What are the top hospitality industry predictions for 2023?
In 2023, the pent-up travel demand will fizzle. The good news: Accumulated consumer savings during to the tune of several trillion dollars plus government handouts are fueling the current pent-demand in travel. The bad news: consumer savings are running out, the inflation is eating up savings and payroll increases, interest rates are rising to unheard of recently levels and making shopping by credit cards very expensive. All of this, the news about layoffs here and there, and the looming probability of a recession will affect negatively consumer discretionary spending, which means tourism in general.
The result? In 2023 fewer people will be traveling, those that do will be traveling less, choosing lower category hotels, on shorter trips and to closer to home destinations.
In 2023, the trend of branditization of the hospitality industry will accelerate. Hospitality has been moving from an industry of independent hotels to an industry dominated by major hotel chains for at least two decades now. Currently 8 global hotel brands dominate many major markets: already 70% of hotel rooms in the U.S. and 50% in the U.K. belong to branded properties. Post-crisis developers, owners and managers will flock in droves to the major chains, attracted by their deep pockets, ability to implement safety and cleanliness protocols, huge loyalty programs able to generate 58.3% of roomnights, dominance in the corporate travel and group markets, comprehensive technology stack, expertise in maintaining and increasing occupancy and RevPARs in post-crisis, unparalleled direct channel distribution, 2x lower OTA commissions and 3x-4x lower dependency on the OTAs.
In 2023, automation in the hospitality industry will become the way of doing business. I believe there are two macro socio-economic factors forcing the hospitality industry to accelerate the adoption of contactless, human-less and do-it-yourself (DIY) services and increase their technology investments in automation: the labor shortages in hospitality (1.5 million open positions in travel, hospitality and leisure in Q4 2022) and the emergence of the new tech-savvy travel consumer. Do guests expect human-provided services at hotels?
I believe the notion that guests are demanding human-provided services is greatly exaggerated, especially today. A great example of why guests do not care about human-provided services as much as some in our industry think comes from the short-term rental sector, where the “gold standard” is customer experience without any human contact between guests and hosts, and yet guests are not only not complaining, but gobbling up this “human-less” service and loving it!
Four- and five-star properties could still keep a "human guest-facing facade" but automate all of the back-end operations, enable smart guest communications, and automate and personalize every touch point with the customer.