Megacities: a new challenge for hoteliers

EHL Students - Bachelor | 26 Apr, 2016

More than half of the world population is expected to live in urban environment in the coming years. Small cities will become big cities and current big cities like Tokyo or Singapore will become megacities with dozen of millions of citizen.

Some studies project the world population in 2030 to be 8.3 billion. That is more than a 10% increase from today’s population. Due to this factor only, the number of megacities is expected to grow from 20 today to approximately 37 by 2025 already.

Will these megacities be as attractive as they are now? How will the hospitality and tourism industry – more particularly hotels – adapt to this change? Here are some modest considerations:

BY 2030, 60% of the world population will qualify as middle class in comparison with 27% in 2009. The average middle class citizen will not only earn more but have higher demands in terms of education, jobs, technology, benefits and services. Hotels need therefore to expect and adapt to new levels of demands from their guests.

The second consideration has to do with a shift in lifestyle. Megacities will not “sleep”. It is already the case nowadays for some cities where the nightlife is important, but this phenomenon will grow in the next 20 years. Day and night will function uniformly, work shifts will be equally distributed, public transport will function non-stop and shops will open 24/7.

This real-time phenomenon drives the increase need for instant gratification: we face the “Generation Now” trend as described in the Black Eyed Peas song of the same title. 

Hotels will have to adjust their functioning and offering to satisfy this behavioral change. That will certainly include changes in the way employees' work is structured, and also impact how customer experience is delivered.

Megacities by their density and diversity will present a wide and easily accessible choice when it comes to any type of services and goods. Coupled with technology advancements, real-time customer service will take the “here and now” to new level.

Hotels will need to integrate this trend by making the necessary investments to build an even more customer-centric organization, diversify their offer and engage in cross-channel real-time interactions. Only by doing so will they keep a competitive advantage and be able to deliver a connected and instantaneous service to their new customers.

If today, companies like TripAdvisor can make or break a hotel’s reputation, imagine what it could be like in 2030? The industry players may change but the technological movement will not dwindle and consumers will become “always connected travelers” and “social capital seekers”.

With countless pictures, 360 videos of hotels rooms, time-lapse of entire holiday experiences or even virtual reality, travelers will exploit the potential of digital media to enrich and inform their offline life.

Hotels will therefore be under constant scrutiny, exposed online on a 24/7 basis and presented to the world through the eyes of their customers. Embracing this consumer empowerment will allow industry actors to remain on top of the game.

We will also have to count on an aging population predicted to reach 1 billion by 2030
This population segment will, thanks to medical progress, live longer, in a better shape and engage in entertaining activities. Leisure travel for elder will be much more comfortable and easier, but will it be more affordable as well?

Answering the needs of seniors by proposing original, stress less cultural activities will become an imperative for hotels in megacities to remain attractive versus the nature focus resorts. In addition to a balanced offering, one will have to take into consideration the means of seniors, and their potentially tightening purchasing power. 

It all comes down to transforming threats into opportunities for hoteliers. If one can count on a middle class and older population packed in cities exceeding ten million inhabitants, it is not yet determined how the hotel industry will be transformed. It is however imperative to take these population and lifestyle changes into consideration and prepare for them. New definitions of “productivity” and “creativity” will have to be established in order for the business to maintain customer satisfaction and thrive.

Author: Martin Beetschen, EHL Bachelor Student

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