Evolution of The Hospitality Industry

Posted by kunal joshi on March 19th, 2020

The hospitality industry has witnessed the rise of several new and interesting models in the 21^st century. For the last 50 years or so, hoteliers’ concept of hospitality was confined to providing guests with a bed and a television. However, in the last decade, the industry has gone through major changes, making way for a complete reinvention of the idea. Previously there was an emergence of peer-to-peer, short-term rentals, where anyone, on the basis of just a few pictures, could launch a business or personal brand instantly. These offerings ushered in a generation of entrepreneurs who are likely to represent a formidable economic force.

This inventory type also heralded the ‘experience era” of hospitality offerings, wherein more and more travellers were more inclined towards unique experiences as compared to luxury, and look for spaces that can accommodate their unique travel ambitions. This transition was very much evident in traveller spending patterns, blending of business and pleasure trips, rise of experience-focused marketplaces, and so on.

As a response to these shifts, hospitality consultants in Dubai sensed a growing realization amongst the major multifamily and commercial real estate companies that the idea of staying in a room with just a bed and a TV is obsolete, and business models will now have to adjusted to create a type of supply with floor prints that will help people feel like they are at home while on the road. Eventually, there was a continuing separation of the hotel model into real estate, operations, distribution, and brands with distinct organizations specialising in each category.

This shift led to significant changes in the income profiles of hotel brands. In an attempt to develop alternative revenue streams and capitalize on the value of brand equity, some hotel brands have expanded into branded residences, as recommended by hospitality consulting services Dubai. However, it is also interesting to note that this market has limited reach as most branded residences are firmly positioned in the luxury space. However, there is huge potential beyond branded residences, when it comes to targeting a much broader market by expanding into everyday services and experiences.

For example, let’s look at the concept of experience economy which basically describes the transition from a product and service-driven economy to an experiential one. The initial success of Airbnb was underpinned by the desire of a growing section of travellers to experience and share a community with like-minded people. Since then, the company has announced its goals of becoming a global travel company and has also begun offering travel experiences in select cities. The bottom line is, after having detached themselves from physical assets, the need of the hour for hospitality companies in Dubai is to capitalize on their brand equity and seek opportunities beyond traditional hotel stays to emerge as universal travel and service brands.