How is the hotel industry being forced to change?
July 26, 2024
According to a 2024 Bismart report the global hospitality market is on track for remarkable expansion in the next three years, projected to reach $1,063 billion by 2028, a strong compound annual growth rate (CAGR) of 10.24% since 2022. This surge is being driven by a range of factors: increased travel demand, higher disposable incomes and a resurgence in both business and leisure travel. Hotels will take a major share of this spend.
All consumer-facing industries have to deal with change in an ongoing basis, as customer demands and expectations evolve. After weathering the severe disruption of the pandemic, the UK hotel sector is facing a wide range of major challenges just as demand is growing, most of which involve factors beyond their control. The state of the industry and these challenges are set out in our recent hotel sector report.
What are the influences dictating major re-invention and modernisation to an industry, which still has many businesses steeped in tradition?
Sustainability
As environmental concerns intensify and not just among younger guests, hotels are having increasingly to adopt sustainable policies. Eco-friendly designs, energy-efficient systems and waste reduction programs are becoming industry standards. Technologies like smart thermostats, LED lighting and water-saving functions are now commonplace. Hotels are also making progress in reducing single-use plastics and sourcing locally produced food.
Technology
The integration of technology into daily processes is making hotel operations more efficient and guest experiences more personalized. Artificial intelligence (AI) and automation tools are at the forefront of these changes.
Also playing a major role are Internet of Things (IoT) devices, which can create a highly personalized stay, so that guests can control room temperatures, lighting and even reflect their entertainment preferences through smart systems. AI-powered chatbots can provide virtual concierge services, promptly and efficiently addressing guest inquiries and requests.
Digital technologies such as contactless check-in, mobile keys and guest messaging systems are streamlining processes, reducing the need for physical interaction and enhancing overall operational efficiency. However, with this comes the consequential challenge of not de-personalising the guest experience too much.
Experiential travel experiences
Guests are increasingly seeking unique and immersive experiences. In response, hotels are offering local cultural activities, adventure tourism packages and personalized experiences that create memorable stays. To cater to travellers seeking authenticity, hotels are increasingly partnering with local businesses and offering activities that highlight local heritage and attractions. Emphasizing local culture can be a powerful differentiator for hotels in a highly competitive market.
Wellness amenities
There is growing trend towards health-conscious travel and increasing demand for wellness and personal care tourism. Tio reflect this, hotels are widening their offerings beyond traditional spas, so that they now include fitness programmes, mental health retreats and holistic health services. The days of a few worn out exercise machines in a tiny former storeroom in an obscure corner of a hotel should be long gone.
Wider food and drinks options
Hotel menus are going through an interesting simultaneous narrowing and widening. The number of food options may be reduced to reflect issues with wastage and kitchen staffing, but at the same time, they are becoming more eclectic, offering plant-based and health-conscious choices. Bars more often feature a wider range of higher margin and more exotic possibilities, such as cocktails, as well as more expensive craft beers and fine wines. Some hotels are experimenting with the use of ‘ghost’ kitchens and high-quality takeaway services to cater for evolving dining preferences.
“Workation” holidays
Now that ‘working from the beach’ has developed out of the working from home phenomenon, hotels are providing co-working spaces or better equipped and more comfortable in-room working areas. High-speed internet throughout properties has become an essential feature. Extended stay packages are being offered to facilitate what has become known as a ‘workation’’, allowing guests seamlessly to mix work and play during their stay in a productive yet enjoyable environment.
Improved cleanliness and safety standards
In response to the pandemic, hotels have introduced more stringent cleaning and safety measures. These include contactless services, advanced cleaning practices and health certifications, all of which are meant to reassure guests. This has become a differentiating factor to attract guests and encourage return visits in the post-pandemic era.
Upselling and bundled packages
Increasing guest spend is a key objective in raising revenues. Hotels are offering ‘all in’ packages that combine accommodation, dining and recreational activities. Upselling strategies are on the increase, offering upgrades and add-ons during booking and check-in. The selling point may be convenience, but the target is coaxing more money from guests.
Personalization
Guest demands have changed fundamentally in only a few years. These may have been shaped to some extent by the psychological impact of the pandemic, but perhaps even more by an awareness of constantly evolving technology capabilities, which have led consumers to expect a high degree of personalization from the businesses with which they interact.
Hotel guests now want a degree of one-on-one interaction and experiences tailored to their individual preferences. Hoteliers must leverage technologies, such as digital customer analytics engines, AI-powered virtual assistants and digital feedback mechanisms in order to provide a truly personalized service and speedily address customer concerns.
If you are seeking professional advice for your business, Opus is here to help. You can speak to one of our Partners who can discuss options with you. We have offices nationwide and by contacting us on 020 3326 6454, you will be able to get immediate assistance from our Partner-led team.