Hospitality Jobs Report Summary
- Lack of information between hotels and guests makes it harder to provide great service
- Sharing economy is shaking up the industry
- The hospitality industry is experiencing growth
- Cost of labor will effect future services
How was 2015 for Hospitality Jobs?
Traditional travel agencies are becoming a thing of the past, as people are able to book vacations online with ease. The majority of travel agencies adapted to this trend and have become online travel agencies (OTAs). Although this new trend makes travel planning easier for consumers, it has also made it harder for hotels to do their part in providing the best service possible by interfering with the reciprocal nature of the service industry.
Additionally, as more travel planning is being done online, a larger portion of it is through mobile devices. In 2015 almost half, 43.8%, of travel planning was done using mobile devices.
Overall, 2015 was a positive year for workers in the hospitality industry. According to the Bureau of Labor Statistic’s (BLS) numbers, the median weekly income of workers in the industry rose from $505 to $515 and a net of 380 jobs were added to the hospitality sector of the economy.
However, the average hours worked for people employed in this sector was only 26 hours, indicating reluctance for employers to hire full time employees. With the increased costs in labor due to the Affordable Care Act taking effect and mandatory overtime laws, it is not surprising to see employers limiting their employees to under 27 hours a week.
The rise of the sharing economy is a new trend that the hospitality industry was affected by in 2015. Services like Airbnb and Uber are introducing new competition into markets and are taking a share of the hospitality industry with them. Airbnb is starting to take up a larger share of the hospitality industry with $900 million in 2015 revenue and a self projected revenue of $10 billion by 2020. If these projections come to fruition we may see a dramatic shift in the hospitality sector of the economy.
Hospitality Jobs 2016 Performance
Despite OTAs efforts to shut out direct communication between consumers and hotels, guests still want the ability to directly contact a hotel prior to booking a stay there. According a Google survey, 68% of hotel guests report that it is extremely/very important to be able to call a hotel during the purchase phase, and 58% are very likely to call a hotel if the capability is available in a smartphone search. This consumer preference poses a challenge for OTAs that attempt to shutout hotels from communication with their guests and may prevent OTAs from doing so in the coming years if consumer preferences don’t change.
The growth of online travel planning and evolving technology has made travel arrangements from mobile devices common. Projections estimate the just over half, 51.8%, of all travelers will use mobile devices to book trips. This new, growing trend means mobile friendly websites and applications are vital for securing the majority of customers in the hospitality industry. We can expect to see travel agencies and hotels developing apps to make mobile booking an easier costumer experience.
Where is the Hospitality Jobs Growth
As the sharing economy continues to grow we can expect to see a larger market share going to new companies like Airbnb and Uber. The fast growth these companies are currently experiencing allude to them having a large market share in the future as consumer confidence in the sharing economy continues to grow and these services are normalized.
The market trend of online vacation planning has been around for quite awhile now. However, the rise of using mobile devices as a primary means to booking trips is a new phenomenon. This presents a new opportunity, mainly for OTAs, as they compete for consumers in need of assistance to make travel planning easy, but could also help hotels to have an edge in competition if they make booking through an app a pleasant consumer experience.
The rise of technology has the potential to possibly eliminate travel agencies entirely as it becomes easier for hotels and guests to have direct contact with each other through Internet connected mobile devices.
Hospitality Job Market Challenges
OTA’s and the hotels they represent conflict in who has rights to the consumer’s information. For example, Booking,com refuses to relinquish a guest’s email to the hotel they are booked with. OTAs have an incentive to do this because if hotels have that information they will be able to contact previous costumers and potentially cut out the travel agency as the middleman.
However, this makes communication between the guest and the hotel much more difficult and due to the reciprocal nature of the service industry, hotels will not be able to provide the best service possible. It is often not recognized that the service industry is naturally reciprocal – when a service is purchased the consumer has to be actively involved and work with the producer to achieve the best result. Think of a haircut as an example, if the consumer does not communicate with the barber and tell them what they would like and in a sense guide them through the process then it is unlikely the transaction will conclude with desirable results for both parties. This extends to the hospitality industry as well.
If guests and hotels are not able to communicate, then it is harder to make any special accommodations that a guest may need or for hotels to inform guests of any specialized, local knowledge that could be of value to them.
The emergence of the sharing economy is expected to gain a bigger market share in the coming years. This presents the potential for creative destruction to occur as some traditional firms may be forced to close their doors if they cannot compete with new market innovations like Airbnb and Uber.
Of course the sharing economy has yet to leap over the regulatory hurdle as they continually face legal battles, so it is yet to be seen if these services will pose a long-term threat.