2017 Hospitality Trends in ReviewGeneral Posted by Alex Gaggioli Date December 19, 2017 2sharesLinkedinFacebookTwitterSubscribe to the BlogGet our new posts sent right to your email inbox. At the end of 2016, we predicted what trends would define 2017 for the hospitality industry. In some cases, we nailed it, while other trends never really took off. Let’s take a look back and review how our trend predictions impacted (or didn’t impact) the hospitality industry, especially for independent property owners and managers.The industry is still growingAt the end of 2016, STR predicated how the hospitality industry might grow in 2017. STR has since revised those projections for 2017, which in some cases are different than the original estimates.For the most part, STR has maintained their predictions for supply, demand, and occupancy. Predictions for average daily rate (ADR) and revenue per available room (RevPAR) are 1.5% less than originally predicted. Essentially, fewer dollars are flowing to accommodation providers than originally thought, at least in the case of room revenue.The hospitality industry grew by 6% across the board (CBRE) and, while growth in the industry is slowing down, it was positive for the 9th consecutive year in a row. One of the main reasons overall occupancy percentage isn’t increasing at the same rate as the industry is due to supply growth in the majority of markets. More properties and added supply aren’t always in sync with actual traveler growth. Even though more people are traveling, rate of supply has been increasing at the same (or greater) rate.ConsolidationConsolidation continues to be a major trend in almost every industry, including hospitality. Last year, we predicted that we would continue to see high profile acquisitions and mergers in 2017. While there wasn’t an onslaught of companies purchased by large conglomerates like Expedia or Priceline, many mergers and acquisitions made headlines this year. Here are a few of the biggest ones:Startup and Cloudbeds partner, TrustYou, was acquired earlier in 2017 by Japanese company Recruit Holdings.Airbnb acquired a handful of companies including Luxury Retreats and Accomable.Booking.com purchased Evature and some even believe TripAdvisor is preparing to sell to one of the travel giants.Other mergers:Pace Holding Corporation and Playa Hotels & ResortsHyatt Hotels and Miraval GroupChina Lodging and Crystal Orange HotelsBest Western and Sweden HotelsGenerator Hostels acquired by private equity firmMaturing of existing platformsRelated to mergers and acquisitions, we’ve seen the continuing maturation of existing platforms that are helping large companies innovate at a faster pace. Brands like Expedia, Marriott, or Airbnb, are doing two things: They’re acquiring companies to increase their portfolio, as well as for their bespoke tools, and then also creating new features and solutions in-house.Hostel culture on the riseWhile it’s hard to quantify the rise of hostel culture, it’s clear to those paying attention that hostels are gaining cultural momentum. While hostels continue to maintain a strong culture foothold outside the United States, we’re starting to see its impact stateside. Major online travel agencies are now actively distributing and promoting hostel accommodations alongside traditional accommodation types.For example, in a recent search on Expedia for a room in Las Vegas, there were listings for all the major hotels and casinos, right alongside them were hostel listings. The same search, even last year, would have produced different results. For us, this signifies a small but meaningful change in the industry as a whole.One of the hostel industry’s largest groups, Generator Hostels, was sold to a private equity firm for $480 million. 2017 was a year of growth for the largest hostel groups in Cloudbeds’ own group of properties, and we know it was for our clients as well.Owning your online presenceOwning your online presence is a never-ending game of change for every business, especially for those in the hospitality industry. While managing your presence on Google and Facebook remain important to most businesses, the endless list of review websites and online travel agencies are becoming increasingly important. An entirely new industry dedicated to reputation management has sprung up as brands of all sizes aim to take control of their online presence.When it comes down to researching and ultimately booking a trip, travelers have an incredible number of options to look at. While the research back in 2015 about consumer booking behavior is becoming dated, there’s no doubt that travelers are still clicking around to upwards of 40 sites when making decisions. Making sure that your property’s brand was well represented online was a topic on everyone’s mind in 2017 and will continue far into 2018 and beyond.The internet’s powerhouses, Google and Facebook maintained dominance this year. Both made several changes to their respective algorithms which affected brands across the web that we’ve seen affect web traffic patterns first hand. For example, many businesses saw their Facebook page’s click rates go down by as much as 25% and Google returned as the number one source of traffic for major publishers.While most hospitality businesses are not pushing as much web traffic as say the New York Times or Buzzfeed, the same trends that affect them will almost always affect you too.Local and shared experiencesOne of the biggest and most talked about trends of the year was the attention and investment put into activities. We saw established hospitality businesses integrate activities into their loyalty programs. Marriott and Airbnb started offering activities on their platform for the first time, and more than $100m was invested in startups like Klook, Tigets, TourRadar, and Get Your Guide.Phocuswright estimates that the activities market will reach nearly $183 billion by 2020, and there are a lot of brands out there hoping to snag a few dollars of that market. While the activities market is as old as travel itself, it feels like 2017 was the year that everyone really took notice.As we look back on 2017, we see that there are a lot of people fighting to stay ahead of the trend, whether that’s a 3-year-old company like Klook or a legacy brand like Marriott. As we roll into 2018, it’s going to be an all-out battle to win over consumers activity spending dollars.Rate transparencyIn 2017, the battle between OTAs and the notion of direct bookings seemed to subside, if only ever so slightly. Back in 2016, rate transparency, parity, and distribution of third-party bookings to direct bookings was a main topic of conversation. You had the large brands running massive direct booking campaigns driving the conversation, which trickled down to independent property owners.While maintaining a well-balanced distribution strategy is essential to any property, the conversation has moved on to other topics – including many of the ones above. Next year, we expect the conversation to focus more on how to increase booking volume through new distribution channels.Stay tuned for our 2018 trends predictions!