Navigating 2023 : How Hotels Continue to Adapt to Changing Guest Preferences

Were you surprised at how last year played out for the hotel industry and the travel industry overall? In January each year on the J.D. Power Travel & Hospitality podcast, we make predictions about the year ahead. I recall our predictions in January 2022—the continued pandemic would depress (or eliminate all together) international inbound travel demand, luxury-oriented demand would push up leisure room rates, there would be continued softness in transient business travel but green shoots of recovery for group/MICE business travel.

While our predictions were largely correct, we underestimated leisure demand and how high hotel room rates would soar in 2022. While room rates had been rising by the end of 2021, we were experiencing another Covid surge at that time. No one knew how long the surge would continue; thus, it was difficult to predict how the high seasons (spring and summer) would play out. Yet if I were to sum up 2022 in one word, it would be “revenge”. Consumers were booking “revenge” travel after two grueling years of a pandemic, and hotel operators were raising room rates as “revenge” against to two years of ugly property P&Ls. So, what should we in the industry expect in 2023?