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| Lalia Rach, who stepped down as dean of The Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management at New York University last year, recently gave the kind of entertaining presentation for which she has become known. |
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NEW YORK—Rach was back.
Using humor, statistics and the latest in social trends, Lalia Rach discussed issues of the economy, demographics and social media with the New York chapter of the Hospitality Sales & Marketing Association International on Wednesday. Rach, who stepped down as dean of the The Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management at New York University last year, gave the kind of entertaining presentation for which she has become known.
She said hoteliers need to turn from a focus on rates to one of value, quality and the need to create “memorable, long-term” experiences for guests. While things will get better, consumer spending habits have changed for good, she said.
“We have been talking about the new normal for 24 months,” Rach said. “Kids, this is it. We’re not going back.”
Economic evolution
“In 2011, three quarters of all economic growth in the world will come from emerging and frontier countries—not from Europe and the U.S.,” said Rach, who will return to NYU this year as a clinical professor. “Africa is developing everywhere—as is the Middle East. The Chinese will be traveling as Europeans did a century ago. They are ready for individual tourism, and to them luxury is everything. But they are not looking for luxury hotels. They want to buy luxury and take it home with them.
“I do see the glass as half full,” Rach said, “but it’s not the glass you think it is. What is leading the recovery is manufacturing and not consumer spending. Consumers remain hesitant to spend. The reason is that we have recovered only 15% of the jobs we lost, and we will take four years to get back to normal employment, if ever. That’s the key.”
Spending patterns have been altered by the recession, Rach said. “People will look for discounts then put the money they saved into a luxury purchase.” But consumers also are asking themselves: “Can I pay for it?”
“We have to talk about providing long-term memories. We have to talk about spending differently,” Rach said. “Yes, consumers spent more on Christmas, but now they’re back to saving. We’ve been putting things off, and we want to enjoy things again without feeling bad. Any great hotel should value the commitment the consumer is willing to make during times like these.”
While Rach said there will be quite a bit more travel this summer, she had strong cautions. Europe (and its economic situation), she said, “scares me to death.”
Rach said states and cities in the U.S. are broke. She predicted more government layoffs and eliminated services.
“The only two states with expanding economies are Hawaii and North Dakota,” she said. “Nothing against North Dakota, but it’s not a good sign when North Dakota is leading the recovery.”
In December 2011, Rach said, “You will look back and say that was a pretty good year. It’s like when you start exercising again after a long time. The first day it feels like death is imminent. Each day gets better until one day it feels good. That will happen in December.”
But Rach cautioned that part of the recovery in 2011 will be due to a tax cut this year—something that will dampen growth in 2012.
Communication leads the way
“Communication is what’s leading us,” Rach said. “I don’t care if you don’t like Facebook, because 83% of the millennial generation lives on social media. Eighty percent of them look at their phones last thing before they go to sleep and first thing when they wake up.
“I still don’t get Facebook,” Rach said, “and you won’t reach me there. But I may not be your consumer. I’m a dinosaur; ignore me.
“Coca-Cola has the biggest page on Facebook with 22 million followers because it was started by consumers and remains a consumer-driven page. Your Facebook page is not for you to tell your customers what you want to tell them; it’s for interaction with them.”
Rach said hotels have to rethink their marketing and not rely on rates. “You’ve taught consumers to wait for bargains,” she said. “You have to show them value, quality and experience. In fact, it will be an interesting time for hotels that have put off renovations because guests will be turned off by that.”
Boomers, singles and other demographics
Rach suggested the hotel industry has been ignoring boomers at its peril.
“You can’t ignore the over 65s,” she said. “They will not be retiring, and even when they retire they frequently go back to work. They are vital and want to stay in the game.”
She discussed the 50 million “emerging adults,” those in their 20s who are not ready to settle down. She said 13% of people in that group return to live with their parents at least at some point. “They won’t wait until 65 to enjoy life,” she said.
Also overlooked by the industry, Rach said, are singles “who are still discriminated against in hotels and restaurants. Nobody talks consistently to this group,” she said.
And it’s a similar story for diversity. “Just having one non-Caucasian face on your webpage doesn’t cut it,” she said.
