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Competitive pricing, rising costs for energy and goods (inflation), staff shortages, and changing customer expectations: 2023 will be a challenging year for the hospitality industry, and many hotel operators are already feeling the pinch.

One development is especially challenging as it touches many fundamental areas: the so-called Great Resignation during the pandemic, which caused a huge staff loss in areas such as healthcare, education, and hospitality, highlighted a shift in employees’ expectations of the industry. This current shortage effectively damages recovery. While performance metrics such as RevPAR and occupancy rate seem to have largely recovered across Europe in 2022, lack of skilled personnel has meant that not all hotels were able to profit from the surge in demand. Meanwhile, customers have developed new expectations. The industry has to meet both ends.

How to cope with this myriad of challenges? And how to ensure to stay ahead of the game? The answer is simple, but not surprising: the industry needs to embrace digitalization even faster. Writing this, it seems almost like a no-brainer.

Digitalization can support hospitality companies in rationalizing their daily business. Hospitality players that are already leveraging digital tools in their operations are profiting greatly by implementing automation to reduce labor costs and streamline processes. One example: automating data entry is a relatively straightforward way to help monitor business performance better, reduce errors, and free up staff to focus on higher-value tasks. And automated booking processes are already part of the daily doing across the industry.

The good news is that by focusing on three main parameters—within the context of the respective business model of course—the industry could tackle the challenges.

#1 Transform the“Great Resignation” into a“Great Upskilling”

There is no doubt: Hotels currently have a staff problem, to paraphrase Sean O’Neill. Where lockdowns did not push hotels to cease operations temporarily, many hospitality workers had to deal with an increased workload due to staff shortages. Subsequently, many workers have left the industry for good.

In retrospect, the so-called Great Resignation of 2021 might be remembered as a turning point in the hospitality industry. Faced with a dwindling workforce pool, hotels have even more reason to explore ways to address staff shortages beyond better pay, flexible working hours, and more rotation across work roles.

Letting automation take on repetitive office tasks and letting chatbots deal with standard customer service requests will certainly excite overworked hospitality workers. But going forward, digital upskilling might be the most enticing proposition at the industry’s disposal. Purposeful educational programs are a great opportunity to attract new employees and empower current workers to become more digitally savvy in the long term. Industry leaders are already taking account of new demands by offering professional education schemes to their employees.

#2 Customers’ Needs Are Changing—Hotels Should Adjust Quickly

Meanwhile, customers have developed new expectations as well. With Millennials accounting for a major share of travel expenditures worldwide, the hospitality industry needs to ensure they precisely understand the generation’s needs when traveling.

Here’s what we know: They expect convenience and immediacy, and they demand a seamless, personalized experience. Technology is giving them access to unprecedented levels of convenience and personalization and hotels should respond to this changing customer base. Yet again, hotels can leverage technology to meet the needs of Millennials, digital natives, and digital immigrants alike.

This could mean investing in digital platforms that provide customers with an individual, intuitive experience. It could mean embracing a mobile-first approach, allowing customers to book rooms, manage their reservations, and access other services through their smartphones. Whatever the approach will be: In the age of digitalization, hotels are able to leverage big data to gain insights into customer preferences and behaviors to forge stronger customer relationships and provide a more personalized experience.

#3 The“New Normal” in Hospitality Will Be Tech-Enabled

To navigate the complex environment of current times successfully, hospitality companies should focus on digitally transforming their business model. Rather than adding digital solutions piecemeal onto a dated approach, the bigger goal here is to create a future-proofed business model that is digital at its core. Parts can always be added later, once a solid foundation exists. How tomorrow’s customer experience in hospitality will shape up remains to be seen. One thing, however, is a foregone conclusion: The “new normal” in hospitality will be tech-enabled.