Changing customer demands and new competitive threats are pushing hotels to pay more attention to guests’ experiences outside of the hotel.

Demand for local experiences is rising

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Amid growing commoditization of amenities and greater price transparency through online travel agencies (OTAs) and metasearch, lodging providers need to invest in the experience economy to strengthen their brand equity. Airbnb has been a leader in this trend since the launch of its ‘Experiences’ program in 2016, which connects users to local hosts operating a wide variety of tours and events.

Further indicative of this trend are the lifestyle hotels gaining traction worldwide. This is being driven by the demand for local experiences with meaning and an authentic look and feel. Accor has played a prominent role mainstreaming this concept by diversifying from the outset. In October 2021, Accor’s joint venture with Ennismore formally created one of the world’s largest and fastest-growing lifestyle companies and solidified the lifestyle hotel and local experience trend as here to stay.

Differentiation needs to go beyond branding

Hotels have traditionally operated in a silo of well-defined brands. This has made it difficult for hotel chains to create differentiated experiences on property, particularly in the midscale and upscale segments, which often have high frequency guests. In today’s competitive landscape, brands can positively impact consumer loyalty and perceptions through onsite guest experiences. Having a concierge with knowledge of the local community, décor reflective of the local culture or offering in-room destination guides is a start. However, players should be wary of just being a “portal” into the local culture, and instead be an active participant in the community, engaging locals and adapting to the local context.

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According to a GlobalData survey*, 76% of global respondents consider ‘authenticity of brand/product’ as an essential or nice to have feature when making a purchase. This suggests that consumers are wanting hotel stays that offer an authentic experience. To have a competitive edge, players need to facilitate experiences that extend beyond the hotel. For instance, Four Seasons Hotels & Resorts offers more than 40 different “Extraordinary Experiences” around the world, ranging from a private helicopter to Mexico’s agave fields for a tour and tequila tasting at the Jose Cuervo distillery to learning the art of Thai boxing in Koh Samui.

This trend is not limited to luxury

Glimpses of this trend can be best seen in the luxury end of the spectrum. For instance, Four Season Hotels & Resorts and Peninsula Hotels provide guests exclusive and highly curated, local experiences. However, the ability to offer curated activities spans all brand categories. Brands ranging from Airbnb, Expedia, and Wyndham to Marriott  are all offering an experiential element to their offerings that goes beyond just giving guests a place to stay.

Wyndham, whose portfolio compromises a number of economy brands, offers discounted or complimentary experiences for its loyalty members in select destinations. The experiences offered by Wyndham are operated by a local tour operator and include a street food tour in Mexico City, a desert safari in Dubai, a pizza walking tour of New York City and a cooking class in Shanghai. As travelers’ expectations for experiences grow, hotel chains’ integration of such experiences gives users the option to build their itinerary and keep their hotels competitive with other lodging player, Airbnb, and OTAs.

*GlobalData Q3 2022 Consumer Survey – 21,267 global respondents