NEW YORK CITY — As technological advancements, changes in customer preferences and regulation continue to drive transformation in the industry, it is becoming increasingly important for hospitality CEOs to review their business models in order expand into new spaces, embrace innovative concepts and maximize returns.
Speaking at the 46th NYU International Hospitality Industry Investment Conference in New York, hospitality CEOs speaking at the session titled Innovative hospitality concepts, new spaces for expansion emphasized the importance of anticipating trends rather than merely adapting to them.
Wellness and Sustainability
Wellness and sustainability are emerging as significant focus areas in the hospitality industry. James Bermingham, CEO of Virgin Hotel Collection, identified wellness travel as a growing trend, with increasing demand for health-conscious travel experiences presenting lucrative opportunities for hotels.
Additionally, he highlights climate change as a major risk, with Virgin Hotels proactively exploring renewable energy sources to mitigate this threat.
“Wellness is going to be a huge focus for us in the near term. The wellness industry has really been taking off and that's something we're looking at. But we can't lose sight of fact that what, what travelers - especially the luxury side - are looking for today, is unique destinations and authentic experiences.
“The biggest risk that we're facing - for our industry and across the globe - is climate change. And we can't wait for regulation. We have to be ahead of that. So we're looking at new opportunities such as wellness and sustainable travel, but not at the expense of what's really important to the consumer, which is that authentic travel.”
Experiential and Immersive Offerings
Creating unique and immersive experiences is a key differentiator in the hospitality industry, added John Cohlan, CEO of Margaritaville, a company with resorts and restaurants which are designed to offer guests an immersive blend of hospitality and entertainment.
“People are living longer and wanting to have fun and so that's been a great opportunity for us,” he said.
And the company has taken advantage of the interest in outdoor experiences, which saw a boom during the Covid period as well as post-Covid, with initiatives such as Camp Margaritaville and their cruise business catering to the growing desire for unique travel experiences.
Scaling and Synergies
Bermingham also stressed the importance of scaling operations and leveraging synergies within related entities, adding that Virgin Hotels has expanded from three to 16 operating hotels in just three years.
“Scale is a significant priority for us. Building on our distribution system, tapping into Virgin sister companies such as Virgin Galactic, continuing to bring those synergies together is critical for us. We're working on several new initiatives with Virgin Atlantic and Virgin Voyages that we'll be announcing over the next few weeks and months. It's there's just such a huge continuing opportunity for us across our sister companies, to really tap into their loyal databases,” he said.
Larry Cuculic, president and CEO of Best Western Hotels and Resorts, noted that transformation is essential for staying ahead in the hospitality sector as he highlighted the company’s evolution from a single brand to an 18-brand portfolio across the luxury segment down to premium economy.
For example, in response to the increasing interest in extended stay as the current critical need to be as cost-effective as possible, Best Western’s rolled out a new extended stay product which allows developers to design efficient and effective spaces tailored to specific market needs, ensuring flexibility and cost-efficiency.
Tech and AI
The CEOs also noted the role of technology and AI in the evolution of the industry as they offer significant opportunities to enhance guest experience and optimize operations. For example, Virgin Hotels’ is introducing Lucy, an animated AI character which will be able to answer guests’ questions pre and post-arrival.
However, they stress that AI will never and shouldn’t be seen as a replacement for human interaction or a personalized experience.
“There's lots of room for AI in our business. It won't replace the people element but I think we can channel it to be accretive to our teams delivering the guest experience.
Cohlan agreed. “The best way to look at AI is the extent it frees up employees to be more interactive with guests by dealing with some of the other things that would keep their head down. But certainly, in what we do, you'll never be able to automate the experience.”
Cuculic adds that AI needs to be used to its full extent, noting that it should also be used to measure performance and results.
“To us, AI isn’t just about the customer journey, it’s also about how you can judge your own performance and to make sure you're optimizing what you do. Use the data that you have available to judge your own performance,” he said.
Going further, Greg Juceam, CEO of Extended Stay America, emphasizes focusing on augmentation rather than automation, ensuring AI enhances human interaction rather than replacing it.
“There is going to be some automation, but we ought to really focus more on the augmentation. Regardless of where you are, economy all the way up to luxury, we've got to continually find ways to provide the hospitality and focus more on the augmentation where we can,” he said.
Looking ahead, the CEOs agreed that by staying attuned to emerging trends, leveraging strategic partnerships, investing in technology and focusing on wellness and sustainability, and most of all being willing to adapt and evolve, the hospitality industry can continue to drive growth. The focus on innovation and adaptability is key to thriving in an ever-changing industry landscape.
Putting it succinctly, Juceam said: “If you're not continually evolving, you're at risk of losing market share. So it does depend a little bit on where you are but all of us need to be recognizing that transformation should be top of mind at all times.”