Hospitality

From technological developments to the rise of niche hotels and lifestyle branding, the lodging industry is host to many burgeoning business trends.

The Internet and Lodging Alternatives

The Internet has changed the nature of the hospitality industry. Consumers can now compare prices and services with ease. Travel agents used to be invaluable—they would handle a trip for a customer by calling hotels, booking tickets, and making reservations. The Internet has rendered the travel agent obsolete, in many respects. Consumers can research destinations, compare prices, and visit hotel and entertainment Web sites that provide most, if not all, of the information they need. Online travel agent (OTA) Web sites such as Expedia, Kayak, Orbitz, Priceline, Travelocity, and TripAdvisor allow customers access to online price comparisons. OTAs account for more than 40 percent the online travel booking market in the U.S., and this number is expected to grow in the next few years.

Airbnb also continues to impact the hospitality industry, offering travelers even great pricing power over hotels. A 2018 study of Airbnb by a Harvard Business School professor revealed that "in the 10 cities with the largest Airbnb market share in the United States, the entry of Airbnb resulted in 1.3 percent fewer hotel nights booked and a 1.5 percent loss in hotel revenue." Airbnb continues to grow, with more than 6 million listings in more than 190 countries and more than 100,000 cities. The hotel industry has launched investigations into the Airbnb impact on housing prices and has also campaigned against Airbnb hosts, portraying them as commercial operators conducting illegal businesses. The debates and competitions between hotels and Airbnb continues.

Vrbo (Vacation rentals by owner), owned by Expedia, has also grown in recent years to become a popular option for travelers seeking alternative vacation rental options. In 2022, approximately 11 percent of U.S. travel portal users booked their rentals through Vrbo. The company now lists more than 2 million homes available for vacation rentals.

Hundreds of millions of travel bookings are made on the Internet each year, through computers, laptops, as well as tablets and smartphones. According to industry experts, the Internet has increased the number of rooms occupied per night, but decreased revenue per room, as the ease of Internet comparison shopping and Internet-only promos have increased competition among hospitality providers. The commissions that hoteliers may have gotten from booking guests directly have decreased as more of the profits have been going to online travel agents.

Today’s hotels are in fierce competition with each other because of their savvy customer base. Social media also continues to strongly affect the hotel industry, as customers frequently share their comments about their hotel experiences and post photos on sites such as Facebook, Instagram, Twitter, Yelp, among many others. Consequently, customer services must now be sterling. Desk clerks, tour guides, and other people who work on the front lines must be friendly, positive, and articulate at all times. And while excellent service is a great draw for guests, word of mouth still remains the best kind of advertisement.

Niche Hotels

One way that hotels have stayed competitive is by entering niche markets. In the hospitality industry, niche markets are specialty services—gaming resorts, golf resorts, shopping excursions, and eco-tourism. Destination vacations and tours of all kinds are now big business. Tours have exploded as a market, including tours geared to specific interests and groups of people.

Some large companies have a firm grasp on niche markets. Along with newly themed concepts, many hotels and resorts, including Walt Disney World, Club Med, Fairfield Resorts, and Sandals, offer perks to attract guests. For example, Hotel Chicago, formerly the Hotel Sax and before that the House of Blues Hotel, is part of Marriott's Autograph Collection. It's a luxurious hotel that features snakeskin wingback chairs, paisley-embossed leather headboards, and painted silhouettes of phantom chandeliers in all of its 354 rooms. The service people are extremely helpful and very enthusiastic about their work. Guests are encouraged to mingle and socialize in areas throughout the hotel, including its penthouse lounge. The House of Blues club adjacent to the hotel hosts performances at all hours of the day and night. Hotel Chicago serves as a temporary home to people in the music business, including roadies and managers who create a high-energy atmosphere.

Eco-Friendly Hotels

Environmentally conscious hotels have become more popular in the past few years and will continue to attract visitors in the years to come. Eco-friendly hotels focus on catering to people who are interested in conservation and having as little impact on the environment as possible. Most of the products in these types of hotels are energy efficient and eco-friendly, such as lighting, bath products, and food and beverage ware. The hotel Solage, Auberge Resorts Collection, located in Napa Valley, California, for example, is an eco-friendly, 89-room resort that consists of stand-alone studios and is surrounded by scrubby young vegetation. The hotel is built and furnished from sustainably harvested wood and recycled materials. Guests can bicycle to morning yoga and enjoy fruit and granola at the open-air restaurant. The lounge by the pool is lined with sago palms. The guesthouses have huge slate-floor bathrooms and spare, dark-wood furniture. Complimentary bicycles are available for guest use. Shaded patios allow for guest privacy.

In an increasingly environmentally conscious world, hotels like Solage, which are on the eco-friendly cutting edge, will enjoy an ever-increasing market share, and employees with an understanding of this fast-growing employment sector will find themselves in demand.

Branding

Strong branding will continue to be more important than most other market trends in the years to come. Brand name hotels are growing globally, and strong branding is necessary to drive online direct bookings, to differentiate and avoid commoditization, and to provide leverage against online intermediaries. To further enhance the bond and brand value, significant investments will be made in brand/franchisee portals, which will enhance and streamline both processes and information delivery.

Other Trends: Self-Service, Blogs for Guests, and Mobile Technology

One recent trend in particular that will continue to grow is self-service. Common use self-service (CUSS) will streamline travel and lodging. For example, hotels are working with airlines to enable guests to print their boarding passes at hotels during check-out—a convenience for the passenger/guest.

Another major trend is blogs created by and for hotel guests. Blogs can add to the word-of-mouth business on which many hospitality businesses rely. Blogs also provide hotels with a defensive strategy by enabling them to control reviews, recommendations, and complaints. An interactive communication forum enables a relationship between the hotel and the customer beyond the customer’s actual stay at the hotel.

Mobile technology also continues to help increase revenue in the hospitality industry. According to a Pew Research Center report, approximately 96 percent of Americans own a cellphone of some sort. About 85 percent own a smartphone, a 35 percent increase compared to 2011. About 75 percent own a desktop or laptop computer, about 50 percent own a tablet computer, and 50 percent own an e-reader. Pew also reported that a growing number of adults aged 65 and older own a smartphone and are using social media, which was once the terrain of mainly young adults. Marketing via mobile technology has grown in popularity as it helps people quickly disseminate promotional information, upcoming events, and room availability.

Many hotels and restaurants now rely on customers having smartphones. Rather than providing printed menus, some restaurants leave a QR code on the table for diners to scan with their phones and view the menu on their phone screen. This allows restaurants to provide the most up-to-date menu efficiently. Many hotels offer mobile check-in options via phone apps and contactless check-in, which lets a guest use their phone as a room key. In addition, many hospitality business deliver receipts via email or text rather than providing a printed copy.