viabledesign

The luxury hospitality sector is outpacing the average market dynamics but is simultaneously grappling with talent shortages, inflation risks, and low occupancy rates during off-season periods. Over the past 15 years, seasonal closures in upscale vacation destinations have lengthened. Today, it is common for Mediterranean resorts to close from mid-September to mid-May, and for European Alpine destinations to shut down from late March to mid-June and from mid-September to mid-December. These breaks are often justified by the need to give hard-working teams a break, conduct maintenance or construction work, and address the challenge of generating profitable business during unfavorable climate conditions.

During the pandemic, rising inflation significantly altered the macro-economic climate with higher interest rates and ongoing price pressures. This greatly impacted the profitability of investors and owners in the hospitality industry, leading to increased interest costs and longer amortization cycles. Additionally, operational costs for operators grew, putting pressure on the offerings side of the hospitality business. In response, prices were raised, service levels were reduced, and significant cost management measures were introduced. However, these efforts were often insufficient to maintain profitability targets, making profitable growth under demanding conditions more essential than ever.

Recently, a shift towards a more profitable business model has become noticeable. While high-season business remains promising, the potential of off-season business is now gaining attention. Fortunately, there is a growing interest in off-season stays from the demand side. Not only more price-sensitive guests or seniors, but also an increasing number of guests from all age groups are seeking a calmer and healthier way of relaxation. In the business-to-business sector, smaller conferences, promotions and offsite meetings are currently driving demand. At first glance, this appears to be a win-win situation for the hospitality industry and its clients, offering the opportunity to extend business further. However, a closer look is essential.

Therefore, understanding the wants and needs of targeted guests and creating innovative offerings that include appealing elements on both personal and social levels is key. In times of cost pressure, considering cooperation strategies ("buy") is essential, especially when vertical integration ("make") is too expensive and slow. This approach to innovation requires new thinking that explicitly includes destination marketing, not only from a communication perspective but also in terms of incubation and execution to vitalize the ecosystem during off-seasons. Ideally, destination marketing sets the framework for a region, supporting respective stakeholders in driving awareness and demand generation.