Industry Update
Opinion Article29 November 2012

Top 10 Hospitality Industry Trends for 2013

By Robert A. Rauch, CHA, President of RAR Hospitality

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Rauch, CHA

The landscape is evolving quickly as content marketing replaces advertising campaigns, mobile merges even more with social networks and travelers are open to spending more on getaways that are worth it…more interested in finance? We just refinanced a hotel at under four percent interest. 2013 is projected to be a better and brighter one for the hospitality industry. But what are the new factors driving the market?

  1. Increase in Travel's Personal Value | Despite the recent years of a contentious and challenging economic climate, we're seeing the revival of the most powerful motivation for traveling — the emotional connection between vacations and quality of life. Leisure travelers are doing less of the things that characterized the economic hardship of recent years and are now adopting more behaviors that confirm the importance of travel in their emerging lifestyles, according to the newly released MMGY Global/Harrison Group 2012 Portrait of American Travelers, a nationally-representative survey of 2,527 U.S. households. This annual survey shows that while the number of overnight leisure trips is almost equal to that of last year, the drivers of these vacations are changing. Cost-effective "staycations" and other money-saving getaways that emerged in the midst of the recession have weakened. This year, expect a boost in travel spending due to a renewed belief in quality experiences that are worth the splurge.
  2. Expect More International Visitors | Average rates and occupancy levels in the US are likely to increase over the next few years for a very new reason. "Leisure demand from abroad, fueled in part by the new Discover America campaign, will stimulate new demand" according to Arne Sorenson, president and CEO of Marriott Hotels & Resorts during a GBTA panel discussion in Boston last month. Brand USA, the DMO behind Discover America, is the national marketing engine promoting US travel to international visitors. The U.S. has about 5 million hotel rooms and almost no new supply in the construction pipeline, Sorenson noted. At the same time, China is ramping up to send about 100 million leisure tourists into the international market every year. If the U.S. gets its typical share, that will mean an additional 10 million visitors from China alone. The average Chinese leisure traveler spends a week in the U.S., Sorenson said. That means an additional 70 million room nights in a market where prices are already rising due to growing domestic demand. And that doesn't count growth from other inbound markets, such as Brazil and India, Sorenson said. "The globalization of travel is a massive force."
  3. A Second Look at Refinancing | When moving from your business plan to your actual budget, remember that while a zero-based budget is time consuming, it will save you tens of thousands of dollars on your bottom line. Each dollar on the bottom line increases the value of your asset by about $16 depending on capitalization rates. So a savings of $60,000 means an increase in value of about $1M! If refinancing is an option, remember that interest rates are unbelievably low right now and that debt is actually available! As a matter of fact, though it is limited, there is even some new development activity in the pipeline. While there is still some economic uncertainty, this industry is cyclical and we are already in the fourth inning of the recovery. Look back and remember 1996-2000 and 2004-2008. Compare them to 2012-2016. The money is made in the middle innings and we are there.
  4. Social Media and Mobile Will Be Inseparable Social media and mobile already live in symbiosis and this year we will continue to see them merge. Now, people can create social media updates from their phone, while tagging friends or checking in. Mobile has allowed social media to truly become real time. Smartphones represent more than 50 percent of new mobile devices being purchased. And, the growth of connected devices will only continue to soar throughout 2013. In fact, Ericsson estimates there will be over 50 billion connected devices in circulation by 2020, including laptops, tablets and smartphones. In North America, 2013 will mark the first year that online access is greater from mobile devices than desktop or laptop. Smart hotel marketers will keep their eye out for authentic ways to make use of emerging social/mobile applications in 2013.
  5. Photo-Sharing Will Dominate
    Photo-sharing sites like Pinterest and Instagram saw their coming of age this year. By curating cool content through images, the Pinterest provides a powerful way to visually communicate lifestyle messages exuding from brands in the hospitality business. Pinterest is, at its core, a master of content curation. And with Pinterest API coming sooner rather than later, hotels will be presented a unique opportunity to curate, collect and highlight the very best of the pinning service through their own digital channels. Copycats are bound to arise, but 2013 will certainly provide us with new players on this field.
  6. More Unrehearsed Marketing Videos | Video is one of the most effective ways to make an impact on web visitors and the opportunities to use videos are endless. In 2013, video is predicted to be an even more vital element in a hotel marketer's arsenal with more and more people viewing and sharing videos online, including hundreds of thousands of consumers regularly streaming videos on their mobile devices. These videos can strengthen your organic SEO efforts and your video doesn't have to "go viral" to be effective. More importantly, it doesn't have to be a literal walk-through of your lobby and rooms. First and foremost, your social videos should showcase interesting and useful information. The content featured in your videos should highlight the uniqueness of your property, as well as the destination and area attractions. Plus, try different ways of presenting, including interviews, instructions, demos, reviews, or coverage of special events, activities or nearby attractions.
  7. Content Marketing Will Replace Traditional Advertising
    Traditional advertising is rapidly losing out as hotel marketing professionals begin to realize the advantages and effectiveness of content marketing. Marketing's new mantra of "Brands must now acts as publishers," has arrived in part because of social media and its potential to engage in meaningful conversations with their loyal fan base and potential clients alike. In short, content marketing is the new advertising. By investing in the sharpest media tools like blogs, social media, newsletters, webinars, ebooks, photo-sharing, or videos and shared media, you'll drastically reduce the hefty investments in traditional paid media. Plus, your SEO efforts will be affected if you "opt out" of being a producer. Google is now weighing current content, social proof and author scores in their results ranking. Simply put, you need to create and share content, while being of interest to lots of people to even be a player going forward.
  8. Renewed Focus on Property Websites | Direct bookings are king. And, finding ways of encouraging direct bookings will be one of the most important parts of a marketing director's job in 2013. As travelers are increasingly taking their transactions online, the hotel's own Website has grown into the most important avenue for them to gain the highest ROI. In 2010, American hotels spent an estimated $2.7 billion on OTA commissions. Now, as those rates rise and rate parity restrictions tighten, hotels are looking at any and all ways to increase direct bookings through their websites. To achieve this, hotel Web sites must find compelling ways to convey the advantages of going through them, rather than the OTA's. Today's hotel website needs fresh content, constantly updated promotions and rich media. Then all of this content needs to be marketed across all channels, including desktop Web site, the mobile site and social media profiles.
  9. Guests Will Crave Food, Not Celebrity Chefs
    Foodies have driven hotel culinary offerings these past few years, with chefs creating meals like pieces of carefully crafted art. Plus, investments to woo celebrity chefs to helm hotel kitchens have skyrocketed because of the rise of big-name chefs emerging from Food Network shows. Hotel owners used these chefs' newfound celebrity status to bring in F&B business. However, now meeting planners and leisure guests aren't focused so much on the chef in the kitchen, but the food on the table. What they'll care about now are menus filled with healthy and organic options, and more options for diet restrictions. F&B directors should reevaluate where their ingredients are coming from, and highly consider procuring from local farmers and vendors if they're not already. Showcasing where your food is coming from will allow guests to connect more with the property, the restaurant and their experience overall.
  10. More Meeting Planners via Social Networks | More and more, meeting planners are utilizing social media tools to research, compare and read reviews of hotels and conference centers. Plus, they are using social networks to strengthen professional relationships like the rest of us. Hotels should designate a sales team member to oversee the property's LinkedIn profile and engage the entire sales team to actively connect with planners online on a daily basis. Some ways hotels can attract meeting planners with their own social media? Have a separate customer service-focused Twitter account to manage questions or issues during conferences. Use webinars to educate planners about things that matter to them. Share positive reviews from other planners on all your sites. Last but not least, make sure you're monitoring and answering review sites like TripAdvisor. Use your hotel blog to write about meeting ideas. Planners are increasingly using former guests' reviews to see if they want their attendees staying with you.

In Closing

Remember that our industry is now more of a science than an art…great stewardship of your properties will reward you in the millions over the next few years. This will include digital marketing, social media marketing, revenue management, distribution channel management and mobile web marketing. May the wind be at your back and the occupancy, rate, net income and values make you happy this coming year and for many years to come!

Robert A. Rauch, CHA

    More from Robert A. Rauch, CHA

    R.A. Rauch & Associates (RAR) offers the full spectrum of hospitality management services to owners, developers, lenders and investors in hotels and resorts. Headquartered in San Diego, CA, the properties under management and/or ownership include luxury boutique, branded and independent hotels throughout North America. Formed as a hotel consulting firm in 1990, RAR acquired its first hotel in 1997 and has since developed several hotels. As the firm created success for its owned assets, development into a third-party management company began in 2011. For more information on the firm, contact Robert Rauch at [email protected]. RAR is a privately held firm based in San Diego. More information can be found on our website:

    Robert A. Rauch
    R. A. Rauch & Associates, Inc.
    Phone: +1 858 720 9500
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