Guests want tech savvy operations, crave adventure and exploration, and exciting new personalised experiences that are transformative and sensory.

So why has the hotel industry, in general, been slow to understand the potential value of creating on-premise experiences and curating local tours and activities for their guests? I think it’s fair to say we have been conditioned to think hotel luxury is defined by quality, product and service delivery, with the emphasis being placed on the physical hotel stay. But times have changed. We live in the era of “the experience economy” and hotels need to understand they are no longer in the business of just offering a bed for the night. Guests expect and deserve more from a hotel experience today.

The experience economy

Believe it or not, the Experience Economy was first presented more than 20 years ago by B. Joseph Pine II and James H. Gilmore who suggested a fundamental change in the very fabric of advanced economies. In simple terms, the experience economy challenges organisations to progress up the value chain from a traditional commodities business to creating and delivering experiences. Pine and Gilmore argued that businesses must create memorable events for their customers and that memory becomes the product: the “experience”.

Although Pine and Gilmore initially envisaged the concept of the experience economy in business, it is certainly appropriate for hospitality and tourism. They further observed the growing importance of experiences becoming transformational, transcending beyond the actual experience and moment in time to transform a person and aspects of their lives. Transformative experiences are where the real value proposition lies for hotels and their guests. It is more relevant today given the consumer shift to slower and more meaningful travel where people might travel less frequently but tend to stay longer.

Consumers place more emphasis on purposeful experiences instead of possessions

As we become increasingly time poor, we prefer experiences over commodities. We’ve become less materialistic and more excited to share real experiences with friends and family. Material experiences provide a short term happiness boost, whereas experiential purchases improve happiness and well-being over the long term.

There has been a seismic shift in the way consumers place more emphasis and importance on purposeful experiences and relationships instead of the accumulation of possessions. This change in consumer behavior shows no sign of abating, and the last few years has prompted consumers to step back and recalibrate, assessing what is important in life more than ever.

In this digitised world where Zoom and Team calls have dominated our lives in recent years, finding new ways to engage the senses and create memorable experiences is more important than ever. Travellers are no longer interested in simply booking a hotel and staying put, they want experiences and cultural activities that will enhance their time away. Hotel managers need to adjust to meet this shift in consumer demand, if they are to capitalise on consumers’ change in spending habits.

Walt Disney, the first ever chief experience officer

Walt Disney believed and understood that by creating dreams and preserving the magical guest experience, lifelong bonds would be formed with his customers. It’s no surprise, therefore, that 70 per cent of first-time Disney visitors return again, and that the Disney brand is one of the most powerful in the world, in large part because they connect emotionally with their guests resulting in extreme customer loyalty.

Hotel managers who embrace this approach will benefit. St. Ermin’s Hotel, an independent hotel in London, has teamed up with Travel Curious to do just that and to offer engaging guest experiences. The management team has created a variety of on-premise and local activities ranging from classic afternoon tea to their very popular City of Spies Tour which incorporates the history of the hotel.

So, what does all this mean for hoteliers?

To put things into perspective, millennials have more spending power than any generation before them, with an estimated $200 billion per year, and some $10 trillion lifetime spend as a generation. They are a generation that travel more frequently and 70 per cent say that funding travel is a key motivation to work, second only to paying for basic necessities. According to a recent report, millennials are leading the charge to spend big on luxury travel and relaxation and therein lies the potential opportunity of the hotel industry.

To quote Walt Disney: “We keep moving forward, opening up new doors and doing new things, because we’re curious…and curiosity keeps leading us down new paths.”

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