The hotel industry is going through a time of transformation and new challenges. We explore the 8 major challenges for hotel management in 2022-2025.
Where does the hotel industry stand in 2022? What new trends will shape the hotel business? What are the main challenges facing hotel management today and in the coming years? What must companies in the sector do to adapt to change?
This article provides an answer to these and other questions.
The tourism sector and, specifically, the hotel industry, has deeply suffered the consequences of the pandemic caused by Covid-19. In fact, 2022 is the first year of recovery for the sector since 2019.
In this scenario, hotel chains are now facing new challenges that will mark the future of the industry in the coming years.
Discover the major challenges facing the hotel industry 2022-2025 and how to face them in our exclusive e-book: "Hotel Companies 2022-2025: Major Challenges and How to Overcome Them." In this book you will find a detailed description of the major issues facing the hotel industry now and in the coming years, the latest data regarding the sector's activity and the steps to take to face and overcome these obstacles.
Let the data do the talking: The state of the hotel industry in 2022
According to recent STR research that compares performance stats for the week of January 23-29, 2022 with those for the same week in 2019:
- In 2022, the average daily rate for U.S. hotels is only 2% lower than the same week in 2019.
- Occupancy has reached nearly 50%, only 12.2% lower than the same week in 2019.
- RevPAR has decreased 13.9% compared to 2019.
In addition, the report notes that during the week of January 30-February 5, 2022, U.S. hotel occupancy reached 50.4% for the first time this year, although it is still 15.8% below 2019's occupancy.
The recovery of the sector is apparent. However, the numbers are still not what they were before the pandemic. In fact, another report by the American Hotel & Lodging Association predicts that it will take at least until 2025 for the U.S. hotel industry to fully recover and reach pre-pandemic levels.
Far from portraying a catastrophic scenario, the complexity of the situation also has its good side and has forced hotel companies to promote changes that, in addition to being necessary, wil transform into opportunities. The pandemic has not only transformed business activity, it has also changed people and in the market. Thus, it is time for hotel companies to adapt to these changes.
The last four years have been years of change and, in the hotel industry, the changes have materialized in new macro trends that promise to reshape the sector's activity.
Some of the trends that are already emerging are:
- Automatic reservations
- Personalization
- Smart rooms
- Green and smoke-free hotels
- Sustainable production
- Differentiation through "coolness"
- Digital customer service
- Augmented reality and virtual reality
- Rooms being adapted to become workspaces
New trends and structural changes bring new challenges in the field of hotel management. The hotel industry is resilient, but, like all industries, it needs agile tools to manage change.
The adoption of advanced technologies and tools for change management and the leverage of data are key to facing this new stage in the industry.
Here we explore the major challenges of hotel management in the years ahead.
The 8 Major Challenges of Hotel Management 2022 - 2025
1. New forms of travel
Over the past four years the usual ways of traveling have changed, especially due to the denaturalization of the most common travel during the pandemic. After the return to normality, some of the new pandemic-driven modes of travel are here to stay.
Customer Trends: New ways to travel and stay
- An increase in local and proximity tourism
- Commitment to ecological, sustainable and environmentally friendly tourism
- Wellness, health and personal care tourism on the rise
- Growth of individual trips
- Work-related travel on the rise
2. More demanding customers
On the other hand, it is worth noting the increase in consumer expectations, which are now more closely related to customer experience and intangible services. The abundance of information in the hands of consumers, as well as greater competition, are increasing customers' decision-making power and their demands and expectations regarding all aspects of their stay in a hotel.
3. Diversification of competition
For some time now, hotel companies have been facing a new type of competition: online tourism supply distribution portals —such as Booking.com, for example— and online rating portals —such as Google Reviews—. Although this is not a new phenomenon, the dependence of hotel chains on this type of player is increasing, which is causing a progressive reduction in direct sales.
Likewise, the occupancy rate of hotels is increasingly linked to reviews and ratings on web portals for rating establishments and services.
4. Increasing commodity prices
In addition to change management, there is now an additional structural problem that is affecting all companies: the increase in the prices of goods, consumables and energy due to the war between Russia and Ukraine. Stats are alarming. In June 2022, inflation in Spain reached an all-time high since 1985, with 10.2% inflation.
The gradual increase in the price of resources and materials reduces the margin of profit for companies in an industry that is just now beginning to recover.
In this sense, hotel companies must rethink their revenue strategies.
5. Digitalization, automation and technology
While progress is being made, digitization and technological leverage remains one of the major challenges facing the hotel industry. In general, the hotel industry lags behind other business sectors in terms of digitization and the use of new technologies.
It is true that more and more companies in the sector are investing in digitization and trying to include technology to improve their productivity and range of services. However, the process is still slower than in other sectors.
If we look at the trends in the hotel sector described at the beginning of this article, we will realize that many of these trends are linked to new technologies that allow hotel companies to automate their processes and the operations and services they offer directly to the customer, such as the digitization and automation of check-in and check-out, for example.
6. Lack of data-driven culture
The hotel industry is also lagging behind in terms of leveraging data, both in terms of its own activity and that of consumers.
The hotel industry is one of the sectors most directly linked to customers, their behavior, preferences and consumption habits. Nevertheless, hotel companies have a long way to go in terms of customer data processing and consumer knowledge.
In short, the vast majority of hotel companies still have a business culture that is not very data-driven or, in other words, very little data-driven. The most serious aspect is that this is an industry with vast access to customer data, which is also easy to access and process.
It is therefore essential that companies in the sector begin to forge a data-driven culture and harness the potential of the data to which they already have access.
7. Marketing strategies that are not very advanced
In recent years, marketing has also undergone a major evolution. Traditional advertising and marketing strategies are becoming less and less effective and companies are opting for new, more digital, more customer-centric and less intrusive forms of marketing.
However, the hotel industry is also lagging behind in terms of marketing strategies.
In the coming years, the development of advanced digital marketing strategies will be one of the factors that will make the difference for companies willing to make the leap into the new era.
8. Difficulties in attracting and retaining talent
Finally, the latest research on the sector shows that hotel companies are finding it difficult to find and retain qualified employees. Attracting and retaining talent is another of the sector's major problems at the moment.
What should hotel companies do?
Far from presenting a dystopian scenario, companies in the sector must seize the moment to develop new business models that are not only capable of adapting to change and facing new challenges, but also enable them to ensure long-term growth through new reform strategies. Information services play a key role in this transformation.
At Bismart, as a Microsoft Power BI partner, we have worked with numerous companies in the hospitality industry, helping them to meet the prevailing challenges and improve their performance and results. Thanks to our experience working with hotel chains, we have been able to identify the keys to ensure the long-term growth of hotel companies and manage change in the right way.
We have captured our findings, experience and knowledge in an exclusive book for hotel chains that you can download below.
Face the change with the e-book "Hotel Companies 2022-2025: Major Challenges and How to Overcome Them."
