2023 trends in hospitality from a road warrior’s perspective

While it’s been a year of resurgence, it has also been one full of ups and downs for the hospitality industry. Conferences came back and business travelers hit the road once again. The demand in leisure travel bolstered the industry in the summer and fall.  

We have seen steady growth in quarterly results from many of the big brands in our industry and there is no shortage of acquisitions and new builds in process or on the horizon. Nevertheless, there are still hurdles to overcome as we head into 2023. As we get ready to finish up 2022, it’s time to take a look at some of the trends we anticipate will dominate our industry in the coming year.

A “bumpy” road ahead

While the last few years have been difficult, the road ahead is littered with uncertainty. Rising operating costs, persisting labor shortages, inflation, high-interest rates and a looming recession (which is expected to be mild – one to two quarters in mid-2023) are all making for a bumpy road ahead. 

As one regional chief commercial officer said recently, “Revenue has to continue to increase by 15% next year just to make up for increased costs.” While the industry has learned to operate much leaner, it will nevertheless continue to be an uphill climb.

American Express released its Global Business Travel report calling out that a world without travel has taken a toll on economic growth, social progress and human happiness. This is certainly true for those working in the hospitality industry.

However, we are beginning to see a light at the end of the tunnel as more and more businesses reopen their travel books. In fact, many are looking to hotels to help them re-engage workers through kick-off parties and events that bring together the remote, hybrid and in-office worker. So, while the year ahead may be a “bumpy” one, it certainly will be one filled with innovation and new ways of doing business. 

Blended accommodation

The notion of dividing lodging into traditional accommodations (i.e., hotels) and alternative accommodations (vacation and short-term rentals) doesn’t make sense anymore. Consumers are seamlessly moving between all kinds of lodging, including Airstreams such as those provided by Autocamp, tents, short-term rentals and hotels. The industry must stop putting up walls and silos and be prepared to cater to all kinds of travelers, regardless of how they want to stay. We have seen Hyatt acquiring Apple Leisure Group, which focuses on all-inclusive accommodations, and Marriott continuing to expand their Homes and Villas product as examples of this.

Atomization of inventory

This trend will certainly continue to accelerate. We have talked for a long time, nearly 10 years, about attribute-based shopping (ABS) in the industry, without much obvious progress. However, there is undeniable progress. Almost all major brands have signaled that ABS is on their radar, and an increasing number of startups are starting to offer ABS-like capabilities to independent hotels. 

A number of articles, including research by StayNTouch and NYU, have shown that customers are receptive to ABS and hotels can see increased conversion when done right. This report demonstrated that 68% of travelers believe ABS would provide clarity when booking a hotel, with 46% willing to pay more to select their preferred room attributes. 

As studies continue, and software companies face and solve the technical challenges of using an attribute model in distribution systems, we are already beginning to see advancements in the potential to pave the way to ABS.

Five million reasons to automate

All the above (increased cost, less labor, increased complexity) point to one thing - more automation. Automation to deal with the five million pricing decisions a typical hotel must make every year. Automation to support increased centralization of support teams and to deal with an overall shortage of labor. Automation to deal with the increased complexity of guests expecting products and offerings that closely match their needs and expectations.

Automation of processes, particularly those done in the backend, will continue to help the industry embrace the future of revenue. Some would argue that automation will come at a cost. But in the end, the cost of not automating will certainly be higher than that of automating, leaving those that do not do so working in the dark. 

More revenue management, more places

As hoteliers continue to be forced to do more with less, we are seeing a much more focused effort on getting an intelligent lead on the other revenue-generating portions of the hotels. Business sections such as meetings and events and ancillary revenue outlets are beginning to automate their forecasts, building better mechanisms to choose the right business and with a more intense drive towards optimizing their spaces. These investments and focus will allow hospitality providers to have insight and react more quickly to the waves of changes in business travel, the increase of small groups, and the rapid return of group leisure and events.

It all comes down to facing challenges with courage, compassion and commitment. Perhaps it is time to take a look at inspiration as we keep moving forward, “Life is about accepting the challenges along the way, choosing to keep moving forward, and savoring the journey,” author Roy T. Bennett.