Adapting to the Changing Landscape of Hospitality

#1: The Rise of Flex Accommodations

At HDC, there were several breakout sessions with explicit discussions around the emergence and rise of flex accommodations and the short-term rental space. What was most intriguing is that both their supply and growth are outpacing hotels. 

As discussed in the session ‘Getting Hotter - Short-term Rentals v. Hotels, it was shown that year over year since 2019, rental supply has significantly outpaced hotels. Recently released earlier this year, STR and AirDNA shared data showing short-term rental supplies hit records in 2022 up 23% YoY. 

Working within the industry, it’s also hard to miss that these flex accommodation companies have also been investing in properties of all types, including several recently purchasing hotels and properties with event spaces. This has also resulted in their investment in corporate sales teams and the technology to support these teams. 

When you start to look at why this might be happening, the average daily rate (ADR) as it relates to inflation rates is telling. Currently, ADR is at a high, which is well above inflation rates.  In nearly half of North American markets, ADR growth exceeds inflation growth since 2019, which is resulting in travel adjustments. An example shared to show the variance between ADRs and cost of living related to inflation: in 2019, $220 got you an upscale room in the Florida Keys, and today with adjusted inflation you’ll be in a midscale room. 

Keeping this all in mind, hotels will have to get creative with how they offer value through experiences and packages to help drive business to their properties and compete with these new options.  

#2: The Battle of Properties - Size Does Matter

Small groups are saving the day! During a breakout session at HDC, a quote from Hilton’s President and CEO, Chris Nassetta, was cited stating: ‘Our sales team talks to (customers) all the time. They’re feeling quite good, particularly with the SMBs, which are at this point, 85% of our business. They’re traveling more. They’re feeling reasonably good about a soft landing in their business.” 

Another session, ‘Group Size Matters - STR and Coraltree’ went on to share data showing that hotels with smaller meeting capacity (<10,000 square feet) are booking more business than hotels with more meeting space compared to 2017, however, larger hotels are beating smaller hotels for business and seeing shorter lead times. 

In speaking with some attendees after the session we were in agreement this is likely the case because the larger hotels have more inventory, meeting space, employees, and the technology to help them bid and report on the business in flexible, efficient ways, which keeps them competitive and able to win the business. 

This means smaller properties have had to work smarter to beat these larger hotels, and does also validates the SMB market pattern Hilton has been seeing. 

According to HTR “40% of hoteliers said technology gives them a competitive edge, suggesting an opportunity for innovation and adoption of revenue-generating technologies.” This shows there’s still room for technology improvements and a reason why new solutions continue to enter the market and challenge the incumbents. Thynk even received a nod from Hospitality Upgrade - What was new at HITEC 2023?

When evaluating how to put your property in the best position, ask yourself - do you have daily real-time reporting as a Sales Manager, Leader, or Corporate Revenue Manager that pulls from the same single source of truth? Can you quickly analyze where your business patterns are? Compare them to past years. Identify where profit is stemming from and where gaps reside.  If not, it’s time to look into technology that can support integrated business management and reporting.

#3: Group travel is back and leisure travel is on the rise 

There’s been a significant increase in people working remotely since 2020, and now that we are back in the swing of things, business travel is on the rise. 

While AHLA debuted their Hospitality Show this year, and we had already locked into HITEC, there was still plenty of buzz about both shows and many companies working to attend both events this year, as they overlapped. AHLA published a survey last year that showed 89% of participants wanted to include some vacation time on their next corporate trip.

To add to this already overwhelmingly exciting statistic, according to a study by Forbes Insight, people believe they build stronger business relationships during face-to-face meetings, events, and conferences. 

90% of business travelers surveyed said in-person business and sales meetings are ‘without a doubt’ or ‘generally’ more successful than video conferencing. Technology is convenient, but in-person meetings build trust.  

As a fully remote company, we believe true innovation is accelerated when you collaborate in person. Attending conferences and ensuring we see each other for strategy and fun a couple of times a year means we also have to have the right technology in place to ensure we are successful day-to-day. The same applies to the travel industry to ensure they are prepared for this change in the way corporate travel is evolving.

#4: Technology has to be easy to use and accommodate your changing business needs

Ask yourself, can you easily: 

• Offer dynamic packages that incorporate the longer stay and need for combining business travel with leisure. 
• Offer new and extended packages that match your leisure offerings. 
• Support these new travel needs using your current technology in a seamless and automated way. 
• Track Total RevPAR unique to each guest.

According to Duetto's Survey: 2023 Groups and Corporate Main Focus for Revenue Teams Survey, the number one focus was on tracking TRevPAR, which encompasses revenue attributed to the guest beyond the room. Following this top need were integrated systems, upselling, and attribute-based selling, which all speak to the demand for solutions to properly track ancillary spending and integrate to make booking and reporting easier, and be able to sell dynamically.

Across all the attended conferences we spoke with many revenue leaders who were overseeing or attempting to bridge gaps between their team and sales. Integrated technology platforms are the lynchpin to breaking out of data silos and will be the future landscape for hospitality.  This will be the foundation to consistently track and improve profitability, while also offering centralized business management. 

Additionally, Kurien Jacob, Managing Director and Partner at Highgate Tech Ventures was interviewed at HDC and spoke about the importance of technology adoption. “Technology is the No. 1 focus for any hotel company today. It is what is going to drive the future and differentiate [hotels], as well as …. Dive revenue-maximizing cost efficiency, productivity, and all that. It is in the forefront,” he shared. The insights shared in Kurien Jacobs, short six-minute video touch on many of the topics shared throughout this two-part series. 

As we participated in these conferences over the summer, the energy was motivating. The hospitality industry is a place where professionals come together to share ideas and collaborate. We share a passion for community and the value of experience, and we thrive on learning from one another. We are committed to elevating this industry through partnership and innovation not just for the sake of profitability, but to deliver long-lasting memories created by unique experiences for our customers.