Increased digitalization, the return of
business travel, the continued evolution of “bleisure” and impressive growth in
average daily rates (ADR) are just some of the major trends the hotel industry
has witnessed in 2022.
However, while many markets have seen a return
to 2019 performance figures in terms of rates and occupancy, uncertainty still
remains.
As hoteliers plan for 2023, what should be their focus? Where are the
opportunities? And what are the threats? We caught up with hoteliers from
around the world to get their views.
According to STR’s global recovery index, aggregate data for hotels from
around the world showed September's performance was just 6% behind pre-pandemic
levels. This was the fifth consecutive month of global demand recovery, with
performance levels at 90% or above on pre-pandemic figures.
STR believes that this slow but steady
recovery is indicative of a reset in demand mix - as above-average leisure
demand stabilizes to more normal levels and corporate travel picks up.
Hotels can expect to see performance returning
to 2019 levels, but hotels have to take the learnings of the past two years
forward with them and not fall back into old habits. Here’s how:
- Incorporate forward-looking data into your
strategy. Historic data is no longer sufficient to build a hotel revenue
strategy.
- Demand will continue to be variable. This is
because the world will continue to experience multiple overlapping market
crises repeatedly. Hotels need to adopt very flexible pricing models,
especially in high-volume hub city destinations.
- Pricing must be dynamic and flexible. Hotels
can no longer rely on fixed pricing models to deliver consistent and reliable
volumes of business. Dynamic pricing and rate flexibility have become
essential, not just for the hotel, but also to attract a new breed of engaged
travelers.
So what can we expect from 2023? There will be
more tech adoption as hotels continue to get to grips with doing more with less;
business travel is returning but in a new guise as corporates are repeatedly
asked to curb travel spend; and that short-term booking window remains.
Short-term
booking window remains
Duetto’s latest Pulse
Report data shows that the short-term booking window remains, and
this will continue to challenge hotel teams, both operationally and from a
revenue perspective. Across all global markets, bookings drop off more than
three months from stay date, with the eight to 12 week booking window remaining
prevalent. But this is not necessarily a bad thing.
“Increasingly, a short-term booking window
represents an opportunity to connect with a more mobile, more astute, and
engaged traveler, switching seamlessly between business and leisure profiles,”
says Chris Crowley, chief revenue officer at Duetto.
“Hotels are learning to integrate customer
data and loyalty profiles across the entire spend onsite to curate personalized
offers for a more discerning guest. A guest that is used to shopping in a
short-term booking window and to making direct decisions with their hotel
supplier,” he adds.
The good news is that there is still a great
deal of pent-up demand for travel, even if it is waning slightly. But margins
are being squeezed both for hotel operators and for travelers. Revenue
management has never been more important than it is now, as price remains one
of the biggest levers in the customer purchasing decision.
“There is still a lot of pent-up demand for
post-COVID travel. And there are still people that have got disposable income,
although that is becoming less,” says Shona Whitehead, founder of Cogent Blue,
a hospitality consulting firm that helps hotels project manage their technology
transition.
Bleisure
and remote working are here to stay
Whitehead believes there are three consumer
trends hoteliers need to have an eye on in 2023: bleisure, digital nomads and
staycations.
“As travel becomes more expensive, people
traveling with work are thinking about adding on a little bit of holiday as
well. That will continue in 2023,” Whitehead says.
“Also, remote working continues to open up
opportunities. People are realizing that this means that they can work from
anywhere, enabling them to explore new destinations before or after their
workday.
“And in the United Kingdom, particularly with
the way the economy is, staycation demand will also continue into next year.”
Business
travel returns
Business travel remains a big focus for
hoteliers in the United States as well. Nick Knight, national director of revenue
and distribution for ASH Hotels, a small independent owner/operator hotel group
based out of New York City with ambitious expansion plans, has business
transient firmly in his sights.
“The big one for 2023 is the return of
business transient,” he says.
“That market is coming back. Some of
our hotels have already exceeded 2019 levels because we perform in that
segment. I foresee next year definitely surpassing it,” he
adds.
A new tech stack has helped rate and occupancy
growth at ASH. The company onboarded a new revenue management system from Duetto
and a new booking engine and GDS.
For ASH, which doubled its portfolio during
the pandemic and opened its fifth hotel, Ulysses, in Baltimore in the fall, the
focus for 2023 is on driving customer experience.
“Now that we're maximizing revenue, we're
looking at our offerings and making sure that our service and amenities match
that rate rise and exceed it,” Knight says.
Using
technology to drive efficiencies
United States-based hotel owner/operator Bridgeton underwent a
tech grade similar to ASH, replacing the property management system (PMS) and
RMS to streamline operations and drive efficiencies.
For 2023 the focus is on continuing to provide
efficiencies for staff wherever possible.
“Being able to accomplish the same amount of
work in fewer hours is invaluable to making your business more profitable right
now and to help protect you from a downturn in the long run. Duetto has helped
us accomplish this by making us much more efficient as a revenue management
team so we can accomplish more with fewer people,” says Lucas R. Proffitt, director
of revenue and e-commerce at Bridgeton.
The New York City-based investment,
development, and management company owns and operates six properties, with
growth plans including development in Sonoma County, California.
Proffitt believes its small size and lean
operating model are a benefit to Bridgeton and that these benefits are enjoyed
across the independent hotels segment.
“I believe that independent hotels are
uniquely positioned for the future. The generations which are starting to
travel now are much less focused on brands as a whole and are more focused on a
unique experience. I think the real strength of being an independent hotel is
that we have the flexibility to quickly move to the demand and to provide the
types of experiences that the guest is wanting,” Proffitt says.
Groups
business provides stable base
The hotel management company, Linchris Hotel
Corporation, has also enjoyed strong ADR growth in 2022 and is focusing on
groups to build out a solid business base for 2023.
“The ADR growth due to the leisure segment and
due to inflation is here to stay,” says Jenna M. Bergamino, corporate director
of revenue management at Linchris Hotel Corporation.
“We are starting to see some associations and
groups come back and look forward to more growth in those segments. We are also
focusing on ways to grow hotel revenues as a whole across all profit centers
within the hotel and working towards revenue management strategies for those
other revenue sources within our hotels,” she says.
With many economists predicting that a
recession is just around the corner for the U.S., Linchris executives are already
thinking ahead about how they can shore up business.
John P Argonish, senior vice president of sales
and marketing at Linchris Hotel Corporation, explains how the group was
building out a base of business with group contracts: “We are focusing on
market and pricing trends and looking at group base business to reduce our
inventory in our hotels. We are looking for group-based business that will
still be in business and have travel needs during a recession, if one should
occur.”
Sports and
leisure return to Spain
In Spain, Helios Hotels, which owns and
operates the Helios Benidorm, Helios Costa Tropical, Helios Mallorca and Helios
Lloret de Mar, totaling 1,100 rooms, continues to see success with its leisure
markets and is confident of further success in 2023.
“Couples and sports people have proved to be
our biggest market. Majorca is a big market for cyclists of all ages and all
levels, and we were so happy to start to see this returning. Cyclists have come
back strongly, and we're celebrating this,” says Kris Vanaerschot, chief commercial
officer at Helios.
“Our figures support the impression that the
start of the year will be better than the same time last year. We hope that we
will start better, and if we can maintain that, bearing in mind that 2022 is
now outperforming 2019, then we will be happy.”