Trends That Foster Growth

Future professionals in the hotel industry must be able to analyze who their customers will be and why they will have customers. Marketing classes teach how to determine the buyers of a particular product—who the potential guests of a particular hotel property are. Such courses show how to evaluate demographic data (size, density, distribution, vital statistics of a population, broken down into, for example, age, sex, martial status, and occupation categories) and psychographic data (emotional and motivational forces that affect a service or product) for potential markets.

The second question—why there will be customers—is an important one. Students will explore this question many times during their career in the lodging industry. A manager must plan for profitable results. This plan must take into account the reasons why customers purchase a product—what trends will increase or decrease the need for hotel facilities? Such factors include the growth of leisure time, the development of the “me/pleasure” concept, the increase in discretionary income, the trend toward smaller families, the changes in business travel, and the expansion of the travel experience. Other economics and political trends—such as public liability, insurance costs, overbuilding, the value of the U.S. dollar overseas, gasoline prices, safety from random danger while traveling, and legislation—affect commerce; labor and the airline industry also have an impact on current sales as well as growth in the lodging industry.

Leisure Time

The trend toward increased leisure time—in the form of three-day weekends, paid vacations and personal days, a workweek of 40 hours or less, and early retirement—has set the stage for the growth of the lodging industry. As more people have available leisure time to explore new geographical areas, try new hobbies, sample different culinary trends, participate in sporting events, and just relax, the customer base of the hotel industry expands. Workers are spending fewer years in the labor force as the concept of early retirement becomes more popular. And as the population segment known as the baby boom ages, the number of retirees is projected to soar. Many of these people will take on a second career, but part-time jobs will likely be more common. With the two prime ingredients for using hotel facilities—time and money—readily at hand, these people will be a primary market for the hotel industry.

Me/Pleasure Concept

The idea of deserving recreation away from the job to restore mental acuity and improve attitude had evolved over the years. The work ethic of the eighteenth and nineteenth centuries strongly influenced the way Americans play, as recreation and leisure were considered privileges reserved for the wealthy. Today, most workers enjoy vacations and experience the feeling of getting away from it all. This trend toward self-gratification will continue into the twenty-first century. The idea that satisfying personal needs is a prerequisite to satisfying the needs of others has a good hold in American society.

The isolated nature of many jobs increases the need for respite. As more and more people find themselves spending more time communicating via computers and other machinery rather than face-to-face, social needs will continue to grow stronger. Workers need the away-from-job experience to balance their social and mental needs with their demands. Travel helps to satisfy these needs, and the hotel industry benefits as a result.

Discretionary Income

Discretionary income, the money remaining from wages after paying for necessities such as food, clothing, and shelter, is the most important of all the trends that support the growth of the hospitality industry. One of the main reasons for the increase in discretionary income of American families is the emergence of the two-income family. An almost double-income family unit had emerged over the years as more married women joined or stayed in the labor force. The strong growth in this segment of the labor force will undoubtedly continue. As more income becomes available to pay for the necessities of life, discretionary income for leisure time and corresponding goods and services also becomes available.

Discretionary income is not a constant. It is definitely affected by various economic factors: an economic downturn with increased unemployment reduces discretionary income, for example. And different economic conditions tend to favor different ways of spending discretionary income: for example, low interest rates, which make the purchase of high-ticket items (such as homes, cars, boats, and aircraft) more desirable, make less discretionary income available for short vacations or quick day trips. Students of the U.S. economy need only review the effects of a recession or the energy crisis of the 1970s to see how quickly discretionary income formerly directed to the hospitality industry can evaporate.

Family Size/Household Size

The current trend toward smaller families also indicates growth for the hospitality industry. The discretionary income available for a family with two children is greater than that for a family with five children when total incomes are equal. Household size—the number of persons in a home—has continued to decrease over the years. Like the trend toward smaller families, the increased number of small households indicates that more discretionary income is available. The costs associated with a one- or two-person household are less than those for a household of four or more people. Moreover, those who live in smaller households are more likely to dine out, travel, and participate in quality leisure-time activities.

Business Travel

Corporate business travel should not be taken for granted by hotel managers in today’s world of high energy prices and speedy communication. Oil prices significantly affect business travel; as the cost of fuel oil rises, higher prices for air travel and other means of transportation result. A business is not always willing or able to budget more for travel.

When travel costs increase, less travel is done and the necessity of any business travel is reviewed. Executives will no longer hop the next plane to clinch a deal if the same task can be accomplished via a phone call, a (conference call), in which three or more persons are linked by telephone (or PictureTel which is the use of telephone lines to send and receive video and audio impressions). Shorter trips (day trips or one-night stays) are another response to the increased cost of travel.

The volume created by business travel often represents the largest portion of the regular income of a hotel property. This prime market must be constantly reviewed for economic details that affect its viability.

Female Business Travel

Female business travelers are on the rise and represent an increasing segment of the corporate travel market. As previously discussed, their travel is also affected by energy prices and speedy communication. This particular market segment requires close attention to fulfilling special needs. Female travelers request particular amenities and demand close attention to safety. Marketing and sales managers need to develop products and services that will capture this growing market segment.

Travel as Experience

At one time, people traveled primarily out of necessity; business and family visits were the usual reasons for traveling. Today, people travel for many reasons, including education, culture, and personal development. Many people want to learn more about the society in which they live. They have studied American and/or world history and want to see the places that they have read about. Cultural pursuits—art, theater, music, opera, ballet, and museums—can attract a constant flow of people into an area. Sports and nature attract travelers who want to enjoy the great outdoors as well as those who prefer to watch their favorite teams. The push for lifelong learning has provided an incentive for many to take personal development/enrichment courses, whether to update professional skills or to increase knowledge of a particular hobby. Ecotourists, tourists who plan vacations to study the culture and environment of a particular area, want to enjoy nature in its unblemished and unsullied form.