The top trends for hoteliers to watch in 2023

Increased digitalization, the return of business travel, the continued evolution of “bleisure” and the impressive growth of average daily rates (ADR) are just some of the major trends that the hotel industry has experienced in 2022.

However, while many markets have seen a return to 2019 performance in terms of rates and occupancy, uncertainty remains.

As hoteliers plan for 2023, what should they focus on? Where are the opportunities? And what are the threats? We met with hoteliers from all over the world to get their opinion.

According to Global STR Recovery Index, aggregate data from hotels around the world showed September performance was just 6% below pre-pandemic levels. It was the fifth consecutive month of global demand recovery, with performance levels of 90% or more compared to pre-pandemic figures.

STR believes this slow but steady recovery indicates a reset in the composition of demand – as above-average leisure demand stabilizes at more normal levels and business travel resumes.

Hotels can expect to see their performance return to 2019 levels, but hotels need to learn from the lessons of the past two years and not fall back into old habits. Here’s how:

• Integrate forward-looking data into your strategy. Historical data is no longer enough to build a hotel revenue strategy.
• Demand will remain variable. Indeed, the world will continue to repeatedly experience multiple, overlapping market crises. Hotels need to adopt very flexible pricing models, especially in high-volume urban destinations.
• Pricing should be dynamic and flexible. Hotels can no longer rely on fixed pricing models to deliver consistent and reliable business volumes. Dynamic pricing and rate flexibility have become essential, not only for the hotel, but also for attracting a new generation of engaged travellers.

So what can we expect from 2023? There will be more technology adoption as hotels continue to learn to do more with less; business travel is returning, but in a new form, with companies being repeatedly urged to reduce travel spending; and this short-term booking window remains.

There is still a short-term booking window

The latest from Duetto Pulse report data shows that the short-term booking window remains, and this will continue to challenge hotel teams, both operationally and from a revenue perspective. In all global markets, bookings drop more than three months after the date of stay, with the eight- to 12-week booking window remaining common. But that’s not necessarily a bad thing.

“Increasingly, a short-term booking window represents an opportunity to connect with a more mobile, savvy and engaged traveler, transitioning seamlessly between business and leisure profiles,” says Chris Crowley, Chief Revenue Officer at Duetto.

“Hotels are learning to integrate guest data and loyalty profiles with all on-site spending to deliver personalized offers to a more discerning guest. A customer used to shopping in a short-term booking window and making direct decisions with their hotel supplier,” he adds.

The good news is that there is still a lot of pent-up demand for travel, even if it is decreasing slightly. But the margins are tightening for both hoteliers and travellers. Revenue management has never been more important than it is today, as price remains one of the main drivers in the customer’s purchase decision.

“There is still a lot of pent-up demand for post-COVID travel. And there are still people who have disposable income, although it’s going down,” says Shona Whitehead, founder of Cogent Blue, a hospitality consulting firm that helps hotels manage their technology transition.

Leisure and remote work are here to stay

Whitehead thinks there are three consumer trends hoteliers need to watch for in 2023: bleisure, digital nomads and staycations.

“As travel gets more expensive, people who travel with work are also considering adding some vacation time. This will continue into 2023,” says Whitehead.

“Additionally, remote work continues to open up opportunities. People are realizing that this means they can work from anywhere, allowing them to explore new destinations before or after their work day.

“And in the UK, especially with the economic situation, staycation demand will also continue next year.”

Returns from business trips

Business travel also remains a priority for hoteliers in the United States. Nick Knight, national director of revenue and distribution for ASH Hotels, a small, New York-based independent owner/operator hotel group with ambitious expansion plans, has transitional business firmly in his sights.

“The big one for 2023 is the return of transient businesses,” he says.

“This market is coming back. Some of our hotels have already exceeded 2019 levels as we are performing well in this segment. I plan to definitely exceed it next year,” he adds.

A new technology stack has contributed to the growth in rates and occupancy at ASH. The company integrated a new revenue management system from Duetto and a new booking engine and GDS.

For ASH, which doubled its portfolio during the pandemic and opened its fifth hotel, Ulysses, in Baltimore in the fall, the focus for 2023 is on improving the guest experience.

“Now that we’re maximizing our revenue, we’re reviewing our offerings and making sure our service and amenities match and exceed this rate increase,” Knight says.

Use technology to increase efficiency

US-based hotel owner/operator Bridgeton has undergone a similar technology note to ASH, replacing the property management system (PMS) and RMS to streamline operations and increase efficiency.

For 2023, the focus is on continuing to improve staff efficiency where possible.

“Being able to complete the same amount of work in fewer hours is invaluable in making your business more profitable right now and protecting you from a long-term downturn. Duetto has helped us achieve this by making us much more efficient by as a revenue management team so that we can accomplish more with less staff,” said Lucas R. Proffitt, director of revenue and e-commerce at Bridgeton.

The New York-based investment, development and management firm owns and operates six properties, with growth plans including development in Sonoma County, California.

Proffitt believes that its small size and streamlined operating model are an advantage for Bridgeton and that these advantages are appreciated throughout the independent hotel segment.

“I believe that independent hotels are ideally positioned for the future. Generations starting to travel are much less focused on brands as a whole and more focused on a unique experience. I think the real strength of being an independent hotel is that we have the flexibility to quickly respond to demand and deliver the kinds of experiences the guest wants,” says Proffitt.

Group activity provides a stable base

Hotel management company, Linchris Hotel Corporation, also saw strong ADR growth in 2022 and is focusing on groups to build a solid business base for 2023.

“ADR growth due to the leisure segment and inflation is here to stay,” said Jenna M. Bergamino, director of revenue management at Linchris Hotel Corporation.

“We’re starting to see some associations and groups coming back and we’re looking forward to more growth in those segments. We are also focusing on ways to increase revenue for the hotel as a whole across all hotel profit centers and are working on revenue management strategies for these other revenue streams within our hotels” , she says.

With many economists predicting a looming recession for the United States, Linchris executives are already considering how they can shore up their business.

John P Argonish, Senior Vice President of Sales and Marketing at Linchris Hotel Corporation, explains how the group was building a base of business with group contracts: “We focus on market and pricing trends and review business base of the group to reduce our inventory. in our hotels. We are looking for group companies that will still be in business and will have travel needs during a recession, should one occur. »

Return of sport and leisure to Spain

In Spain, Helios Hotels, which owns and operates the Helios Benidorm, Helios Costa Tropical, Helios Mallorca and Helios Lloret de Mar hotels, totaling 1,100 rooms, continues to enjoy success in its leisure markets and is confident of continued success in 2023.

“Couples and athletes have proven to be our biggest market. Mallorca is a big market for cyclists of all ages and skill levels, and we were so happy to start seeing that return. The cyclists have come back strong and we celebrate it,” says Kris Vanaerschot, Commercial Director at Helios.

“Our figures confirm the impression that the start of the year will be better than at the same time last year. We hope we start better, and if we can maintain that, knowing that 2022 now surpasses 2019, then we will be happy.