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Sir Martin Sorrell’s Forecast for 2010,
Is Your Hotel Looking Ahead?


November 10, 2009 - Sir Martin Sorrell finally appeared at Ad Tech NY this year, after turning down the invitations of the last three years. He opened Ad Tech with his keynote presentation on ‘What’s coming in 2010.’ He focused on New Markets, New Media, and Consumer Insights. 

Sir Martin Sorrell is the founder of WPP, one of the world’s leading communications services groups and a member of the FTSE-100, FTSE-Eurotop 300, the MSCI and BusinessWeek’s Global 1000 companies. GroupM, JWT, Ogilvy and Mather, Young & Rubicam and Grey are all part of the WPP Group.

Sir Martin holds an MBA from Harvard University Graduate School of Business Administration and an Honorary Doctorate from London Guildhall University. He is on the Board of Dean’s Advisers of Harvard Business School, and on the Board of the Indian School of Business. He is a governor of London Business School, a member of the advisory board of IESE in Spain, and also on the Dean’s Advisory Council for Boston University School of Management, and Deputy Chairman, London Business School.

Sir Martin was under the impression that he would be speaking to a small intimate group ad Ad Tech but that was not the case as the large room was completely filled. He chose not to have a formal presentation on stage, and instead he walked through the crowd as spoke about the future of advertising in today’s changing landscape and how to work with these changes. We have compiled Sir Martin’s thoughts on the topics below and how they are relevant to your hotel.

Sir Martin’s Forecast 

Mobile Phones
Sir Martin began his talk with a theme that was repeated throughout the conference, and that is the mobile phone. Mobile phones play an important role in the world today and this will continue in the future.

He stated that China and India have the largest growth rate in mobile and that the corporation China Mobile rated number 5 in the top most powerful valuable brands in the world. 

He said that growth in mobile in the more traditional markets of Western Europe are led by the following five countries; The U.K., France, Germany, Italy and Spain. 

As far as WWP is concerned, he stated that mobile advertisements have not been as successful as quickly as they would like to see.

Change from Traditional Agencies 
Sir Martin stressed that agencies need to change from their traditional structure and adapt to the global markets and digital media.

“People who run agencies tend to be resistant to change. If you spend 10 to 20 years trying to get to the top, you don’t want to change. You want to spend the last 3 years of your time to go around the world and enjoy yourself with some stability. The last thing you want to do, as I do, is get up and deal with massive change every day,” said Sir Martin. 

Recession
Sir Martin wasn’t very encouraging about the recession and stated, “I have worked in Advertising for 33 years and I have never known times more focused on cost than there are now.” 

However he encouraged companies to invest in brands in times like these and said they will come out stronger when the recession is over.

He stated that corporations are more open to digital media now because it gives them quantitative opportunities to evaluate spending in ways they never have before. 

Growth and L-U-V
One of the main points of Sir Martin’s keynote was how the growth of developing countries and new markets are affecting us, and he stated, “100% of the growth in our 2007 - 2008 came from growth in China and growth in India. In 2009 growth in China has been more than 100%.”

In regards to economic recovery Sir Martin stated that the world is operating at different speeds and he referred to the idea of L-U-V, first coined on a blog entry by Stella Dawson, Treasury correspondent of Reuters. L-U-V is meant to represent economic recovery in the following way:

• The L-shape represents the recovery in Western Europe where there is slow recovery after a long drop.

• The U-shape represents the recovery in the U.S. (he included Spain in this category and then noted they have dropped down), where there a feeble recovery that takes a little longer than a V-shaped one.

• The V-shaped recovery represents the countries of Brazil, Russia, India and China (often referred to as the BRIC countries which was first used by Goldman Sachs) where there is a short recession with a quick rebound again. 

New Markets, New Media & Consumer Insights
Sorrell said if he had to sum up WWP strategy in one sentence it would be: New Markets, New Media, and Consumer Insight. 

• New Markets
The shift in the market is clear with the focus on the fast-growing developing economies of the BRIC countries (Brazil, Russia, India, and China). There is a large population growth in these countries and an increasing percentage is joining the middle class. South America is also an emerging market.

Sorrell said that every single client they deal with is focusing on those parts of the world for growth. He said that 26% of WPP business was in these countries and he predicts that will increase. 

• New Media
Sir Martin states that digital and new media are the strongest forces of growth and the majority of his clients spend 12% to 13% of their world-wide budgets in new media in one shape or form. He believes this will increase significantly over the next five years to 20%.  New media accounts for almost 25% of WPP’s revenue. 

• Consumer Insights
Sir Martin stated that a large part of WPP’s business is data information. He said they are the fourth largest information service in the world. “If we were starting from scratch we would have tried to bring these three elements more closely together; media planning and buying, digital piece and the data piece,” said Sorrell. 

He referred to a market research project his company will be doing with Google on validating the importance of web-based marketing. Sorrell stated that he believed that Google has become even more important in the last 6 months as they have focused more on core products of Search and Mobile Search. 

Sorrell also brought up product overcapacity and stated that most industries, such as the auto industry, is working with an overcapacity of products. He also stated that there is an under capacity of talented workers and he expects that this will worsen as a huge part of the population begins to retire.

Growth in Retail
Growth in retail will become a powerful thing. Some of the most fundamental change is in retail. He stated that Walmart controls 8-10% of the US in retail services and Tesco is the leader in the U.K. Companies that have immense power in the domestic market will have stronger buying power as they move to markets around the world. 

Doing Good is Doing Good Business
Sorrell states that corporations will embrace environmental friendly policies and fair business practices. Corporations today are becoming more responsible and are working towards creating products that are more environmentally friendly. Consumers would rather buy from companies who are more environmentally conscious than those who aren’t. 

Governments Have Become Major Clients 
Governments around the globe are taking initiatives to supply financial stimulus packages to accelerate the growth of the sustainable economy globally.  He stated that the governments are spending trillions of dollars on sustainability related spending. 

Branding
There are many new opportunities for brands in this new era. A cultural shift means corporations can change their point of view, or how the consumers perceive them. Sir Martin states, “You can have innovation without branding, but you can’t have branding without innovation.” 

Internal Communication & Structural Change
Sir Martin said the biggest problem for a chairman is communicating internally strategic and structural change. New Media has given the CEO opportunities to communicate in a quick flexible way like they never have before and that has implications. He used WWP as an example and said that communicating in a corporation that is multi-branded is very difficult. 

He said it was true that companies are becoming more global, it is true that we are seeing consolidations, but as companies become larger and become more complicated, at a country level there is still an intriguing role for country managers. We are not going to go back where we were 10, 15, or 20 years ago, but we are going to see country managers almost as ambassadors, or stronger, dealing with governments, dealing with technological change, dealing with CSR (Corporate Social Responsibility), dealing with education, and dealing with research & development at a company level.

See video at end of this article of Sir Martin Sorrell discussing this topic. 

What’s the Role of the Agency in the Changing Landscape?
It’s about strategic thinking. We are embracing technology in a way that traditional media hasn’t done before. Agencies must plan, place, and measure media. It’s about creativity in a much broader sense. He also stressed that the lines between advertising and editorial are becoming more blurred. 

What Does This Mean for the Hotel Industry?

Much of what Sir Martin discussed is very relevant to the hotel industry. Although he didn’t discuss specific industries let’s look at what his forecasts for the future can mean to your hotel. 

Incorporate Mobile Phones in Your Marketing Budget
Many people are now ‘on the go’ and they use mobile devices such as the iPhone, to search the web, send emails, and use the thousands of apps available. Many markets such as Asia Pacific are worlds ahead of the U.S. in mobile usage, but we will catch up.  Hotels must take this into consideration for the future and integrate mobile websites and mobile marketing into their budgets. 

Expand to New Markets and The BRIC Countries 
The BRIC Countries (Brazil, Russia, India & China) are projected to dominate the global economy by 2050. You may already have properties in these countries or you may be considering acquiring some. 

At the Global Travel & Tourism Summit last May, Luiz Barretto, Brazil’s Minister of Tourism stated the following about the travel industry in Brazil: 

The flow of international tourism also rose in 2008.  More than 5 million foreigners visited Brazil last year, leaving here almost US$6 billion, or 16.8% more than in 2007 – an historic record.

In addition to the flow of overseas tourists, it is important to point out that Brazil is like a continent, with a potential internal market of 100,000,000 tourists.  Eighty-five per cent of tourist activity in this country is sustained by Brazilians themselves.  It is this great internal consumer market that explains the good results for Brazilian tourism, even in the face of the adverse international scenario and the economic downturn in the most important tourism source markets.

We have shown a robust performance since the beginning of 2009, when Brazil was at the peak of its summer.  The sector has grown by about 20% in comparison with the same period in 2008.  The increase has occurred in almost all segments of the tourist chain: hotels, airline companies, car rental and among tour operators and travel agencies.

I am certain that these results are a reflection of the combined actions of private companies and the Brazilian Government.  In the past six years, the Ministry of Tourism has invested US$2.5 billion in infrastructure for tourism destinations.  And that number does not include the significant contributions of the Brazilian Government in the context of the great national investment plan for infrastructure that is fully underway.
In the next few years, in addition to the resources that are in the budget of the Ministry, we will have another US$1 billion from the Inter-American Development Bank, to be spent exclusively on tourism infrastructure.

Brazil is also preparing for the 2014 FIFA World Cup and it is estimated that it will bring in 500,000 overseas tourists. Then of course there is the 2016 Summer Olympics. According to CNN the games will be held in four zones with varying socioeconomic characteristics; Barra, Copacabana, Maracana, and Deodoro. 

Market Your Hotel With New Media
There is unlimited potential to market in Digital Media in the Hospitality Industry, and hotels need to incorporate this in their marketing strategies. This includes Internet Marketing, Videos, Social Media, Organic Search, Paid Search and Reputation Management, just to name a few. 

Consumer Insights
Hotels now have an ability as never before to gain insight about their consumers. There are so many inexpensive and effective ways to do so. Collect your guests’ email addresses and create profiles which you can segment into groups (i.e. type of traveler, age, marital status, and personal preferences). You can manage these profiles in your database and send out very targeted email campaigns to the separate groups. 

Interact with your guests in social media sites such as Facebook and Twitter. Read their reviews of your hotel on review sites such as Trip Advisor and respond. Find out who they are, what they like, where they spend their time. When you know who your guests are you can target your message to them in the places where they go, online and offline.

Go Green – Go Global
It is a given that corporations should be practicing policies that are environmentally friendly and culturally aware. Your guests will appreciate this as well.

Branding
In this new era you have new opportunities to brand yourself, whether it be to create a new brand or re-invent and existing one. Be creative and create a niche. 

Watch Video

Below is a clip from Ad Tech of Sir Martin Sorrell’s presentation.

If you would like to learn more about Internet Marketing for the Hospitality Industry please call at 978-465-5955 or send an e-mail to info@orourkehospitality.com

O’Rourke Hospitality Marketing, 44 Merrimac Street, Newburyport, MA 01950. www.orourkehospitality.com.

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Contact: 

O’Rourke Hospitality Marketing
44 Merrimac Street
Newburyport MA 01950
http://www.orourkehospitality.com
 

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Also See: Southwest Airlines is Riding the Blogosphere Like a Wild Horse! / October 2009
Don’t be Invisible Online - Learn which Websites Travelers Use to find Hotels and be Seen! / September 2009
What can a Blog do for my Hotel? The General Manager from Hawthorne Hotel Shares Insight! / September 2009
How to Edit, Export, & Upload Your Hotel Videos – Easy Technical Tips / September 2009
How Hotels Can Build Links by Leveraging their USP, PR, and Organic Growth; an O’Rourke Video Interview / September 2009
Will Google Caffeine Affect my Hotel SEO? / August 2009
Don’t Hide From Trip Advisor Reviews! / August 2009
5 Ways Hotels can Improve and Track Return on Investment from Twitter – Oh wait, there is no investment! / August 2009
Leverage Blended Search and Boost your Hotel’s Search Ranking Position / August 2009
How to Optimize Your Hotel Website for Natural Search / August 2009
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