Hospitality Industry Trends to Watch in 2016General Posted by Alex Gaggioli Date December 11, 2015 LinkedinFacebookTwitterSubscribe to the BlogGet our new posts sent right to your email inbox. IntroductionLast week, we shared how you can prepare your hotel, hostel, bed and breakfast, or other accommodation for 2016. As a continuation of our new year series, we have created a list of predictions for the upcoming year. We have included many of the topics we reported on in 2015, such as mobile technology, and hopefully some new insights into what the new year will bring. We expect to see technology further influence every facet of hospitality from the way your hotel operates to the way you interact with guests. Trends such as the sharing economy will mature and take greater shape in 2016.Here is a list of what we think will be most important in 2016. Continued Hospitality Industry GrowthThe hospitality industry saw positive growth in 2015, with every key performance indicator increasing, according to a report from STR and Tourism Economics’ forecast. For 2015, they forecasted a 1.4% growth in occupancy, 5.2% increase in average daily rate, and a 6.6% growth in RevPar. Their forecast for 2016 included a 0.8% increase in occupancy, 5.0% increase in ADR, and 5.8% increase for RevPar. STR also projects demand to increase in 2016 by 1.4%. Accommodations benefited from these increases in 2015 and projections for 2016 appear to point north for the US market. Hospitality Technology EvolvesKreg Steppe/FlickrFor decades, hospitality technology has been old, cumbersome, and expensive. But, in the past few years we have seen the rise of SaaS (software as a service) products which are more intuitive and cost much less than their predecessors. Property management systems and channel managers are now readily available to small properties like independent hotels and hostels that enable owners to compete on a more level playing field. In 2016, we expect to see the evolution of hospitality SaaS products to continue. SaaS providers, like Cloudbeds, now offer suites of products that work together to make hoteliers’ lives easier. Previously, hoteliers were forced to use many different software solutions to power their businesses. Examples of these include channel managers, reservation systems, countless extranets, customer management systems, email services, etc. Many SaaS products on the market don’t solve all of hoteliers’ current needs, but we expect to see software providers enhance their current products and add ones to their future lineup. We also expect a heavier reliance on cloud computing. Gone are the days where your hotel’s information was stored on servers in your back room taking up valuable space. Cloud computing offers greater security and reliability because your hotel does not have to keep up with security maintenance. Related to SaaS and cloud computing, utility computing will become the norm in 2016. Utility computing treats the technology that powers your property, like software, backup servers, etc., like a utility rather than an owned good. A property will pay a monthly usage fee rather than paying a large upfront cost. Utility computing also means that things like software updates and security updates will be completed by the provider rather than you. The Sharing Economy Will GrowWe’ve reported on the sharing economy here, How the Sharing Economy Influences Hospitality, here. As widely successful startups like Airbnb and Uber mature and grow in 2016, it will be interesting to see how they influence the market. Inc defines The Sharing Economy as: “Consumers or firms granting each other temporary access to their under-utilized physical assets (‘idle capacity’), possibly for money.”It’s simple to think about how Airbnb fits into that definition. People rent out their properties that would otherwise go unused via Airbnb’s website and apps. Or, someone with a car and free time can give people rides with Uber. It’s a simple idea that has had huge implications. We expect more companies to enter the sharing economy and enable everyday consumers to use their existing assets to make money. But, we also expect existing hospitality brands to take a piece of the sharing economy any way they can. And not all startups will focus on helping consumers make money off their existing assets. New markets will arise for hotels and other accommodations to sell their unused inventory, like Hotels by Day. Hotels by Day partners with hotels and lets people rent rooms for the hours during the day they go unoccupied between morning check-out and afternoon check-in. This business model enables hotels to make extra revenue based on inventory that is otherwise sitting empty. While it does offer its own challenges, it’s a unique way for travel to approach the sharing economy. New Customer Facing TechnologyEvery year brings a new round of consumer-facing technology that influences consumer behavior. We expect 2016 to be no different. More technology will empower consumers to gain information and book travel in new ways. An example of technology that we expect to enjoy greater market dominance are websites like Skiplagged that help travelers find the quickest and cheapest routes. They do this by short-stopping connecting flights. For example, a ticket from San Diego to Milwaukee that connects through Chicago is often significantly cheaper than buying a San Diego to Chicago ticket. Skiplagged books you the flight to Milwaukee but tells you to get off in Chicago instead. There are a few caveats, like that airlines don’t like you to do this, and you can’t check any luggage, but it shows how travelers are getting creative with technology to save money. Another example is WorldMate, an app designed to help making complicated travel easier. They let you forward all your confirmation emails to them and they create an easy-to-read itinerary for you. This type of simplicity is highly sought after when booking travel on several different websites. WorldMate also uses your past reservations to give you similar recommendations in new cities. In 2016, we’ll see more services making it easier and cheaper for people to travel the world. Technology will integrate different and competing products and services to make travel easier for guests.More Niche MarketplacesOnline travel agencies that cater to specific lifestyles or identities will remain popular in 2016. Travelers are always looking for new information on travel destinations, and sites that cater to the individual will only become more popular. For example, Bud and Breakfast caters to marijuana-loving travelers who are looking for friendly and legal places to enjoy their hobby. Because marijuana laws are quite different across the United States and world, it is a great resource to find accurate information. Another example of a niche marketplace is Worldpackers. Worldpackers caters to a younger demographic seeking adventures around the world. The platform is unique because it allows travelers to exchange their labor and skills for accommodation, creating a win-win situation for travelers and hostel owners. The platform is about creating honest relationships between all types of travel enthusiasts. It’s possible for hoteliers to take advantage of niche online travel agencies when they use a channel manager. With a channel manager, adding and testing a new marketing channel can be a simple process. More channels means more potential guests which means more bookings. We just so happen to have a fantastic channel manager solution called myallocator, which connects to both Bud and Breakfast and Worldpackers. Continued Importance for Direct BookingsOnline travel agencies continue to dominate the travel industry. Companies like Expedia, Priceline, and Tripadvisor continue to raise their commission fees. For smaller properties, these types of commissions are hard to swallow. In June of 2014, Priceline acquired buuteeq, a digital marketing startup that powered hotel websites and booking engines. Priceline renamed buuteeq “BookingSuite”, and offered its website services for free to hotels, in exchange for 10% of all direct bookings made on them. This was Priceline’s way to get a percentage of direct hotel bookings. This lesson demonstrates that even giant OTAs salivate at the revenue direct bookings can bring hotels. If they expect direct bookings to increase in the coming years, so should you.We often blog about ways to increase direct bookings (like here, 8 Ways to Dominate Your Direct Bookings and here, This is why you shouldn’t pay for direct bookings), so for 2016, we highly suggest putting time and effort into your direct bookings marketing strategy. Travelers in the trip planning and research phase visit up to 38 sites before they make a purchase. In the research phase, you want potential guests to gain more value from your website than any other. Give them a reason to stay on your website, through best rate guarantees or other added bonuses. Here are some other tactics you can use to gain direct bookings. For starters, you should have a booking engine on your website that is also mobile responsive. Cloudbeds has one of those too, called mybookings. Secondly, you should have an updated website with big, beautiful photos. Remember to include vital information such as room size, available amenities, and local attractions. And thirdly, you should focus on attracting guests to your website through content marketing, social media, and online ads. ConclusionIn 2016, we will see the continued evolution of hospitality software and consumer-facing technology that will influence purchase behavior. Now, more than ever, is a perfect time to prepare for these changes. If you haven’t already seen our 2016 Marketing Trends article, you can read it here.