Source: Lighthouse

It’s a milestone moment for the hospitality industry. The impact of the pandemic is undeniable, and with that stress comes mega-trends that ripple throughout the industry. Some of these - such as the unique labour market dynamics we are seeing - will level out in time.

Others are likely to play out over future decades, creating fundamental ripples and long-term change that hotels need to be working towards right now. In part one we look at three major trends that are going to change how you operate your properties themselves, and how they can be future-proofed to make the most out of what is yet to come.

Stay tuned for part two, where we look at the digital and data trends you need to be thinking about for the rest of 2021 and into 2022.

1. Hard to hire, harder to keep: Why you need to address the labour shortage

It has been a year of wild ups and downs for many within the hospitality industry. Few industries have been hit as hard as we have, causing widespread job losses across the sector, despite the extension of government support in many places.

According to the US Department of Labor, for the year from February 2020, (when the pandemic was first arriving on American shores), just under 40% of the total jobs lost were in the leisure and hospitality industry. Now, while it might be the case that consumers are now returning and the sector is rebounding, the same cannot always be said for hospitality workers.

Job openings have reached record highs in the sector across many major economies around the world. For example, looking at the most recent ONS data for the UK, vacancies for accommodation and food service businesses have increased more than ten-fold from their lowest point. The bottom was hit in April to June 2020, where there were just 8,000 vacancies, compared to 117,000 now. Even this estimate is below trade body UK Hospitality’s estimate of a 188,000 shortfall of workers. In the US, unemployment for leisure and hospitality workers is now reaching pre-pandemic levels, and pay has now exceeded levels commonly being paid before COVID hit.

All of this means that retaining your employees, and then achieving the best results with them are now paramount as we move towards recovery for travel and tourism globally. It is also now time to make an investment into technology solutions to alleviate the pressure of running a hotel with a smaller team and ensure your staff can do more with less.

It also makes sense to up-skill and re-skill your staff. This will serve to help with retention, mitigate the effect of constraints in hiring capacity, and help maintain effectiveness at a time of reduced budgets in many hospitality businesses.

While the idea of increasing any budget right now can seem like a risky move, investing in tech and focusing on staff retention makes both good economic sense and represents a sensible long-term strategy. When it comes to technology, today’s ‘good enough' is usually outdated by tomorrow. Not only will an investment in new technology improve efficiency at present, it will pay dividends in the future.

Estimates vary on how much it costs to replace a staff member, but none of these approximates are cheap. A review of research by the Centre for American Studies noted that, “the typical (median) cost of turnover was 21% of an employee’s annual salary.” It’s unlikely that in this unusual labour market staff recruitment has reduced in cost. Instead, the reverse is most likely the case on the ground for most hospitality businesses.

So, how can you make the most out of every staff member and keep them working in your hotels?

One of the simplest ways to increase efficiency with limited staff numbers is by implementing new technology solutions to take the heavy lifting out of your day to day. From a revenue management perspective, efficiency is based on freeing the team up from tasks to focus their efforts on maximising revenue. It's vital that revenue management teams make timely decisions based on reliable and accurate business data.

By removing time-consuming manual tasks with innovative tech solutions, you can have actionable insights at your fingertips, save considerable time and can switch focus to positively impacting your bottom line. Now is the best time to adopt newer technologies that will drive productivity and stimulate growth. See how much time you can save with our ROI calculator.

Studies show that while pay is important, the biggest reasons for not being able to retain staff are just as often a lack of progression and opportunities. Therefore, the number a key objective for hotel managers in dealing with this trend is to build comprehensive training plans that lead to structured and clearly laid out employee progression upwards through the organisation.

This then creates the benefits of:

  • Retaining knowledge in the organisation.
  • Reducing the direct and indirect recruitment and initial training costs.
  • Increases resilience through organisational flexibility and back-up in key positions via cross-training and mentorship.
  • Improves productivity.
  • Increases customer satisfaction, particularly when customer service and digital skills are taught.
  • Raises the bottom line.

Other elements that can enhance that all-important retention are flexible working conditions, a focus on workplace safety and retention-focused compensation. All of these should help you to do more with less and keep your most valuable asset, your staff, ready for the full return of demand and the next challenge for our sector.

2. Coping with a crash in corporate demand

Let's face it: corporate travel is in a very different place versus pre-pandemic. Where once business travel seemed vital - enough so that airlines could base their entire road to profitability on the premium business traveller - now the corporate traveller is a comparatively rare sight. The restrictions in international travel and the rise in video conferencing have lessened the importance companies put on face-to-face interaction - with huge consequences for hospitality.

The Global Business Travel Association estimates that across 2020, business travel spending crashed by 52% and that the sector is likely not going to return to pre-pandemic levels until 2025.

Instead, the hospitality industry is now far more reliant on the leisure traveller, and the green shoots of recovery are now very much present when it comes to this sector. We have previously discussed in a blog post why domestic demand is a key driver right now, and why this dynamic is set to continue for the foreseeable future.

Although international leisure travel is now returning to growth as well, new variants mean this is shrouded in uncertainty once again. Hoteliers will need to address this mega-trend of reduced corporate demand and a reshaped travel market head-on.

What's required is not only a long-term strategic outlook but also one that starts right immediately. There are two primary paths that hoteliers need to be taking when it comes to making up for the loss of business travel: re-allocating marketing spend and introducing flexibility for facilities previously utilised primarily by corporate clients.

The first strategic consideration is likely already in place for your properties, but it is worth emphasising how important it is to be effective in directing marketing spending. The shifting nature of travel restrictions and changing government advice is creating a highly fluid situation. At present, demand can rise rapidly and fade away just as quickly. These shifts are largely dependent on the situation in the leisure market, and are minimal overall in the corporate market.

A great way to maximise the effectiveness of this strategy is by drawing on strong business intelligence that shows accurately where demand is, and will be, generated. Take a look at our Global Market Insight tool, which not only provides a real-time picture of demand and its origin but also incorporates GDS search for many locations (a good indicator of corporate travel).

When it comes to property resources once devoted purely or largely to corporate travel, hoteliers need to be considering how they can adapt to new conditions. Consider working with local businesses to meet their needs on a flexible basis. For example, hotel meeting space might be useful for hosting companies that have downsized corporate office space, operating as flexible working spaces.

Another way to maximise space utilisation and continue to drive revenue from it could be to try to zero in on companies that need large meeting spaces located close to their employees. These companies might need these to reduce costs or to fulfil social distancing requirements, but the key is to look less at the traditional opportunities and pivot into whatever demand is available.

3. MICE might never be the same

Hoteliers need to face the fact that even the 2025 estimate of a return to pre-pandemic corporate travel spend may be optimistic, and that this segment has fundamentally changed forever. Not only have businesses been forced to consider work-from-home policies in a way that could not have evolved without the shock of the pandemic, but there is also a growing body of evidence that remote work is here to stay. Events will change too, moving from live in-person events that focus purely on the face-to-face, towards hybrid meetings and events that put together a digital broadcast (and increasingly interaction) with the live event.

A 2020 survey by Cvent of 700 event planners, managers, coordinators and directors in Western Europe found that more than three-quarters are looking at putting together a hybrid event in 2021. Hotels can move towards this future by creating environments that support these kinds of events and allow those booking them to really show off their product. Most critical to this is having the tech support necessary for hybrid meetings and events. Nobody wants their event, which is being broadcast to the entire internet, to go down unexpectedly. Those that make this process as convenient and slick as possible are most likely to capture the market.

Hoteliers with significant MICE space who want to move towards this should improve digital infrastructure and support in the following ways:

  • A must-have is to invest in fast bandwidth internet, and preferably on-premises 5G capability.
  • Have space and power outlets for AV stations and equipment.
  • Think about how the space is going to be utilised and prepare accordingly. Use the space to record interviews and break-out sessions throughout the exhibition area. Make sure the lighting is suitable for livestream events.
  • Create a list of AV and technical partners who can strengthen proposals for hybrid events. These can also be useful advising and filling in for where you lack expertise.
  • Create a microsite advertising your capabilities, and make sure the visitors can fully visualise the space and its capabilities. It may be worth creating a virtual tour, but at the very least have detailed floor plans.
  • There may also be value in investing in a dedicated studio space to support very high-quality recordings.

When periods of dislocation and disruption occur, they often create an environment ripe for change and innovation. With the pandemic continuing to hover menacingly over the hospitality industry, that moment is now, and nowhere is that change more apparent than in the need to revitalise our industry’s focus on digital and data.

These areas will define the success of hospitality companies in the next few years as they come out of the pandemic period and the way it has created a fire blanket over a previously hot travel market. Those that survive will need to be lean and effective at reaching and retaining customers. This won’t be possible without understanding who those customers are through analytics, personalising their experience and reaching them with the right offer when they are considering booking.

In this post we therefore look at the digital adoption underpinning the industry, how that is driving personalisation, and how revenue management is moving with these trends to become a more evolved and integral part of hoteliers’ approaches.

To catch up on our first three trends, which covered staffing, changing demand patterns and the future that awaits the MICE segment, click here. Read on to see how to take your hotel into the digital age.

4. It’s a case of digital or decline

You may be sick of hearing it, but the digital and data side of the hotel business is not going away. In fact, quite the opposite is true, and you need a comprehensive strategy in place that takes a digital-first mindset, both for reaching out to the customer and handling their information behind-the-scenes.

The fundamentals are clear: hotels need to be fostering a long-term relationship with their most profitable guests and looking for similar potential bookers in their marketing and partner programs. That’s just not possible in today’s distribution system without the right digital approach.

Lying at the heart of this are well-structured and accessible datasets that allow insights to be derived and shared across different segments of the business, depending on their needs.

This can start with something as simple as site analytics and SEO, growing into a comprehensive suite that includes Customer Relationship Management (CRM), a Property Management System (PMS), financials, marketing and promotions, revenue management and third-party data.

The key is to keep building and integrating these layers in a structured manner that improves the picture of information each time and to then link that back into measurable goals and informed decision making.

It is also pretty much mission-critical now to make sure that information is hosted in the cloud. Migrating data away from local systems creates several benefits, most noticeably breaking down internal silos and sharing information far more easily, but also being able to link internal data and systems up to third party micro-services. The growing profusion of services in this latter category allow more nimbleness from hospitality companies as they can tap into a wide range of external expertise and skills.

Through this, hospitality businesses can fully contextualise relationships with their customers, not just in a particular moment, but across that entire lifetime. With that, comes efficiencies and revenue-generating opportunities: marketing can be better directed; loyalty programs targeted meaningfully; in-stay ancillaries positioned at key moments; and post-stay communications tailored, all while streamlining overall operations. That ability to increase the margins through this process will be vital at a time when hotels are being faced with tough budget calls.

A huge part of the ability to reach out and talk to customers effectively is a result of being able to action the data and talk to that consumer on a personal level, which brings us to our next trend: personalisation.

5. Putting a premium on personalisation

Another trend that is now a must and that has been on the rise for a while is personalisation. Taking all your touch points with a customer and bringing together what you know to provide a personalised service will be a core part of getting your hospitality business back on its feet.

Why is that? Because a host of surveys and studies have shown that personalisation works. It does this by creating a connection between brand and business in initial interactions, helping to secure first-time bookings, and then also builds the relationship, so that customers trust that brand and return to it. More than one piece of research has found that around 80% of consumers say that they are more likely to shop with a brand that creates personalised experiences.

For a hotel brand, personalisation takes on several phases depending on the customer’s point in their journey, all of which should be linked up by a central CRM system. These are:

As they search and book

At a time of curtailed budgets, maximising paid channels and reducing cost of acquisition is a must, making personalisation more a requirement than an option for hoteliers looking to conduct campaigns.

Marketers need reliable data from a variety of sources to create accurate personas of their guests. They need to be looking closely at forward-looking data and noting when and where demand is coming from to produce personalised digital advertising. At a time when so much is up in the air, they cannot be solely reliant on what their prior guest has looked like and need to work to spot all revenue opportunities in the market. That is why a market intelligence solution like Market Insight is now indispensable for hotel marketing teams - providing granular, segmented demand insights to better inform marketing campaigns.

Then on own-brand channels, personalisation needs to take another step up to capture these potentially valuable direct bookings. This should encompass a dynamic online experience that can tailor the messaging and process depending on the visitor’s location, language, prior booking interest and preferences.

  • Before they arrive / In the time between booking and the stay, revenue and data gathering opportunities abound, but no one wants to be spammed with useless material. Hoteliers need to nurture those email connections and build in relevant and engaging communications with guests. A CRM system can kick into gear here and identify what works and doesn’t for different guest personas, capture key data and allow ancillary offers and up-selling to be positioned correctly.
  • At the property / Once guests arrive, then there is a huge opportunity to impress and build a long-term relationship, as well as boost property-related revenues. Using data gathered pre-stay, hotels can offer personalised interactions on the property, although it is important to think about the human elements and how staff can take advantage of information as well as feed it back into a system.
  • Post-stay / The post-stay phase is often neglected but automated and personalised messaging in this phase can draw guests back in and push them towards loyalty programs, which are extremely valuable from a repeat booking and data perspective. Look towards creating one-on-one messages here that reflect key pieces of personal information and that references their stay.

Creating customer personas and profiles and linking these up across a complete journey will unleash a host of revenue generating potential and marketing opportunities. As the cost to install these capacities continues to fall, while the need to maximise own-brand channels remains a priority, personalisation will only become more attractive and important in the race to remain competitive.

6. A rewrite for revenue management

The pace of revenue management is stepping up dramatically and will continue to do so post-pandemic. It is going to be critical for revenue managers to have a high degree of agility across data-gathering, analysis and implementation of strategies. Having a data first foundation that can identify patterns as they emerge and react to them in a market-specific context will be critical.

The underlying drivers of this trend are more accommodation businesses going after a smaller pool of travellers, creating intense competition, and a highly fluid situation. Historical trends are now less reliable to set strategy and hospitality businesses are offering a wider range of rates tied to flexible policies or ancillaries to draw in customers.

As revenue managers shift back from support staff to revenue generators, they will need to fully understand these trends and lead the response to them. With hotel operators leaning more heavily on their revenue managers to help them get an edge in the market, there is then a race to create the perfect set-up in this new environment.

Achieving a better balance for the revenue management department will rely on achieving the right technological base, the core of which is a suite of advanced business intelligence tools powered by industry leading data. With forecasting more challenging and less reliant on prior periods, revenue managers need real-time data that covers on the books (OTB), but more importantly, forward-looking demand data, and information on the local environment (major events, travel restrictions, etc.) at any given moment. This is where a market intelligence solution comes into play.

They also need increasing agility when it comes to what discounting and promotional strategies they can set, alongside the overall rates. Since the pandemic broke, flexibility has been a priority for both consumers, as well as search engines and OTAs. This has driven a rise in semi-flexible rates and a fall in the prevalence of non-refundable rooms on offer.

The trend will carry through for the foreseeable future and revenue managers need to be able to respond, creating rates that cater to market needs, whether that is accommodating cancellation policies, or additional discounts for upselling rooms or for increasing length-of-stay. By using the Rate Strategy feature within Rate Insight, you can see pricing and promotional strategies in your market, understand the impact of promotions on your competitiveness and then benchmark this strategy against your compset.

As revenue managers move toward the role of key revenue generators, able to influence demand more directly, they need to be elevated into the heart of hospitality business decision-making and coordinate closely with their marketing and sales counterparts. This requires a holistic commercial strategy and close collaboration, all underpinned by shared data insights.

7. Total RevPAR becomes the go to metric

As noted above, the traditional position of the revenue manager to purely set room rates and advise on strategy from deep in the back office is going to fade. The revenue manager’s position is going to grow and move towards the centre of hospitality businesses.

Fundamental to this, is the need for more effective and encompassing metrics that really reflect what is going on within a property. Out of these metrics, Total Revenue Per Available Room (Total RevPAR or TRevPAR) is set to be the critical metric to take forward and put at the centre of how you measure property performance.

Already, pre-pandemic there was a need to increase the scope of how to measure a revenue manager’s success. This has now taken on added urgency as hotels need to really understand costs against revenues when operating capital is at such a premium, looking beyond pure revenue generation from rooms sold.

The metric takes the total revenue base for a hotel and then divides this between the total available number of rooms to give a per-room metric for how a hotel is performing across its entire business, not just from room sales. This should include all additional revenue generating areas, ranging from food and beverage to on-site spas, to commissions from in-destination activity partners.

This breadth is why Total RevPAR is becoming the core key performance indicator (KPI) for many accommodation providers, as it is a more effective measure of success than traditional RevPAR. By monitoring its constituent parts, hoteliers have granularity on performance across the business, which they can then tweak for greater business performance.

For example, they can quickly identify trends in their ancillary revenue streams and recalibrate pricing in these all-too-often static areas or place high-demand items front and centre on their owned channels. This kind of approach is only going to become more important as hotels look to widen their offerings, both to attract back critical leisure travellers, but also to squeeze all potential revenue out of their properties to carry them out of this difficult period.

Conclusion

That summarises our seven key trends for 2022. Although many of these have been pushed to the forefront by the extraordinary times we are going through, taking them into account and using them to remodel your hospitality business makes long-term sense.

If you need help in doing this, then we are to give you advice and set you up for success. Get in contact with our team today and see how we can make sure you are ready for whatever comes your way in 2022.

About Lighthouse

Lighthouse (formerly OTA Insight) is the leading commercial platform for the travel & hospitality industry. We transform complexity into confidence by providing actionable market insights, business intelligence, and pricing tools that maximize revenue growth. We continually innovate to deliver the best platform for hospitality professionals to price more effectively, measure performance more efficiently, and understand the market in new ways. Trusted by over 70,000 hotels in 185 countries, Lighthouse is the only solution that provides real-time hotel and short-term rental data in a single platform. We strive to deliver the best possible experience with unmatched customer service. We consider our clients as true partners—their success is our success. For more information about Lighthouse, please visit: https://www.mylighthouse.com.

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