INDUSTRY TRENDS

5 Hospitality Industry Trends for 2022 and How Property Owners Can Prepare

By Nancy Huang | Published in December, 2020

The abrupt disruption that the lodging and hospitality industry experienced in 2020 paved the way for how the industry adapted in 2021 – and how it will continue to innovate in the months and years to come. While the hotel industry inched toward normalcy in 2021, we still have a way to go to reach pre-pandemic recovery levels – especially as the international community grapples with new coronavirus variants. As the world continues to roll out vaccines and becomes more experienced at tackling new COVID variants, there is light on the horizon for travel.

Here are the hospitality industry trends that will be critical to shaping your strategies in 2022.

1. “Revenge Travel” is here – and travelers are ready to splurge

people waiting in line at airport with masks on

While travel recovery is in a fragile state as the world navigates each discovery of a new COVID variant, there’s evidence that the hospitality industry won’t be going back to the strict restrictions of March 2020.

Even though millions of people around the world lost their jobs, some parts of the population were able to gather more savings in the bank than ever before, either with the help of government stimulus checks or due to the lack of spending on travel, dining, and entertainment after the world shut down. According to McKinsey, the demographic of high-income earners in the U.S. who were able to keep their jobs throughout the pandemic have a savings rate of 10 to 20% higher now than pre-pandemic – and they’re eager to spend some of it on travel.

After spending so much extra time at home either under lockdown orders or working remotely, pent-up demand for travel is surging. It’s leading to what’s known as “revenge travel,” or the idea that people have a stronger desire than ever to travel freely to make up for the time spent stuck at home and experiences that were missed. People have discovered something about travel: it’s not a want; it’s a need.

As people are beginning to travel more, three habits are trending:

1. A higher demand for domestic trips (as international travel continues to face limitations)

2. A preference for longer stays (with 25% of travelers wanting to book stays over 10 nights)

3. More value placed on flexible bookings (leading to the need for adapted cancellation policies that accommodate changes)

While business travel is still slow worldwide, luxury travel is has been a leader in travel recovery. That means a focus on premiumization – or emphasizing the high-quality aspects of your property or location as a means to a higher rate – can play a big role in attracting a higher-paying travel demographic.

What hoteliers and hosts can do to prepare:

Take stock of your marketing and pricing strategies to make sure you’re appealing to the right customers, at the right time in their digital guest journeys. One way to boost your hotel marketing strategy is to use social media to grow your hotel brand. Learn how to win on social media by choosing the right platforms, producing engaging content, setting up a posting schedule, and measuring your results.

Additionally, make sure you’re maximizing your revenue potential by creating attractive and competitive rate plans and pricing. If you aren’t a professional revenue manager, the task can seem daunting and it may be tempting to resort to the basic rates and simple room pricing you’re accustomed to using. However, there are profitability benefits to creating a dynamic rate plan and pricing strategy.

 

2. Demand becomes even more unpredictable

The constant changes that come with the pandemic mean travel planning has become unpredictable for both travelers and suppliers alike, with government regulations and travel restrictions prone to shift from one week to another.

As a result, travelers are trying to build their own certainty by “trip stacking” – or taking advantage of flexible policies to book multiple trips at once, knowing that they will either cancel or postpone one of the trips. This practice is making travel demand even more uncertain for suppliers and accommodation providers, who now have to contend with fluctuating demand, shorter booking windows, and last-minute cancellations.

What hoteliers and hosts can do to prepare:

It’s become difficult to predict demand, as it’s no longer driven by the factors used in the past, such as seasonality and marquee events. Demand can also spike high or low based on circumstances that are out of your control, such as travel restrictions. One country’s new quarantine restrictions may cause demand for domestic travel in your own country to suddenly rise, but then the announcement of another country’s loosened entry regulations may cause cancellations as travelers drop their staycations in favor of traveling abroad.

To maximize revenue in times of demand highs, you’ll want to stay ahead of the curve by tapping into real-time data insights and pricing intelligence. You can do this by using a revenue management tool to alert you when your local market and your competitors change pricing so you can always be well-positioned in comparison. A revenue management tool can even alert you to adjust your rates and stay restrictions when your occupancy experiences a sudden drop from cancellations so that you can fill those empty hotel rooms.

Additionally, investing in digital marketing with the goal of getting more direct bookings – including having an attractive, easy-to-use website – is also important as it allows you to build a relationship with a guest directly. Having a one-on-one relationship with a guest can help mitigate issues and misunderstandings over things like non-refundable rates (which help to prevent chargebacks).

 

3. Labor issues carry on

According to the Bureau of Labor Statistics, the leisure and hospitality sector comprised nearly 31% of the 531,000 jobs the U.S. economy added in October 2021, and yet the labor shortage continues to be a huge issue for the lodging industry. Hospitality businesses have notoriously suffered from high turnover rates, and the pandemic has only exacerbated the labor issues.

While increasing pay rates has attracted some talent, it’s not the definitive solution. And, for some properties that are already operating on low resources, it’s not even a viable one. Additionally, many people have left the industry for good after having time to reflect on their careers or found other opportunities as wage wars rage on.

What hoteliers and hosts can do to prepare:

You can’t – and shouldn’t – take the human aspect out of hospitality, but you can implement automation for manual tasks. Using a fully-integrated technology solution can help save hours of work per week. Look for solutions that streamline operations by automating manual tasks that were previously handled by staff, from reconciling credit card payments to managing rates in multiple OTA extranets to proactively adjusting rates to fill rooms. This way, your staff’s time will be freed up to spend more time making guests happy.

In the past, hoteliers and hosts had to work with a number of different tools, platforms, and vendors to achieve these goals. But more and more properties today are choosing a platform approach, partnering with a single technology provider like Cloudbeds that seamlessly integrates all the tools they need into one, cloud-based platform.

woman with luggage in lobby checking in on her phone

4. Travelers expect a more digital guest experience

Leaders in the hospitality and lodging industry have long talked about the importance of providing a great guest experience. In fact, a recent survey found that companies that made substantial investments in their customer experience over the past year are 10 times more resilient and three times more likely than their lagging counterparts to have grown their customer base in the last six months.

Today’s guests now expect a frictionless, digital experience. McKinsey reports that 58% of all customer interactions globally are now digital, compared to 36% prior to the pandemic. This shift has occurred across all generations, not just millennials and Gen Z. There is a growing demand for contactless, self-service options like keyless entry and contactless payments. Smartphones have become a central device in the guest experience, allowing guests to complete mobile check-in and even engage in messaging with the property or host to request things like room service. These digital apps and services not only make for a happy hotel stay, they are also easy to implement at vacation rental properties.

What hoteliers and hosts can do to prepare:

In recent years, new technologies have emerged allowing properties of all types and sizes to implement upgrades like keyless entry, self check-in, and mobile concierge. Many of these services are now available through apps, and if you have an integrated hospitality management platform with an open API, you can integrate these apps with your PMS to make things like mobile check-in seamless for you and your guests. This way, not only will you be providing global travelers and hotel guests with a modern travel experience, you’ll also keep all your guest data centralized in one place for easy operations.

 

5. A renewed emphasis on sustainability

Although sustainability has been on the travel trends radar for a few years now, the pandemic and a growing concern over more frequent natural disasters have kept this topic at the forefront of consumers’ interests. According to a Booking.com report, 83% of global travelers find sustainable travel to be vital, with 61% saying the pandemic has made them want to travel more sustainably in the future. The same report found that 3 out of 4 accommodation partners claim they have implemented some form of sustainable practices at their property.

One of the latest trends the travel industry is seeing is guests are considering taking fewer trips but booking longer stays. This way, the frequency of air travel is reduced. According to Airbnb’s Q3 2021 earnings report, the company’s fastest-growing trip length is 28 days long, accounting for 20% of nights booked that quarter, up from 14% in the prior year’s quarter. Personal wellness and the well-being of the planet will likely only grow in importance in the years to come.

What hoteliers and hosts can do to prepare:

The pressure is on for everyone to make sustainable adjustments in the way live and run our businesses in order to enact an impactful change for our planet. Even small changes will make a difference not only on the environment but also on your wallet. For example, lodging businesses spend an estimated 6% of their operating costs on utilities, of which 35% goes to lighting. Switching to energy-efficient light bulbs is an easy and affordable step towards sustainability that will also help save you money. Other ways to save energy include implementing smart thermostats that can be automated to change the temperature throughout the day and using occupancy sensors to turn off lights (this alone can reduce electricity usage by 30%).

When it comes to conserving water, low-flush toilets and low-flow showerheads are a good start, as well as introducing and towel and sheet reuse program. While it may seem like reusing towels or showering with less water flow will be disappointing to guests, if you make it known that each of these modifications are being done for the sake of sustainability, your guests will be understanding, especially when 73% of travelers say they would be more likely to choose accommodations that have implemented sustainability practices.

 

Travel Trends on the back burner

In 2019, emerging technologies such as artificial intelligence, virtual reality, augmented reality, smart rooms, and the internet of things, were slated to gain wider-spread use and adaptation throughout the hospitality industry. However, when the 2020 health crisis took over, the rise of these digital superpowers got derailed. There is a good chance these initiatives will have their time to shine again, but their moment has been delayed and only time and recovery will tell when their resurgence will be. For the time being, contactless and self-service technologies have taken precedence when it comes to hospitality industry trends.

 

Change is inevitable

If the pandemic taught us anything, it’s that change can happen overnight. As more is learned about emerging COVID variants, hoteliers and hosts must remain vigilant and agile, ready to adapt in a fast-paced world. Lean on the above five trends to prepare for what’s ahead, and build in extra flexibility to tackle emerging trends as they arise.

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About Nancy Huang

Nancy Huang is the Director of Marketing Communications at Cloudbeds. She has 15 years of experience working in marketing at the intersection where hospitality and travel meets technology and e-commerce. When she’s not studying travel trends or ideating marketing campaigns, she loves traveling, dining, and swimming in really cold lakes.

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