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Three Highly Likely Predictions for the Hospitality Industry in 2024

28 December 2023
With 2024 just around the corner, are you curious about the future of hotels and travel? This blog post unveils three highly likely predictions for the hospitality industry. From the surge of electronic reservations to the intriguing shift of guests becoming pivotal in hotel marketing and the robust growth in travel, we dive deep into the trends that will shape tomorrow's hospitality world. But that's not all – we also explore how hotels might react to these changes. Will they embrace innovation or stick to the tried-and-tested paths? Join us as we dissect these trends and offer insights that might be thought-provoking and vital for industry professionals gearing up for the future.
I have read many predictions and trends for 2024. Most assume hotels will adapt as soon as they read or hear about the trend. That is very far from the truth. Most hotels will continue working as they did the previous year and are reluctant to change. In this blog post, I wanted to look at three predictable trends impacting hotels. Blog posts about trends tend to talk about the trend but do not give any advice to hotels. Therefore, I first want to predict the reaction of the hotels to these trends. Finally, based on these three trends, I would like to point out what hotels would benefit from doing. Find out if you agree.

1) The Rise of Electronic Reservations

Current Trends

The hospitality industry started shifting towards electronic reservations before making a reservation over the Internet was possible. Pre-Internet, only GDS reservations were 100% electronic. The conversion from handling bookings manually to digital automation has been slow. 30-40 years later, less than 60% of hotel bookings are made electronically, indicating the slowness of the industry's digital transformation. However, this trend, even if it is slow, is not just a fleeting phase; it's a fundamental change in how consumers interact with travel and accommodation services. The share of electronic reservations will continue to grow. The question is whether Online Travel Agencies (OTAs) will primarily capture this growth or if hotels can leverage their booking engines to claim a larger slice.

Prediction for 2024

Looking ahead to 2024, there are strong indicators that electronic reservations will continue to grow. This increase can be attributed to several factors:
  • Influence of Technology Advancements: Booking platforms tend to become easier to use and more user-friendly thanks to technological advancement, and people are getting used to hotel booking processes. AI and machine learning innovations enable more personalized and efficient booking experiences, drawing more users to digital platforms. OTAs and mega-chains will drive booking experience enhancements and new features.
  • Changing Guest Preferences: Modern travelers, particularly millennials and Gen Z, strongly prefer digital interactions. The ease of comparing prices, reading reviews, and making reservations with just a few clicks aligns perfectly with their lifestyle and expectations.
As electronic reservations continue to dominate the booking landscape in the hospitality industry, hotels face decisions on adapting to and capitalizing on this trend. Here's an exploration of the likely hotel responses and recommendations on more strategic approaches.

Predicted Reactions of Hotels

  1. Increased Dependence on OTAs: Many hotels, especially smaller ones, are predicted to become even more reliant on Online Travel Agencies (OTAs) due to a lack of change in their approach. This increasing dependence leads to higher commission costs and less control over the customer relationship. No actions automatically lead to higher commissions and Customer Acquisition Costs.
  2. Success of Hotels with Robust Online Booking Systems: Hotels that have invested in effective online booking technology are well-positioned to capture a significant portion of the growth in electronic reservations. This success, however, hinges on their commitment to ongoing marketing efforts to attract guests directly to their websites. Most hotels will keep their existing web booking engine and have difficulty shifting from OTA to direct.
  3. Neglecting Customer Acquisition Costs: A common oversight for many hotels is the difficulty in accurately calculating and managing Customer Acquisition Costs (CAC). Hotels struggle to optimize their marketing spend and profitability without clearly understanding these costs. Most hotels do not have the knowledge or resources to start managing CAC, which is between 15% and 25 % of room revenue.
  4. Staffing Challenges and Data Utilization: The industry faces a staffing crunch, which could result in inadequate training and underutilization of valuable guest data. This shortfall can hinder efforts to offer personalized guest experiences and effectively target potential customers. Staff shortages will continue in 2024. Hotels will try to replace people with people, and replacing people with systems will not come to mind.

Strategic Recommendations for Hotels

To counter these challenges and make the most of the growing trend in electronic reservations, hotels should consider the following strategies:
  1. Developing Direct Booking Incentives: Hotels should offer compelling reasons for guests to book directly to reduce OTA dependence. This can include exclusive offers, loyalty rewards, or personalized packages not available through OTAs.
  2. Investing in Digital Marketing: Hotels should allocate resources to digital marketing campaigns that drive traffic to their booking platforms. This includes SEO, content marketing, and targeted social media campaigns.
  3. Understanding and Managing CAC: Hotels must develop a comprehensive approach to calculating and controlling Customer Acquisition Costs. This involves analyzing all channels and strategies for acquiring bookings and optimizing them for cost efficiency.
  4. Staff Training and Data Analytics: Despite staffing challenges, investing in training staff to capture and utilize guest data effectively is crucial. This data can be instrumental in crafting customized guest experiences and targeting marketing efforts more accurately.
  5. Leveraging Technology for Efficiency: Automating certain operations can help manage guest data more effectively and offset staffing shortages.
  6. Continuous Website and Booking Engine Optimization: Regular updates and improvements to the hotel's online booking system ensure a seamless, user-friendly experience that can compete with OTAs.
  7. Engaging with Guests Post-Stay: Encourage guests to book directly for their next stay through follow-up communications and special return offers.
By adopting these actions, hotels can lessen their dependence on OTAs and gain greater control over their bookings and customer relationships. This proactive approach is essential for thriving in an increasingly digital marketplace. The cost of doing nothing is becoming more dependent on bookings through OTAs at a higher expense and lower profits.

2) The Guest Becomes the Hotel Marketing Department

Current Guest Role in Marketing

In the current hospitality landscape, guests significantly influence hotel marketing through online platforms. Their role extends beyond being consumers to becoming active promoters (or detractors) of the brand. This influence manifests in various forms: online reviews on TripAdvisor, social media posts, blog entries, and word-of-mouth recommendations. Positive experiences shared by guests can enhance a hotel's reputation, attract new customers, and increase trust in the brand. Conversely, negative experiences can harm a hotel's image and deter potential guests.

Prediction for 2024

By 2024, the trend of guests as primary marketing agents for hotels is expected to intensify. The reasons behind this shift include:
  • Increased Digital Connectivity: As more people become digitally connected and adept at using social media, the reach and impact of user-generated content will grow. This increased connectivity will enable guests to share their experiences instantly and widely.
  • Authenticity in Marketing: Modern consumers, especially younger generations, tend to trust peer reviews and authentic guest experiences more than traditional advertising. Hotels will recognize the value of this authenticity and shift their marketing strategies accordingly.
  • Evolving Role of Social Media: Social media platforms will continue to evolve, offering new and innovative ways for guests to share their experiences. Features like live streaming, augmented reality, and enhanced story capabilities will give guests more tools to create engaging content.
Impact of Social Media and User-Generated Content: User-generated content, particularly on social media, will become a cornerstone of hotel marketing. Photos, videos, and reviews shared by guests will not only serve as testimonials but also as a window into the real-life experiences offered by the hotel. This content is seen as more genuine and relatable than traditional marketing materials.
Evolving Marketing Strategies: Hotels must adapt their marketing strategies to harness the power of guest-generated content. This could include encouraging guests to share their experiences, creating shareable moments within the property, and integrating user content into their marketing channels.
The growing influence of guest-generated content in hotel marketing is evident, and how hotels react to this trend will be crucial for their success. I always read reviews before I book a hotel or reserve a table at a restaurant. Recently, I overheard a conversation in a hotel bar between a guest in his 50ties and a bartender telling the bartender that he would not eat at the hotel restaurant because it only had 4,1 on Google while the city had several restaurants with higher scores. The hotel and the restaurant are the architects or designers of the guest experience, so they have all the power to make things right. Here's an analysis of likely reactions and how hotels can adapt.

Predicted Hotel Reactions

  1. Recognizing the Power of Guest Feedback: Even if hotels acknowledge that guests' voices carry more weight, they do not know how to manage guests, and most hotels hope that guests will post positive reviews. The focus will be filling the hotel with guests, ensuring they get a standardized good experience, and then posting a good review.
  2. Prioritizing Guest Experience: Some hotels will understand that a positive guest experience directly translates to positive reviews and content and will likely emphasize ensuring guest satisfaction. The statistics tell that 40% of guests are inclined to leave a review after a positive experience, while nearly half would do so after a negative experience.
  3. Adjusting Marketing Focus: Hotels might gradually shift their marketing strategies to post more often on social media to compete with and offset guest-generated content. The truth comes from the hotel, not the guests, who are not always right, which some hotels point out in their response to guest reviews.
I understand that hotels are too busy, especially if they are understaffed, but the core business is to deliver a superior guest experience without shortcuts and mishaps. Here are a few ideas on how to take action.

Necessary Adjustments for Hotels

  1. Enhancing the Quality of Service: There is a reason for a negative guest review, so to ensure more positive reviews, hotels must focus on providing exceptional service and personalized experiences and addressing any issues promptly and effectively.
  2. Engaging with Guests: Develop strategies to actively engage with guests during their stay, encouraging them to share their experiences online and offline.
  3. Training Staff in Guest Interaction: Staff training will become more crucial, focusing on encouraging guests to share their positive experiences and handling any negative feedback proactively.
  4. Monitoring Online Presence: Hotels must dedicate resources to monitor and manage their online reputation across various platforms, responding to reviews and engaging with user-generated content.
  5. Utilizing Data for Personalization: By leveraging data from guest interactions and preferences, hotels can create more personalized experiences that guests are more likely to share. Therefore, hotels must ensure high data quality and train staff to collect the correct data.
  6. Creating Photogenic Spaces: Designing 'Instagrammable' spots within the hotel to encourage guests to take and share photos, thereby naturally promoting the hotel.
  7. Encouraging Direct Feedback: Implementing systems where guests can provide direct feedback to the hotel during their stay, allowing the hotel to address any issues before they turn into negative reviews.
By adopting these ways, hotels can effectively utilize their guests as a significant marketing resource, turning each guest stay into a potential positive marketing opportunity. This approach enhances the hotel's image and builds a community of engaged guests who feel valued and are more likely to return.

3) Business as Usual: Travel and Hotel Industry Growth

Current Travel Trends and Predictions for 2024

Before the pandemic, travel and tourism grew by 4-7 % annually for 20 years. Travel and tourism are almost back on the same path, and the pandemic will soon only be a dent in the long-term growth curve. Some people predict a recession, some slowing growth rates, and a few others a shift in the mix of travelers. I am talking about a long-term trend. The annual "trend" is more a fad or a fashion hype for a short time. The growth in travel and tourism will continue due to two significant drivers. 1) The world is getting more prosperous, and more people can afford to travel. 2) Younger generations do not want to buy things. They want to buy experiences, so there is a shift in consumption patterns favorable to travel and tourism. On top of that, there might still be a pent-up demand post-pandemic, but that is slowly wearing off. The reason for travel will continue to change over time. The way of working changed during the pandemic, and not everyone will return to the same way of working as before the pandemic. People talk about an increase in bleisure and workations, but hotels are not known for their capabilities to collect accurate data, so this might be more hearsay than facts.

Predicted Hotel Reactions to Industry Growth

Given the positive outlook for the travel and hotel industry in 2024, here's how hotels are likely to react based on the mentioned predictions:
  1. Welcoming Increased Demand: Hotels will likely express enthusiasm and relief as the market expands. The increased occupancy rates and rising number of guests will clearly show recovery and prosperity. This general market growth will be met with a positive attitude, as it promises higher revenues and profits.
  2. General Market Approach Rather Than Targeted Segmentation: With a lack of high-quality, segmented data, hotels might adopt a more generalized approach to marketing and guest services. Instead of targeting specific market segments, they will welcome all bookings, focusing on serving a broad audience. This approach, while simpler, may lead to missed opportunities in catering to niche markets or emerging traveler segments.
  3. Limited Adaptation to 'Bleisure' Travel: Despite the growing trend of blending business and leisure travel, hotels might not actively adapt to this market segment, viewing it as a minor part of their overall business. This could be due to either a lack of awareness of the potential of this segment or the perceived complexity in catering to these specific needs.

Summary of Predicted Hotel Reactions

Overall, the predominant sentiment among hotels will be contentment with the growing market. However, this satisfaction might lead to complacency, resulting in a 'business as usual' approach. Hotels will continue providing the same level of service as in previous years, possibly overlooking the need for innovation or tailored services for emerging market segments.

Recommendations for a More Proactive Approach

While the predicted reactions are understandable, hotels might benefit from considering a more proactive approach:
  1. Embracing Data-Driven Decision-Making: Better data analytics tools and strategies could help hotels identify and target specific market segments more effectively.
  2. Recognizing the Potential of Niche Markets: Acknowledging and adapting to emerging trends like bleisure travel could open up new revenue streams and differentiate a hotel in a competitive market.
  3. Continual Innovation in Services: Even in a growing market, continuous service innovation and improvement are vital to maintaining competitiveness and guest satisfaction.
By being proactive and adaptable, hotels can enjoy the benefits of a growing market and position themselves strategically for long-term success and resilience.

Other trends to keep an eye on

There are numerous predictions and trends for 2024, and AI and sustainability are expected to be the key drivers of growth in several industries. AI has the potential to enhance the performance of hotels in several ways. However, AI requires high-quality data, which is currently unavailable in most hotels, to work effectively. Online Travel Agencies (OTAs) are expected to take the lead in the application of AI, making hotels even more reliant on third-party channels for their revenue. As a result, hotels that fail to improve their data quality may fall behind in the race to implement AI. It took hotels a long time to adopt the Internet in the 1990s, and it may also take them several years to adopt AI.
Hotels are currently discussing the topic of sustainability, or ESG, and are intending to become more sustainable. However, achieving this goal will require substantial investments in all old hotel buildings to meet environmental goals to lower energy consumption. The social aspect of ESG focuses on taking care of all employees and ensuring that they receive fair wages, reasonable working hours, and employment terms on par with other industries. On the other hand, governance is still an unknown concept for many small independent hotels worldwide. Education will be required to lift the industry to the next level in managing their businesses.
The burden of AI and sustainability makes it difficult for hotels to start, as they mainly focus on their day-to-day operations.

Conclusion and Takeaways

As we look towards 2024, the hospitality industry stands on the cusp of significant changes and opportunities. Let's recap the three key predictions and their potential impacts, along with the anticipated reactions from hotels:
  1. The Rise of Electronic Reservations: The shift towards electronic bookings is expected to continue, with a growing preference for online channels. While this trend bodes well for market growth, hotels that rely heavily on OTAs may find themselves increasingly dependent, whereas those with robust online booking systems stand to gain. Hotels are predicted to maintain their current strategies, missing opportunities to optimize their digital presence and reduce OTA dependence.
  2. The Guest as the Marketing Department: The influence of guest-generated content in hotel marketing is set to rise. While hotels recognize the importance of positive guest experiences in generating favorable reviews, a proactive strategy to leverage this content in marketing efforts might be lacking. The anticipated reaction is a continuation of current practices without fully embracing guests' potential as marketing agents.
  3. Business as Usual: Travel and Hotel Industry Growth: The general upward trend in travel and hospitality is expected to continue, with hotels welcoming this growth. However, a 'business as usual' approach may prevail, with limited efforts to target specific market segments or adapt to emerging trends like bleisure travel.
Encouragement for Industry Professionals: These predictions underscore the need for industry professionals to anticipate changes and actively prepare and adapt. Embracing data-driven decision-making, exploring new marketing strategies, and continually innovating service offerings are crucial steps in staying ahead in this dynamic industry. The future of hospitality will likely belong to those who can anticipate trends and react swiftly and strategically.