The hotel industry began 2023 with confidence. Numbers were returning to 2019 levels in many areas of operations, and projections for the new year promised to surpass them, including in occupied room nights and room revenue, according to the American Hotel and Lodging Association’s 2023 State of the Hotel Industry Report. Even staffing — one of the industry’s biggest ongoing struggles — is expected to cross 2 million hotel employees in 2023, the first time since 2019.
That said, much of the hospitality landscape has changed since the onset of the pandemic: Guest demographics, habits and expectations have changed; corporate travel remains restricted; booking trends have shifted; and hotels have new digital tools — including ChatGPT — to consider.
To navigate these conditions, here are five key trends hotel leaders need to watch in 2023.
Digital Is Here to Stay, But So Are the Humans
The employment of artificial intelligence, chatbots and other digital tools got a powerful boost during the pandemic as the world shifted to streaming communication, contactless services and virtual experiences. These technologies became essential for hotels to offset the drop in employee numbers and fulfill essential tasks as they continue to struggle — nearly 80% of U.S. hotels reported staffing shortages in an AHLA February 2023 survey.
What gets lost in that push to digital, however, is a fundamental element of hospitality: the human touch. As Chip Rogers, president and CEO of AHLA, said: “At its core, travel is meant to be connecting humans to humans. … So, we want to provide a much better human experience for travelers.”
With this in mind, hotels need to determine the best strategic use of human interaction with restricted resources. One way to approach this is augmentation versus experience. “Those things that can be done in a very simple way, in a digital way, that can augment what the guest needs, I think are going to move toward those digital solutions,” Rogers explained. Easing friction points, such as at the check-in process, are a good example.
Wyndham Hotels & Resorts offers mobile check-in at all of its properties and mobile pay options at 5,500 of its hotels in North America. Later this year, it will introduce AI technology on mobile devices that will allow guests to make typical requests, such as asking when the pool opens, without calling the front desk.
The human touch, Rogers added, is more useful in creating and enhancing an authentic guest experience. “The human touch of a concierge who really knows the neighborhood — knows what the best dishes are at any particular restaurant, knows when the best time to go is, knows where the best seat is — those are things that you’re probably not going to get through the digital offerings that we have today.”
In February, Kimpton Hotels & Restaurants introduced “Stay Human Concierges” to support experience packages of the same name launched last December. As part of the Stay Human packages, guests can work with a hotel’s designated on-property Stay Human Concierge to select from its experiences menu — including everything from perfumery classes to Thai boxing classes — to create a unique stay.
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Rethinking Design to Adapt to the Rising ‘Bleisure’ Market
Whether you call it “bleisure,” “flexcation” or another term, the practice of blending business and leisure trips shows little sign of slowing down. Not only has the bleisure trend affected booking and guest behavior, but it’s also pushing hotels to reconceive and redesign spaces to better support the balance.
Minneapolis-based BKV Group is one design firm helping hotels support the bleisure market. It can start in the lobby, said Joan Sizemore, director of interior design at BKV, where instead of clusters of lounge furniture there might be group tables available for working and collaborating.
Business centers, which Sizemore said were getting progressively smaller as portable devices became more common, are finding a second life with the bleisure trend, albeit in new manifestations. “They might bring their spouse, boyfriend, girlfriend, whatever it might be — that person may be lounging all day,” explained Sizemore. “Now we’re providing small offices or phone room-type areas that they can get away and do a conference call and have a nice backdrop behind them.”
Outdoor spaces are in the equation, too, Sizemore said. “What people started getting used to with COVID was working outside. I don’t know that people before COVID worked outside very much, but it really has rolled into that, and I think people are much more comfortable outside.” To support this, BKV Group’s landscape team can create spaces with secluded workbenches and group tables, even by the pool.
According to Rogers, the key to accommodating people working out of hotels is a robust and expansive Wi-Fi network to handle the “incredible demand” on a hotel’s Wi-Fi infrastructure.
Hotel brands are also experimenting with in-room configurations. Marriott International is testing a guest room where the furniture can physically transform with the push of a button, said Jeff Voris, senior vice president of global design strategies at Marriott.
“This means metaphorically expanding the room’s footprint, but literally enabling it to better serve many functions as a place to sleep, work, relax and socialize,” Voris said. “This enables the room to seamlessly serve a myriad of trip purposes, including stays that blend work and leisure such as extended family vacations.”
EV Charging Stations Find a Home at Hotels
Interest in sustainability at hotels has more than doubled in AHLA polling since the start of the pandemic, according to the 2023 State of the Hotel Industry Report, with 11% of customers now naming environmentally friendly practices among the top three factors influencing their choice to stay in a hotel. Implementing sustainability measures, however, can prove challenging as funding often falls on the hotel owners and management companies, or hotels lack the staff and expertise to operate and maintain them.
Installing EV chargers on-premise is one way to cater to eco-conscious customers. In 2022, Hilton Hotels added the option to find a hotel with EV chargers to its search filters. “The EV charging filter alone resulted in more than 30% of users completing a booking,” noted Hilton in a January 2023 report.
Partnerships to install EV charging stations at hotels are also becoming increasingly common between hotels and charging-station manufacturers, as the latter can take on the burden of installation, operation, maintenance and driver support, either partly or entirely. Last year, EOS Linx and Choice Hotels International struck a deal to install EOS Charge Stations at properties in Atlanta and Chattanooga and Nashville, Tennessee.
Stay-N-Charge, a Georgia-based EV charging network, has collaborated with about 40 hotels across the country to install chargers through two financing routes, according to founder and CEO Tony Booth. Hotels can either purchase chargers from Stay-N-Charge directly and share a portion of their revenue, or they can lease Stay-N-Charge’s units for an annual fee. “Really, what I tell [hotels] is that’s the difference between if you want to do a CapEx or an operating expense,” Booth said.
Business is booming, too, Booth said. “This year alone, we’ve already sold more in the first three months than the entire of last year. It’s really been crazy.”
Customers currently have fewer options of hotels with charging stations, which is helping drive some additional bookings, but that likely won’t last. “If you’re the newer hotels in the area that have EV charging, you’re picking up some incremental rooms. … Obviously that’s great for everyone who puts them in right now,” said Booth. “Over time, that advantage goes away as more people add them.”
Further funding might come from the Infrastructure Investment and Jobs Act, passed in November 2021. The National Electric Vehicle Infrastructure Formula Program within the act contains $5 billion to help install EV charging infrastructure. Money is also beginning to flow in the form of grants as part of the Charging and Fueling Infrastructure Discretionary Grant Program after applications opened in March.
“We see a huge potential for the hotels to tap into this funding and become a big part of the charging ecosystem,” Booth said.
Corporate Rates Return to Negotiating Table After COVID Hiatus
Until the pandemic, corporate rates were generally reviewed and renegotiated each year, with historical data from the previous year factored into the next. COVID-19 halted that process for many hotels, as business travel all but ceased. As a result, many corporate rates have stayed the same since 2020.
With business travel steadily picking up, hotels and travel managers have started renegotiating these rates. “For two years, we did roll those rates over, and 2023 was the first year that we’ve gone back to a traditional RFP process,” said Tammy Routh, senior vice president of global sales at Marriott.
There are also new factors influencing renegotiations, as hotels shifted their focus to leisure revenue streams amid the pandemic and may not see corporate travel as attractive or lucrative now. According to Routh, hotels that previously hadn’t done much leisure business found the pivot a way to diversify. “Our hotels … are trying to figure out what is the new norm in terms of their mix of business, because they might have been solely relying on business travel before, and [now] they might have a little bit better mix.” That said, “We still need business travel.”
For travel managers and businesses, the rate renegotiations in 2022 for 2023 were “one of the more difficult RFP seasons anybody’s ever been through on both sides,” Routh said. For customers, it was hard to predict what the volume of travel would be, and for hotels, it was difficult to determine the best rate they could offer a year out in light of changing conditions. That’s why, she said, there is increased discussion in the industry about dynamic supply-and-demand pricing more akin to leisure pricing, rather than having one rate that’s locked in for a year.
Room Service Drops as Delivery Rises
Despite auspicious reporting and projections in many areas of hotel operations, food and beverage continues to lag behind 2019 levels. Contributing factors, according to the AHLA’s 2023 report, include inflation and sourcing issues in the protein market, which is “still strained due to high feed costs, volatile demand and low inventories.”
Also slowing F&B recovery is the proliferation of delivery services. “Americans became extremely comfortable during the pandemic about getting food delivered to them, and this has transferred its way into the hotel industry,” said AHLA’s Rogers. There are still hotels that will offer room service, he said, but added the number has shrunk considerably.
That’s not necessarily a bad thing, Rogers continued, especially for hotels that don’t consider F&B a core mission. If food delivery services meet demand, and the customer is still happy, “I don’t know that they’re going to go back to the days of 24-hour room service.”
Partnerships in the space include Grubhub, which took over room service for Resorts World Las Vegas in 2021. Marriott works with Uber Eats and offers six Marriott Bonvoy points per dollar spent while staying at a hotel within the Marriott portfolio. DoorDash partners with Wyndham, and Hyatt Hotels launched a partnership with Gopuff in August 2021 to deliver drinks, snacks and other groceries.
“Getting deliveries, using the multitude of food delivery services, I think that’s a permanent change,” Rogers said.
This article was written by Mike Dunphy from Hotel Dive and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.
