BREXIT: UK’S CHAOS DIVIDEND
The UK Government is in turmoil following Theresa May’s decision to cancel the planned Brexit vote in Parliament – yet that could mean a positive upside for the UK’s wellness and hospitality sectors.
The Prime Minister’s situation looks impossible as she tries to find a way forward. And every economic forecast (including those by the Government) has come to the conclusion that any form of Brexit will make the country worse off in the short term, even more so with a hard Brexit. So where’s the silver lining?
Put simply, demand in wellness and hospitality is highly sensitive to currency fluctuation and its effect on pricing; when the British pound depreciates relative to other currencies, inward travel to the UK increases – and vice versa.
“When the British pound depreciates relative to other currencies, foreign travel to the UK increases”
Within minutes of the PM’s capitulation, the British pound followed suit, trading down roughly 1 per cent against both the US Dollar (to an 18-month low of $ 1.26), and the Euro (to €1.105). Any further bout of bad news is likely to keep the value of sterling depressed compared to other major currencies. This is bad for the UK economy, but a net positive for UK hotels, spas and the broader wellness and hospitality sector. Brits are more likely to staycation in the months ahead – while for consumers in other countries the value and affordability of a visit to the UK looks increasingly attractive.
Thierry Malleret, Managing partner Well Intelligence
A LOGO IS NOT A BRAND
The number of air travellers globally is set to hit a new record of 808 million by the end of 2018, up from 415m in 2012, according to Global Traveller Report (Horizon Consumer Science). And yet average spend in the travel retail market has shrunk to $491 per trip, $170 less than in 2012. China is the exception, both with traveller numbers increasing and spending up.
So why the overall drop? One answer is that travellers are increasingly preferring to spend on experiences over material goods but another is related to having no stimulus or inspiration to do so.
In his new book This is Marketing, best-selling author Seth Godin highlights big flag hotel groups as examples of companies that have a logo but not a brand. His point is that they all feel the same. If Nike created a hotel, he says, you’d know what it would be like; but the same cannot be said if Hyatt created a running shoe. There’s no meaningful difference, he argues, between staying at a Hilton, Marriott or Hyatt property, and decision making within this category is solely based on price, not experience or any form of emotional connection. In short, price comparison has become much simpler and brands aren’t creating the differentiation to move away from being a commodity. Those of us in the know, might leap to Hyatts defence, citing the acquisition of Exhale and Miraval as an integral distinction but what Godin is saying provides valuable clarity through the eyes of a frequent business traveller and marketing guru.
“Travel companies aren’t creating the differentiation to move away from being a commodity”
Hospitality is not known for moving fast but the pressure is on. The changes in consumer spend and expectation patterns are hurting businesses that have not evolved with the change in demand. Whilst these numbers do not give answers they do provide insight. General spending may be down in travel retail but we know spend and demand for wellness travel is increasing (now $638billion according to GWI), in both trips and revenue receipts.
Anni Hood, Managing partner Well Intelligence
CHECKING IN TO CHECK OUT YOUR FELLOW GUESTS
New evidence that hotel and lodging providers are moving in on the meaningful network connection opportunity: Marriott’s Moxy brand has teamed up with Bumble, the female-first networking app for dating, friendship and professional networking. And Generator, the boutique hostel brand, has announced its own proprietary app with swipe and match features, allowing guests to connect with other travellers.
Making connections with other people is one of the ways we achieve happiness and wellbeing. And it’s big business. Dating site Tinder is worth $3 billion at a conservative estimate, while co-working operator WeWorks is valued at $20bn.
The proliferation of private member clubs also tells us how important meeting other people is.
A few weeks ago (Edition 4) we highlighted the opportunity for hotels in gateway cities to take greater advantage of this need for connection – and the risk that private member club brands will beat them to it.
“Creating a social scene with purpose in hotels has become less of an option and more a necessity”
Solo travellers are the norm in business hotels and an increasingly significant slice of the overall market; at Generator, for example there has been a 17% rise in solo guests staying since 2015. In that context, creating a social scene with purpose in hotels has become less of an option and more a necessity. It’s about much more than dating – knowing you’ll be with like-minded people feeds a universal sense of wellbeing.