Disrupting Hospitality: Adapting to Trends Affecting Hotels in 2020

Disrupting Hospitality: Adapting to Trends Affecting Hotels in 2020

The hotel industry is evolving. Guest habits are changing and so are their expectations. Technological innovations are giving hoteliers new powers to provide incredible services and boost revenue. If you’re reading this article, you have probably heard this before.

The question is: are you doing enough to take advantage of these developments?

Having worked with a wealth of leading hospitality brands; built partnerships between hotel chains and tech providers; and made it our job to help the industry adapt for the future it’s clear that there are some major trends that hoteliers need to place front of mind in 2020.

Failing to recognise these trends will cost you bookings and reputation.

We’re going to throw the spotlight on these trends to help you understand what they mean for your hotel and why you can’t afford to ignore them any longer. We’re talking big benefits like increasing occupancy, mastering non-room revenue and boosting direct bookings.

We’ve also suggested some simple steps to get started. This isn’t theory, we want to help you right now.

You’ll also find insight from some of the leading players in the innovation sphere. 

Here are the major trends hoteliers need to focus on in 2020.

Non-room Revenue

Non-room Revenue - The Growth Works 

On-demand Resource Rental

Non-room revenue has always been on hoteliers’ radar. Almost every property features some form of ancillary income, with the usual suspects of restaurants, bars, meeting rooms and spa complexes the most prominent.

HotStat report that non-room revenue accounted for 40% of TRevPAR (total revenue per available room) in the UK last year.

Considering how important it can be to your bottom line, are you doing enough to make your non-room services as efficient as the rest of your hotel?

Is it as easy to book a table at your restaurant as it is to book a room? The same applies to hiring out meeting rooms and booking spa days. Can I book them live, right now? Does revenue management in your hotel include these areas? 

With so many companies now offering tech-based solutions, it’s time to start monetising your available resources as efficiently as possible.

Established services like Open Table optimise restaurant bookings. Booker does the same for leisure facilities. Tech providers like Meeting Package employ dynamic pricing to efficiently hire out meeting rooms. While new revenue streams, such as car parking space rental, can be unlocked with companies like Arivo.

Takeaway – Don’t neglect non-room revenue – make it the responsibility of your team to measure and track this number. Make it the responsibility of your revenue manager to grow the number. Tech partners can help optimise your available resources to increase TRevPAR in 2020 – perhaps pilot a couple and see what drives revenues for you.

Artificial Intelligence (AI)

Artificial Intelligence (AI) The Growth Works

Dynamic Pricing

There is a lot of noise around artificial intelligence at the moment, in fact there has been for years. We nearly left it out of our list, as it risks being generic jargon. However, in our view the real benefit of AI for the hotel industry is dynamic pricing, and it’s worth a second look.

A report from Skift shows that over 80% of hotels are still not using technology to manage their pricing models.

We can guarantee that these hotels are missing out on revenue as a result.

At OYO, dynamic pricing has been shown in some cases to increase occupancy by 68% and lead to a quadrupling of RevPAR (revenue per available room).

There are simply too many variables for revenue managers to consider when setting rates. In order to truly maximise bookings at the highest viable price, revenue managers would need to work 24/7 analysing huge swathes of data such as: occupancy, competitor rates, global booking trends and historical price action for each individual customer.

It’s just not realistic for a human to undertake such a mammoth task of sustained data entry and analysis. 

An AI-powered tool such as IDeaS, on the other hand, can comfortably carry out millions of computations every second to come up with the best room rate. Many of the best contract revenue managers out there have live market data at their fingertips, and the best technology partners certainly have it built in.

If you’re looking to increase occupancy and boost RevPAR at the same time, you need to look at partnering up with an AI-powered dynamic pricing agent sooner rather than later.

 Takeaway – Implementing AI takes a little bit of time and the process can be intimidating. But finding a partner to test improved pricing should be one of your priorities this year.

Sustainability

Energy Conservation

It’s no secret that concerns over the environment have taken centre stage over the last 12 months and will continue to do so in 2020. 

High profile campaigns involving everybody from Prince Harry to David Attenborough, Greta Thunberg to Extinction Rebellion, have raised awareness about climate change and influenced consumer habits.

Search data reveals that 1,620,000 people sought information on ‘sustainability’ last year while a study by Booking.com found that 70% of travellers would be more likely to book an accommodation knowing it was eco-friendly, while a previous report found 67% are willing to spend at least 5% more to ensure their travel has minimal impact on the environment. 

This shows that a commitment to sustainability in 2020 could help you increase both occupancy and rates.

While it’s difficult to run a global travel business without leaving behind a carbon footprint, every effort you make to reduce your environmental impact will be looked upon positively by guests. We won’t save the planet by a few people making a huge change, but we might, by all of us making the changes we can. 

And some of the most significant things that hotels can do to become more sustainable are conserving water and energy and reducing food waste.

Online water management systems like INTEREL make use of smart valves and other plumbing hardware to manage water temperature and consumption. Meanwhile Internet of Things platforms like Blue Pillar optimise energy use across commercial properties, using existing hardware setups.

Pragmatically speaking, another strong incentive to become more sustainable is the simple fact that it is cheaper not to waste energy.

There are creative steps you can take to manage food waste with partners like Too Good to Go and Olio, that will also promote your hotel to your local market and bring in new customers.

Takeaway – Travellers demand eco-friendly accommodation in 2020 and are willing to pay more for it. Replacing legacy hardware could be expensive, but partners that work with existing setups are available. Crucially, make a few changes – then communicate this far and wide to guests in your marketing, it’ll prove the ROI and that makes it easy to justify further steps.

Integration

Integrated Partnerships

In 2020 an openness to partner up with providers will be crucial for hoteliers if they wish to benefit from the latest trends, which are often focussed around complex technology.

Most hotel companies are not tremendously tech savvy, which can hold back investment in innovative new services and curtail hotel performance as a result.

In fact, 53% of hoteliers mention outdated technology architecture and the effort required to integrate systems as a major pain point.

At the same time, the need for technology is greater than ever, which can mean an intimidating and expensive journey ahead.

The solution – from an independent hotel up the the largest chains – is to form partnerships with providers that integrate within your systems and make implementation of their services easy. This allows you to benefit from the latest hotel tech trends without compromising on time spent tackling your top priorities.

This could mean taking the scary, but ultimately necessary, step of upgrading your PMS to one of the newer emerging leaders, with a leaner, fully-open two-way API, but more importantly a culture of partnering with the best.

As more and more specialist services become available, it is going to become more important than ever for your hotel to be able to take advantage of these competitive edges. Hotels leading the way are reporting profit increases of 5% and seeing guest satisfaction rise 14%.

With a two-way API, data from all aspects of your hotel travels in both directions, allowing the technology to work together seamlessly to assist with core strategic goals such as revenue, non-room revenue and customer satisfaction.

Slick cloud-based marketplaces like Mews allow hoteliers to access great services at the touch of a button, while middleware solutions like Impala and Ireckonu connect your hotel to multiple services faster than ever before.

Takeaway – Taking the bold step of upgrading your PMS to an open system in 2020 will open your hotel up to a whole new world of strategic opportunities. At the very least, discuss with your provider how they are integrating to newer technology partners and put the pressure on them to support you better.

Experiential Travel

Experiential Travel The Growth Works

Local Attractions, Experiences & Tours

Travellers are increasingly interested in immersive experiences, activities that help them meaningfully engage with a destination’s history, people and culture. Not only that, but increasingly travellers are spending more on these experiences outside your hotel.

Since 2014, spending on experiential travel has increased 21% to £122 billion and continues to grow at an annual rate of 9%, according to Skift.

Despite this huge market, 80% of travel experiences are still booked offline. 

And the booking process, in terms of hotel brands and their offerings, is usually quite disjointed, and can be intimidating for first-time visitors to your hotel

A guest might be able to speak to the concierge to arrange a local tour or sort out car rental, but generally speaking there is not a lot of scope for customers to discover and book the diverse range of activities and services that they might be interested in.

This disjointed approach is causing hotels to miss out on a slice of the highly lucrative experiential travel pie.

What’s needed is an integrated approach, a simple platform from which your guests can access all of the local tour options they crave. Companies like Livn and iSeatz help manage and sell bookings from a wide range of vendors, through live integrated API systems. This means you can offer these to your guests in a simple and safe way, while sharing the revenues.

Place Pass is an interesting example of an experiential tour company that was deemed so good that it was bought by Marriott and integrated into their loyalty rewards scheme. 

Takeaway – Demand for experiential travel is growing exponentially. Hoteliers can tap into this revenue stream by offering guests integrated booking options, either through partnering with API booking networks or deep partnerships with specific providers.

Content

beautiful food hotel

Direct Bookings

While the relationship between direct bookings and third parties has evolved over the years, the preference for direct bookings is very much alive in 2020.

And content is the battleground.

On average indirect bookings are two to three times more expensive than direct bookings. After all, without a third-party intermediary, hotels gain strategic control over the situation with the ability to upsell pre, during and post stay.

To add some balance to the argument, the right 3rd parties should be driving you value incremental business. Take care not to constrain overall demand by being too narrow in your approach to 3rd parties.

However, assuming you want to build consistent long term direct relationships with guests, there are a number of weapons at your disposal to ensure guests book directly – here we want to focus on compelling content. 

Your website, app and anywhere you appear online must represent the best of your hotel, and potential guests must be able to explore and have all their questions answered, as simply as possible.

One of the easiest and most effective ways to overhaul your content is to commission some new photography. Images deemed ‘high quality’ receive 63% more clicks and lead to a 22% increase in booking enquiries.

Established global brands like BOOM! Image Studio can help your brand improve its visual aesthetic.

Another key pillar of content is your review section. Booking.com report that 96% of guests consider reviews important when finding and booking accommodation.

There are a whole host of service providers such as TrustYou, GuestRevu and Review Pro, who collate all of your hotel reviews from across the web and display them to your website visitors to gain trust, credibility and drive direct bookings.

Once you have these bases covered, you can look at more sophisticated services like Triptease, who identify your hotel’s most valuable guests and then use AI to work across the customer journey – from acquisition to conversion – to make sure they book directly at the hotel.

And to ensure you are making the most out of your direct bookings, market leaders like Oaky create personalised microsites to upsell services pre-stay. Automation saves you time and is perfect for implementing at scale. Interacting with guests like this pre-stay gives you a great chance to build that direct relationship.

Takeaway – Improving your content will lead to more direct bookings and increased profitability this year. There are lots of providers who can help you achieve this. Of course, only a great guest experience will ensure you see that guest again – hopefully in your direct channels! 

Virtual Reality (VR) 

Virtual Reality VR Hotel The Growth Works  

Virtual Tours

Building on the theme of content, the refinement of virtual reality services is making it easier than ever for hoteliers to showcase their properties and services to potential customers.  

According to Adobe Digital Insights “at least eight of the largest hotels have tested some kind of VR experience.”  

We believe that virtual tours are the best use of this technology for hotels. 

Pew Research Centre’s Internet & Technology survey advises that hotel websites with 360-degree virtual tours receive 40% more views than competitors.

And the data suggests these views convert into bookings.

Radisson introduced virtual tours to a number of properties and achieved a 135% increase in online revenue, amounting to £5,500 per hotel per month, compared to those without VR tours. Omni Hotels found similar results, with online visitors 67% more likely to book a room if they had access to a 360 VR tour.

These strong figures underline that point that if you don’t currently offer virtual tours to guests, you should be looking at ways to implement them in 2020.

Powerful 3D imaging platforms such as Matterport make it extremely easy to create 360 VR tours of your property that will increase web engagement and boost direct bookings.

Takeaway – New technology is helping hoteliers boost bookings in 2020 and there are brands you can work with to take advantage of these trends. Trial a virtual tour of some of your rooms, or perhaps your meeting space, and see what impact it has on your marketing and website bookings.

Need help determining your 2020 priorities? Get in touch and we’ll help you get started.

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