Hospitality 2010: An In-Depth Report Into Driving Shareholder Value In The Hospitality Sector - A Five Year Wake Up Call? - Part One.

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Hospitality 2010: An In-Depth Report Into Driving Shareholder Value In The Hospitality Sector - A Five Year Wake Up Call? - Part One.

FOREWORD

Welcome to Hospitality 2010 – our vision into mega-trends that will affect shareholder value over the next five years.

New York University (NYU) and Deloitte dedicated a joint team of professionals to develop a "Vision 2010" of the global hospitality industry. Our vision is supported by research, analysis and structured interviews with leading industry CEO's.

The report focuses on the strategic implications of the mega trends that are shaping the future of the hotel industry and which generate most shareholder value.

The mega-trends we have selected for review at this stage are:

Brand

Emerging markets

Human assets

Technology

We have included a section on air travel as this holds key information which relates to the changing shape of the hospitality sector by the year 2010.

We also recognise the importance of the business model and regulatory requirements and accordingly have identified these areas for review at a later stage.

We hope you find this report useful and we look forward to any feedback you may have and the opportunity to discuss with you the aspects affecting shareholder value in your business in more detail.

Alex Kyriakidis Global Managing Partner Tourism, Hospitality & Leisure Deloitte

Dr. Lalia Rach Associate Dean and HVS International Chair Preston Robert Tisch Center for Hospitality, Tourism and Sports Management New York University

EXECUTIVE SUMMARY Question: How Many Drivers Of Change Are There In Our Industry? Answer: Far Too Many! To focus our strategic analysis, we used the Deloitte Enterprise Value Map' to filter all the possible drivers of change on the basis of their potential impact on shareholder value which, whether a public or private enterprise, is the key measure of financial success. We concluded that five "mega-trends" will have the greatest impact on shareholder value namely, Brand, Emerging markets, Human assets, Technology and the Business model.

Brand Is The Way Forward As most gateway cities reach product saturation, brand, long held as the most important value driver in consumer business, is receiving the industry's full attention. The changes in customer lifestyle, demanding experiential stay, will mean that brand choice, as opposed to location choice, will lead the way in the future.

While brand is much talked about, there is no consensus within our industry on what it means or how it should be measured. We take the step in this report of proposing an industry definition for brand and a framework for the development of brand metrics. Interes...

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