. In addition to healthy
food options, growing trends include lighting that energizes, air purification, yoga spaces, in-room
exercise equipment and even vitamin-infused shower water.

TECHNOLOGY IN 2015

-In 2015, the hospitality industry focused on improving the customer experience using hotel in-room
technology. With many guests now living in connected homes, hotels realized that to keep customers
satisfied, the hotel experience must provide at least the same level of technology that guests enjoy in
their own homes. Hotels are also now beginning to take full advantage of mobile devices to create a
customer-focused experience from the moment guests step onto the property until the end of their
stay.

Smart Televisions

-Many hotels upgraded to smart televisions in 2015. The guest room television serves as the
center of entertainment and automation in the next-generation guest room. Hotels without this feature
will soon find themselves behind the competition in their ability to provide a top-notch guest
experience, both in terms of technology and personalization.

Since many travelers have their own content on their mobile devices, Huntington Hotel Group
properties in San Jose, California, use screen mirror technology so that guests can watch their own
content as well as their own premium subscriptions on the guest room television. Smart television sets
also allow hotel staff to personalize the premium content offered based on guest data and preferences.

Connected Hotel Rooms

-Thanks to new hotel in-room technology, the guest room will never be the same. Instead of an
impersonal space in which to sleep, hotel rooms are now designed to anticipate guests’ needs and
create a personalized experience. A 2015 survey conducted by Hotel Management on behalf of Samsung
Business found that in the next 18 months, more than 20 percent of hotels plan to integrate smart guest
room features, including lighting and drapery that automatically adjusts based on guests’ preferences.

-Guests can also use mobile devices to control the lighting and temperature in the room without
ever having to leave the bed. At the SLS Las Vegas, guests perform various tasks from in-room smart
televisions, including arranging for laundry pickup, calling for the valet to have their car ready or
checking out of the hotel. Smart televisions also allow hotel staff to automatically personalize the
content in theguest’s preferred language

Virtual Reality in Restaurants

-Virtual reality in hospitality emerged on the scene with virtual reality gear now becoming
affordable and the technology less complex. The most notable example is the virtual reality dinner
service by Sublimotion, in partnership with award-winning chef Paco Roncero. During the lavish dinner
at the Hard Rock Hotel Ibiza, guests wear Samsung Gear VR to experience various sensory experiences,
including being underwater and in a Tuscan garden.

-Hotel restaurant operators can incorporate the same concept of virtual reality to enhance the
overall meal. Instead of multiple scenes and extravagant effects, restaurants can use virtual reality for a
specific course or for one scene throughout the meal. Diners can feel as though they’re eating their
pasta in a piazza in Italy by setting the scene, adding street musicians to play music and even the light
scent of flowers coming from the portico above.

Marketing & Distribution in 2015

5. Need for seamless technology

Seamless connectivity across platforms and devices is growing more important. Many hotel groups are
offering mobile check-in and digital concierge services. At Aria Resort and Casino in Las Vegas, guests are
issued high-tech cards that detect their presence and unlock the door before they even reach it.

6. Sustainability rules

Eco-friendly practices are becoming the norm, as properties focus on renewable energy resources and
water scarcity. Many hotels are installing solar panels and updating systems so that air conditioners and
lights automatically switch off when guests leave their rooms.

7. New roles for staff

Many travelers seem to prefer technology to human beings—they want to check-in digitally and don’t
mind if a robot delivers room service. This will give staff the opportunity to focus on more personalized
service, as opposed to rote tasks.

8. Destination promotion

The explosion of social media is causing hotels to become more involved in destination and self-
promotion. Many are featuring guests’ images and tweets on their websites; some are even using the
material in their advertising campaigns.

9. Real-time damage control

If a hotel guest is dissatisfied, he or she can easily complain on Facebook, Twitter, Yelp or TripAdvisior.
Hoteliers must be able to quickly respond. Engaging with customers and responding to their needs
through these public forums help maintain positive guest relations and drive future bookings.

10. Unique perks

With so many brands to choose from, properties need to find a way to stand out. Some are offering free
daily wine tastings in their lobbies or bars; some are incorporating sophisticated informational screens in
bathroom mirrors; and others are giving away curated set lists of downloadable music.

2016 TRENDS.

Digital Marketing is dominated by two words: mobile and video: This is why live video streaming via a
mobile device is so deserving of our attention; it is a true joining of the two best developed areas of
digital marketing. The average user consumes more than 65 minutes of live video a day and this number
is growing fast. Periscope alone averages 2 million daily active users with over 10 million total accounts
created as of August 2015 (barely 5 months after it launched). Millennials look at live streaming video
the same way past generations viewed television. The future of knowledge and culture is in digital, not
print.

Invest in Capex immediately: While the money is available and cheap, take advantage now of major
expenditures including renovations that may not only be required by the brand but will also revitalize
your hotel now and through the next downturn. Remember, new supply is coming and a tired hotel
loses twice—in 2016 when rates can be pushed to pay for the capital expense and in the future when
demand drops and those who have renovated win! Moreover, the Sharing Economy could have a
material impact on lodging demand by 2017.
Millennial Mindset trends toward group settings: Millennials and those who have the "millennial
mindset" are looking for John Naisbitt's hi-tech, hi-touch experience. They like a personalized, gourmet
experience for a reasonable price and this has produced all new lobby designs in the hotel sector. Lobby
bars and hotel restaurants are wide open with combination work, play and eat/drink spaces designed
with this youthful customer in mind, one who is a "party of one" but "hanging out together." So give
them what they want—personalized experiences that create value. This group is quick to criticize via
social media so "wow" customer service is your best protection here.

Optimal Channel Mix: Online travel agencies (OTAs) are having a tremendous impact on distribution.
They are responsible for incremental demand and the OTA's extensive marketing campaigns and
sophisticated platforms reach travelers who might not find your hotel any other way. Owners still view
OTAs as an expensive channel but it's a channel we most definitely need going into the next downturn.
Find ways to use OTAs without relying on them as your primary resource—and get more eyeballs to
your own web site!

Personal Engagement in the Digital Age: Understanding the modern consumer is key to creating
relationships and appearing up-to-date, particularly in the digital realm. Guests are using social media
outlets, community apps, and online forums not only to research and book hotels, but to gauge the
hotel's brand identity – increasingly more on wireless devices. The hotels that frequently engage with
consumers on social media and provide mobile-responsive websites or even apps to streamline the
process will maintain repeat guests by showing a genuine understanding and interest of guests' needs,
as well as brand personality and relatability.

Revenue Management 2.0: Adhering to the science of hospitality, revenue management is a constant
work in progress that is now 40 years old. Investing time in fine tuning your revenue management
strategy will maximize profits providing for a larger cushion when the next downturn hits. And don't just
go with your gut—invest in new technology as it is changing rapidly! Take a hard look at who is the most
profitable customer and what room types are in highest demand each and every day. Additionally, make
certain your team is accurately forecasting demand!

Sharing Economy and Disruption: No matter how hard some people may fight it, Airbnb, Uber, and the
likes are here. Hotels should innovate and provide quality alternatives with the same appeal to the
maximum extent possible. Mobile/digital check-in, easily accessible and plentiful outlets in all areas,
reliable and fast wifi are some of the amenities desired by those who utilize Airbnb and HomeAway. The
hotel industry should not take its cues from the music and taxi industries that could not embrace change
and continue to implode. More disruption is on the way!

Soft Landing: The party will not go on forever so do not make promises of distributions beyond 2016.
Although this requires careful readings of partnership agreements, it is easy to distribute excess cash
given that the good times are here. However, holding back some of this money is in the best interest of
many partnerships because it may prevent cash calls upon the next downturn or soft landing. From an
emotional/psychological standpoint, it is better to not give too much and not request later on rather
than to give more now and request some of it back later.