Mathisworks | Digitalvision Vectors | Getty Images
For years, hotel operators have under-invested in technology, but persistent labor challenges are forcing a reckoning within the industry.
“The labor issue is a giant driver for investments in technology,” said Mark Haley, a partner at Prism Hospitality Consulting, which makes a speciality of hospitality technology and marketing. “You possibly can’t hire enough people. … I’d undergo you that to most hoteliers today, [labor] is a more profound and concerning issue than a pending economic slowdown.”
In the meanwhile, hotel operators are reporting brisk bookings, even within the face of rising room rates. Thank leisure travelers. They appear so desirous to get out and about that they don’t seem to be flinching at the upper prices. Hotel revenue per available room, a key industry metric often known as RevPAR, will likely top pre-pandemic levels this yr, on a nominal basis, in line with two industry forecasts.
The newest, released by STR and Tourism Economics on the NYU International Hospitality Industry Investment Conference this week, predicts that hotel occupancy will remain below 2019 totals but average each day rates will probably be higher by about $11 than the group’s prior forecast.
The outlook aspects in the opportunity of a recession, but doesn’t expect the economy’s slowdown to force the traveling public to change their habits. And it anticipates that business travel will proceed to ramp up heading into next yr.
“It’s sort of a chilly reality that even in a reasonably deep recession, as a rule, 70-80% of the population is not seeing it. They’re still getting their regular paychecks and so they’re still traveling,” Haley said.
Business travel has long been a key driver of hotel spending and its weakness continues to be felt. In April, the American Hotel & Lodging Association and Kalibri Labs projected that hotel business travel revenue will probably be 23% below pre-pandemic levels this yr, which is a lack of about $20 billion from 2019. In 2020 and 2021 combined, the industry lost about $108 billion in business travel revenue, according the AHLA.
In May, PwC projected business traveler growth next yr will help offset any softening from leisure demand. It anticipates average each day room rates can be up 16.9% in 2022 from the prior yr, prompting a 28.1% climb in RevPAR from last yr. Then, in 2023, higher occupancy and room rates will help RevPAR rise 6.6% yr over yr, which can be 114% of the 2019 level.
Skipping the front desk, texting for towels
As guests enterprise back to hotels they likely will notice some big changes, hotel operators say. Amongst them is a greater reliance on technology, which is usually getting used to assist ease the impact of staff shortages.
More guests should have the option to skip the front desk, and check into their rooms using a kiosk or app on their phone. Oracle and travel industry trade publication Skift conducted a survey of 633 hotel executives this spring and nearly all — some 96% — were investing in self-service technology at their hotels. And 62% said they expect contactless experiences will probably be essentially the most widely adopted tech over the following three years.
Marco Manzie, founder and president of Paramount Hospitality Management, which operates five resort and hotel properties in Orlando, Florida, said he sees the investment in technology as a must since it has the ability to lower his costs over time.
“Once we take a look at the leanness of the longer term economy, it has most hoteliers and owners of hotels taking a step back and revisiting ways to enhance their bottom line margins because they have been eroded from the inflation that we have been hit with,” Manzie said.
Inflation hasn’t been this brisk since December 1981. Surging food and energy costs pushed the buyer price index up 8.6% in May, the Bureau of Labor Statistics said on Friday. Hoteliers are seeing these costs ripple through their businesses, from the food sold in hotel restaurants to the fuel that heats and cools buildings to the salaries paid to staff.
Manzie said he’s within the means of rolling out contactless check-in and kiosks for food and beverage orders at a number of the properties he manages. Because it remains to be a work-in-progress, he has yet to reap the advantages of lower labor costs.
“I can inform you that we budgeted the tip of the yr for some labor cost reductions, anticipating savings,” he said.
When the pandemic struck in early 2020, most large hotel chains had already been deploying contactless options for his or her guests. But Covid accelerated the adoption and now it’s the price of entry, industry consultants said.
In keeping with Alex Alt, senior vice chairman and general manager at Oracle Hospitality, some hotels were seeking to make these changes inside a one-to-three-year time-frame. After Covid struck, the road map was accelerated to 1 to a few months in lots of cases, he said.
“As hotels saw a decrease in hotel staff and a rise in customer safety and health expectations, there was a robust need for hotels of all sizes to automate the hospitality experience by empowering guests to administer their stay largely from their mobile devices,” Alt said, in an email interview.
Nitat Termmee | Moment | Getty Images
One reason is guests expect it. Of their survey, Oracle and Skift also polled 5,266 consumers, and the overwhelming majority (73%) said they usually tend to stay at a hotel with self-service options.
The responses suggested guests want the power to order room service from their phone or text to have more towels sent as much as their rooms. Additionally they wish to seamlessly hook up with their personal streaming or gaming accounts with the in-room television without having to recollect their passwords.
Also, consumers want the power to “unbundle” hotel offerings and only pay for the services they use during their stay, Alt said. They’re even willing to pay more for personalized selections equivalent to choosing a precise room or floor, he said, likening it to options consumers have in booking airline tickets.
Within the Oracle survey, 40% of hoteliers said the unbundling model is the longer term of the industry.
“It is a step-change from the best way hotels recognize revenue today, so that they need a more modern [enterprise resource planning] ERP system to have the option to adapt to those changes,” Alt said.
He declined to offer specific forecasts for future spending but said hotels are making significant investments throughout the business.
The difficulty is that some hotel technology systems are antiquated, especially at independent hotels. In an article published in Hospitalitynet, Recent York University professor Max Starkov said the hospitality industry can often spend lower than 2.5% of net room revenue on IT, including staff and advantages.
Darin Yug, PwC U.S. hospitality and gaming consulting leader, also has seen a greater concentrate on updating back-office systems.
“There hadn’t been a variety of attention paid to the back office,” he said, adding that corporations were having to play a little bit of catch-up. But even this investment can also be being inspired partly by labor needs, he said.
“The search for talent shouldn’t be just for people cleansing your rooms and hotels, but additionally running finance operations and it’s getting an increasing number of difficult,” Yug said. “By putting higher technology, higher tools of their hands, it’s really about upgrading … the experience for his or her employees.”
Scott Strickland, the chief information officer at Wyndham Hotels & Resorts, said the small business owners that franchise Wyndham hotel brands like Wingate, Ramada and Days Inn, get pleasure from using one in all two standardized property management systems it offers.
“We made the foundational investment [to standardize], which puts us way ahead of our competitors,” Strickland said. It also implies that a few of services more commonly related to high-end hotels can be found to its more economy-priced hotels brands.
“For us to be have the option to do it on the economy hotel and to roll that out at scale is something we’re very pleased with,” Strickland said. He added that it means a bus full of children getting back from a soccer tournament can arrive at a Super 8 hotel and use self-service check-in to hurry their option to their rooms, which helps construct loyalty.
Wyndham’s franchisees also can opt into its reservation system, which routes customers to a centralized call center to book a room. Wyndham said the 4,000 hotels that use the system see a 15% or higher premium on rates than non-participating hotels. Also, hotel operators are in a position to concentrate on the guests at their hotel or other duties like cleansing rooms, with out a distraction, Strickland said.
Still, Wyndham is on the lookout for recent ways to make use of tech to ease the labor crunch. It’s piloting a cashless tipping system where guests are in a position to tip the housekeeping staff by scanning a QR code within the room with a phone. To this point, Wyndham has seen a rise in tipping, Strickland said.
Bene, the provider of the cashless tipping platform, has said its clients see a median increase in staff compensation of $4.50 an hour, and a 30% increase in monthly staff retention.
Zhihao | Moment | Getty Images
Strickland said the system makes it easier for guests, who often don’t carry money, to have the option to tip.
Many hotels are also considering chatbots, machine learning, artificial intelligence, facial recognition and other ways to run properties more efficiently and safely with less staff. These technologies are particularly helpful in handling more mundane requests, which then allows staff to concentrate on more meaningful one-on-one interactions, said Oracle’s Alt.
“These kinds of strategic technologies will probably be critical because the hospitality industry remains to be facing a labor shortage as we head into the busy summer travel season,” he said.
‘Flexy Time’ and road trip apps
Sharan Pasricha, the founder and co-CEO of lifestyle hospitality company Ennismore, said he has used technology as a key point of differentiation in his business.
“The hotel industry runs on a really archaic technology stack,” said Pasricha, who explained that many hotels are only now switching over their property management systems to the cloud.
Pasricha’s approach has been to have in-house software developers and product engineers who can create bespoke applications. One among his focus areas was improving the booking system, where he drew inspiration from features within the e-commerce industry, which he sees as more modern than the hotel industry.
“I could not quite understand why we’d accept a really traditional, boring, badly designed … cookie-cutter [third-party] booking engine, once we care a lot about our physical experiences and all the things in our hotels is so thoughtful and authentic and inventive,” he said.
His efforts led to more bookings coming on to the web site of Hoxton, one in all Ennismore’s boutique hotel brands. About 50% are direct, Pasricha said.
It also made it possible for the corporate to create Flexy Time, a feature that enables its guests to ascertain in or out of a room 24 hours a day, somewhat than having to attend for a standardized time. Pasricha said the offering, which comes with no extra charge, means guests do not have to “bum across the lobby for five hours” after arriving on the town on a red-eye flight.
Flexy Time presents more of a logistical and operational challenge, however it has helped Hoxton stand out amongst other hotel brands. To be sure that rooms are ready, it asks guests when they’ll arrive and depart once they book.
“Having the power to manage the technology lets you have these iterations and innovations, which has for us, garnered a variety of loyalty with our guests,” he said.
Ennismore is within the means of expanding Flexy Time to its 14-brand portfolio, which incorporates the Scottish hotel Gleneagles, So/ and Mama Shelter, amongst others. The corporate is a three way partnership with Accor, the French hospitality brand that owns the Fairmont and Sofitel hotel brands, amongst others.
Wyndham also looks for methods to face out with its investments. Two weeks ago, it launched a road trip planning feature on its app that recommends routes and allows users to customize a visit itinerary. Also, ahead are investments it’ll make in electric vehicle charging stations, including a reservation system to book plug-in time, Strickland said.
Mobile apps are great for corporations that wish to construct loyalty with their customers. The info corporations can harvest allows them to higher tailor future services and offers.
Even though it’s too soon to say what impact inflation could have on the industry, the pandemic forced “a recent level of appreciation” for contemporary systems, in line with Alt.
“While the pace of innovation may slow, hotels know there isn’t any turning back on these recent consumer demands and they have to have the option to adapt with the assistance of the best technology,” he said.