Interview with Vladimir Preveden, managing partner, Roland Berger GmbH, Austria
VIV: Which key trends do you expect in tourism in the next 2-3 years in our region?
Tourism is a continuously growing industry and this will be true also for the Adriatic region. I also do not expect that Turkey, northern Africa and even Greece will recover as target destinations in the mid term, which will hold the inflow into the Adriatic region on a consistently high level.
Programs to prolong the season and destinational development concepts will bear fruits for the more proactive destinations and tourism players. Due to a high demand in peak season, which is showing an upward trend in Croatia, and the fact that destinations are already highly booked, it is necessary to increase investments in higher added value offers, such as hotels and resorts that bring a change in the structure of guests, season extension, and higher revenues for the entire destination, and enable the development of additional services and reasons for arrivals outside the high season.
Driven by the technological side we see that a separation has been initiated into tourism players who invest into modern online and especially mobile channels and the ones who will have a hard time to survive the currently unfolding digitization wave.
And on the guest side, the Gen Y and Gen Z, namely the ones born after the year 1980 in a fully digitizing environment, will make up 44 % of the population in Europa in three years. They are worth mentioning, as they bring along totally different value sets then the other guest segments. I am speaking of sharing instead of owning, meaning instead of brands, community instead of fences and everything in real-time on high technological level.
Overall, we will see a stronger seperation of winners and losers in the tourism industry, which will show effect in not more than a few years from now already.
VIV: How is the digital transformation of the economy and consumer behaviour affecting hotel management, globally and locally, and especially in the leisure travel segment?
Globally or locally does not make a difference. It is affecting hotel management significantly as managers have to first understand that the changes and the speed of change are significant and the impact is significant as well. After they gain this understanding, they need to outline a target picture for their business on where to company wants to play in five years and in ten years. Where will the profit come from, considering the above mentions trends and what needs to be done along a roadmap until then? And then, you need to transform the organization in terms of entrepreneurial culture and agile working form so you can implement successfully. Overall, not only hotel management, but also employees across the entire organization will have to build up new skill sets like digital marketing, data analytics, predictive concepts, artificial intelligence and psychometry.
VIV: What are the key trends in applying technology and digitization to the hotel business and services?
In our recent international study called Hotel Industry 4.0, we have analyzed the status and trends of digitization in the hotel industry. We have found that the status quo is not satisfactory. While a guest has on average 21 mostly digital touch points until he makes the actual booking, hotels typically have a website and maybe a facebook site and that is it. What a waste of potential. We have found out in general, that a key success factor for a hotel business is to address the guest along the entire guest journey.
VIV: What do you think which tourism companies are leaders in terms of innovation and digitization? Can you name some of the successful projects? What is the role of small start-up companies in these processes?
AccorHotels has introduced the Jo & Joe concept a few months ago. In my point of view it is revolutionary as it completely redefines the approach towards the Gen Z and Gen Y segments in the accommodation segment, topping any other successful concept in this segment. In the development of the concept, next to the Accor Team, a shadow team was introduced, made up of the future guests and external experts. Together, they formed a team to define the concept. It also redefines the role of the management. The hotel manager is accompanied by a community manager and an event manager and all three are responsible for the success of the hotel.
VIV: What is the role of the little start-ups in the whole process?
Within the overall innovation process, start-ups play an essential role. They are the drivers of creativity and innovation. As most of them will fail, it is important to be in touch with many of them, to continuously scout for emerging start-ups and to be able to put them into the overall context of your business and the target picture you defined. It is fairly easy to do so, via internet search, own learning journeys to start-up hubs like for instance Barcelona in the tourism industry and start-up pitches.
Hardly any accommodation group is systematically cooperating with start-ups and thus using their innovative potential. Other industries are far ahead of the accommodation industry in this respect. A good example however is Marriott, who has launched its own high-tech accelerator program for hospitality start-ups called Marriott Test Bed, only a few months ago. This will secure a strategic competitive advantage for them for years to come and I can only encourage other hospitality groups to act fast on this topic. The winner takes it all is a true finding in the digital age.
We as Roland Berger have launched our own digital hub called Spielfeld, in Europe’s hottest start up centre, in Berlin, to systematically work with start-ups.
VIV: Tourists are looking for local, authentic experience and great offers in destinations. Who is most responsible for creating the offer and experience? What role can technology have in the process?
To be honest, the most responsible authority is the destination manager. He has to involve all stakeholders in the destination like the accommodation industry, the hospitality industry, the retail shops, the public transport providers, the cultural institutions and the city authorities and he has to align the target picture for the destination, the actions, milestones and responsibilities on how to reach the targets and to track the progress. Especially in the Adriatic region, we have market leading resorts like for instance your Valamar Isabella Resort, which in my opinion is a leader in the entire Mediterranean region. However, as soon as you leave the resort, the destination is not supporting the premium positioning the guest is expecting. So there is a misfit in perception and guest experience during the stay and is not healthy.
Of course it is important to have a high connectivity for free in the destination. This is a basic thing but not fully understood by destinations so far. On top of that, data management is the hottest emerging trend in the digitization of destinations. How to identify the individual guest along his many stays in a destination, how to link him to the booking process, how to customize the offering and thus excel in guest satisfaction? These are the key questions and the answers will define who a winning destination will be in the near future.
VIV: Virtual reality and robots are already present in tourism – what can we expect over the next ten years?
Virtual reality is a nice thing to promote your offering on remote locations, like for instance fairs. Augmented reality is an even more important, already fully developed technology. It allows the guest to understand the offering better and to guide him through a destination or resort and to couple it with cross-selling opportunities. Robots are emerging, like for instance Pepper, the humanoid robot by Softbank, whose key feature is to understand human emotions. The robot is rolled out massively at the moment, unfortunately not in Europe but in the USA and across Asia. It represents a true technological turning point in human history. Pepper can interact with guests, give them guidance, make recommendations for their trip and sell simple products. First experiences show that user excitement as well as selling success is massive.
VIV: Speaking of tourists – the two biggest consumer groups (baby boomers and young adults) have completely different habits and expectation for their travels. What does this mean for hoteliers?
Say bye bye to one-size-fits-all concepts. Hotel concepts and assets need to me extremely narrowly positioned to their target groups in order to be able to meet the expectations of the target guests. Do not forget, especially the Gen Y searches globally and when they decide, they want their expectations met. If not, they will post it to a global audience and you do not want to have that.
VIV: The UNWTO announced this year as the year of sustainable tourism. What is sustainable tourism, and what does Croatia need to do to put sustainability into focus?
Sustainalbe tourism means that you provide your services and operate your business without harming the resources in your destinations and without causing frictions with the local population. In other words, respect and protect the environment by having water recycling, CO2 neutral energy production and consumption, usage of energy efficient materials and modern building management, supporting local and organic food but also showing respect to your employees and empowering them and living alongside the local inhabitants instead of making attractions for the guests only. Croatia is a long way from sustainable tourism in my point of view as there are only very few destinational master plans in place, which will guide the initiatives and the stakeholders in a destination. Without them, there will be no sustainability in a destination.