Hotel CEOs say demographics are the future of travel

Take skift

From a rising middle class to an aging population, the most powerful leaders in the hospitality industry agree that demographics are crucial.

Jos Corder

Yes, AI will be everywhere one day, and yes, lifestyle hotels are the new trend. But if you want to track the future of travel, the answer lies in the demographics.

A “bulging” middle class, an aging population and a global shift east are among the most powerful forces in the industry, according to recent comments from global hotel CEOs at IHG, Accor, Hilton and Marriott.

Hilton CEO Chris Nassetta said at a conference in Saudi Arabia last week that responding to demographic shifts would help usher in a new era of growth. “My own view is that we are at the beginning of a golden age of travel,” he said. “Three things are the driving force for this. One of them is demographic: by 2030 we will have more than five billion people in the middle class. The growth of the middle class is enormous.”

“If you wake up in 20 years and look at the growth in the sector, most of the growth will be in the mid-market. Why? Demographics. The middle class is the bulge that will drive travel demand.”

Hilton, like all its competitors, has hotel brands ranging from budget levels including Garden Inn and newcomer Spark, to luxury flags such as Waldorf Astoria and Conrad.

Last year at the Skift Global Forum, Nassetta said that while Spark isn’t “the sexiest” brand in Hilton’s lineup, it offers some of the strongest growth opportunities thanks to its mid-range.

Skift CEO and founder Rafat Ali put demographics at the top of the list last year in a piece on the future of travel. And we’ve identified a megatrend around the way travel responds to demographic shifts.

Focus on the middle class

Anthony Capuano, CEO of Marriott, also agreed in Riyadh that hotel operators should focus on travelers of all income levels.

“We all see the consumer divide. We see that high-income households travel in the higher segment, and that lower-income households also want to travel. That’s why we’ve all built portfolios in multiple price categories. The pandemic caused a brief pause, but we are all talking about an explosion of the middle class.”

Capuano said this laser focus on the middle class isn’t just “intuition,” but is driven by reams of consumer data that Marriott and other operators collect from users who spend money with their branded credit cards.

He added: “That is not our intuition. We all have major brand credit card platforms, so we have great data on real-time consumer spending. That willingness to prioritize travel and experiences applies to all demographics.”

Go local first

Sebastien Bazin, chairman and CEO of Accor, said luxury hotels should be repurposed later in their lifespan, with the economy and mid-market being where the real business happens, and be there to serve local demographics.

Bazin said on stage: “We must understand that travel starts in our own country. We all get confused when we think about (traveling to) other continents. But 70% of trips, in terms of volume, are domestic. It will also be in the GCC. 80% of turnover.”

‘That’s why it’s so easy to read. It started with America fifty years ago, then with Europe forty years ago, and then with China for the past 25 years. Then India for the next twenty years. It’s all about demography, the emerging middle class and the local population.”

“Luxury is at the end of the journey.”

An aging population

On the same stage, IHG CEO Elie Maalouf looked at another rising demographic: older generations. He said: “It is prevalent in North America, Europe and China – the aging population. There is a wave of retirees who are healthier and wealthier than any generation before. One of the main things they want to do is travel.”

“They want to experience the world. They want to spend their money. Go first class or their kids will. Demographics…travel is moving east. You have to be strategic. You can convince yourself that you can keep a stock by doing nothing.”

The younger generation

The younger generation is also crucial. Accor’s Bazin said these travelers are the ones who need to be listened to and that winning their favor is the new “name of the game.” He also said their travel habits will require developers to better tackle overtourism.

“The new generation may be much more likely to go to remote places than to Venice and Barcelona, ​​for example. The name of the game, those between 20 and 30 years old, you have to listen to them.

IHG’s Maalouf added: “I don’t think there is an overtourism problem; there is an over-concentration of tourism in a few important places. We need to work with governments to distribute travelers differently.”