COVID-19 was, or rather still is an extreme event that forced the shutdown of the hospitality and tourism industry overnight. Millions of jobs were lost, and well-known brands ran into losses. Many businesses were shut down for good.
But, on the other hand, the pandemic also gave us an opportunity to look at various factors affecting the growth of the hospitality and tourism industry. We recently got a chance to interact with Ms. Nicole Philips, Director of the MSc in Real Estate, Finance, and Hotel Development at Glion Institute of Higher Education, Switzerland and she keenly explained the three key factors affecting the growth of the hospitality and tourism industry.
Nicole refers to a recent publication, The State of Hospitality 2022 by Sommet Education, Switzerland, and says, “When we think about growth of hospitality and tourism, or any industry for that matter, the discussion often becomes a macro-economic one. The State of Hospitality 2022 includes some valuable analysis of contextual economic and financial data around spend, growth, resilience, investment, and emerging jobs. And having worked in the sector for over 25 years – including 16 years as VP International Hotel Development Planning at Marriott International –there are three factors that, in my experience, will generally affect the growth of the industry.”
She elaborates on these factors:
- Economic: Supply and demand
The economic cycle, especially in relation to supply and demand and the value of money, is obviously a major factor in growth. We have seen during the pandemic how the demand for hospitality and tourism dramatically dropped and now, with things opening up all over the world, it is rising again. It was a similar picture during the recession. Of course, some countries may still experience some local impacts due to factors such as changes to employment markets and consumer traveling behaviours – but generally when economic conditions are favourable people want to travel. Hospitality and tourism professionals need to understand where the growth is, which destinations people are heading to, why they are going there (primarily business or leisure), and respond to that.
- Development: investing in the future
Although COVID-19 really spelled doom and forced the shutdown of hospitality and tourism overnight, the industry should always have a longer-term eye on growth which helps it to mitigate short-term fluctuations in the market. At Marriott International, I supported the expansion of the company in Europe, the Middle East, and the African region. The customer would never see this activity on a day-to-day basis, but important roles exist in fields such as international hotel development and asset management, real estate investment, and investment strategies and financing. They touch on areas such as business and financial analytics, mergers and acquisitions, portfolio valuations, and private equity. Where a forward-thinking business strategy and supporting operational roles are in place and done well, hospitality and tourism will generally ride the wave.
- Education: talent to support innovation
People, and talent, are other key factor that fosters or limits growth. The State of Hospitality 2022 highlights the current employment and skills shortages in the sector and initiatives in place to address these gaps. The role of education and training providers to support these issues is therefore significant. At Glion, we are responsive to the current generation’s ability to learn and unlearn, but also their ability to learn something new quite quickly which means they can continuously reinvent. Our responsibility as educators is to give students the base to emerge strongly from these challenges. Traditionally hospitality and tourism have not always led the way and innovated. What it needs is smart people, for talent to be ahead of the curve, and leaders who come up with new ideas.