The future of Hospitality and main investment opportunities in 2023
Last year our industry was still too busy recovering from the pandemic and licking its wounds so we didn’t have much time to think about the future. Now, finally, as the dust is settling, we’re able to take a breather and look around to see what our new reality is – the new Hospitality 2.0. And if we're agile and innovative enough to detect what has changed and act on those patterns, we can be successful as an industry and better prepared for the upcoming recession.
The questions are: What will we be doing in 2023 with the old tools we had? What new systems will we be using? And how?
In my opinion, most interesting investment opportunities lie in 2 fields: operations and technology – and not only financial investment but also investment of our talent, time, and resources.
A key transformational element for the industry where the highest opportunity lies from the operations standpoint is definitely steering away from only looking at top-line room revenue towards a bottom-line, profit-oriented approach.
As a result of establishing this profit-oriented culture throughout organizations, another area of transformation naturally emerges – departments collaborating closely with each other (e.g., revenue, marketing, sales, operations, finance). This way, you can ensure that all “body parts” are aligned and are working together towards the same profit-seeking goal as one living organism, versus doing a bunch of one-offs that may benefit a department or address a specific objective, but overall not boosting the entire profit picture.
I predict that the revenue management discipline (and RMS tools in particular) will start playing a more crucial role in achieving this, tying all key stakeholders together, like a glue, a core that feeds everything else with data, insights, forecasting, optimization decisions, strategy, etc.
And this is where technology also comes into play.
Popularization of cloud platforms like AWS (Amazon Web Services) and GCP (Google Cloud Platform) has resulted in the rapid growth and development of technology in all sectors. As I see it, momentum is definitely building around the hospitality tech industry, especially after the COVID pandemic’s “kick in the butt” that all of us felt very strongly.
Traditionally, the hospitality industry has not been on the forefront of tech adoption. And I don't think that's going to change, but because of various disruptive events, technologies are being developed more rapidly and our industry is being forced to start catching up with the rest of the world.
Here’s a high level view of how exactly the hospitality tech world has changed and what we now have to ourselves in 2023.
When it comes to the consumer side, I believe the industry will mature at a faster pace than ever before. Technology like mobile apps, remote check-in and check-out, etc. – all of that will be more readily available and accepted, and it’s likely to continue evolving. I predict that more and more hotels will be using AI-driven customer service and data analytics that will redefine industry standards on providing a personalized guest experience. It is already happening.
As we know, the largest barrier for growth for tech vendors today is the complexity of the hospitality ecosystem, in combination with the lack of data standardization. The latter has become a major issue preventing us from truly utilizing the data we have on hand. And the amount of data is accumulating every day. It’s accumulating and just sitting there, piling up. Many companies are sitting on pots of gold without even realizing it. As a result of the above, data analysis and workflow optimization will be an interesting growth market to keep an eye on in 2023. Because these markets are still immature at this point, companies that are able to become central market players will have a very attractive position.
The last 2023 trend to be mentioned is end-to-end solutions providers. Being able to take the complexity of solution design and become a comprehensive one-stop shop is definitely an attractive proposition. However, it’s still hard to achieve, considering the complex world of use cases in the hotel operations, and the number of those use cases is growing daily (from chat bots, to labor management and scheduling, to campaign management, to payment processing, the list goes on) so is the number of tech vendors addressing them. So some hospitality tech companies will still resort to providing the key elements in their stack while allowing other vendors targeting less critical use cases via open API connections. App stores will become a more regular way to source and buy technology, with a “try-before-you-buy” mindset of delivery and enabling sales.
What do we do with the old dinosaur legacy systems? Each time new applications or new technologies face the old ones, there’s a need to compromise by integrating them, looking for the lowest common denominator. This is not helping technology evolve. Soon everything will be in the cloud. Traditional systems that are not able to handle this change – will be left behind.
The market opportunity in 2023 for hospitality technology is tremendous. There are many high-growth areas that are currently developing around new technologies, cloud computing, big data, machine learning, as well as business intelligence and revenue management. There are also many areas of opportunity in the way we run our businesses using technology, build our teams and approach customer acquisition and retention.
Here’s to another exciting year in the most exciting industry on the planet.
