5 hospitality industry trends for 2023 and how property owners can prepare

After a chaotic 2021 filled with uncertainty, lodging operators saw demand strengthen in 2022 as “revenge travel” surged with reduced restrictions and eager travelers looking to get back out and explore. While this increase in demand was welcomed, lodging operators were faced with significant staffing shortages and unpredictability due to “trip stacking” and changing government regulations.

The industry was resilient, and at the end of 2022, the US hotel industry exceeded pre-pandemic RevPar by 6.4%, and ADR increased by 12.8%. Technological advancements that would’ve taken years (or even decades) pre-pandemic were adopted by lodging businesses of all types as self-service technology like digital check-in, keyless door locks, chatbots, and contactless payments became more widely adopted.

While we can expect challenges in 2023 due to increasing inflation rates, economic uncertainty, and continued labor shortages, new hospitality industry trends bring exciting opportunities for hoteliers and guests alike.

Here are five of the latest trends to shape your strategies for a successful 2023.

1. Value-driven travel takes priority

Euromonitor International’s annual index found that international travel is expected to grow by 40% in 2023. While travel is anticipated to boom, the ways in which people travel will change.

With inflation and economic uncertainty prevalent worldwide, more travelers will rethink how to get the most value from their money. Whether through off-season bookings or low-budget accommodations, travelers are looking for ways to spread their dollar this year. Expedia found that 43% of travelers will stay in one to three-star hotels in 2023, opening up a valuable opportunity for lower-budget properties to capitalize on through their marketing efforts.

Even though price will play a determining factor in travelers’ decisions, the value and experiences lodging businesses offer will also play an important role. Hotel management must ensure that guests feel their experience was worth the cost, and personalized service will be critical in delivering this outcome.

Value doesn’t have to come with a hefty price tag — properties can offer simple add-ons and offers like:

• Free parking
• Welcome cocktail
• Guided walking tours
• Working spaces (with fast, reliable wifi)
• Booking discounts (long-stay or last-minute)
• Flexible cancellation policies
• Room upgrades

What hoteliers and hosts can do to prepare:

Effective revenue management will play a key role in 2023. As more demand shifts off-season, hoteliers must be flexible and stay in tune with market demand and competitor pricing. Investing in revenue management technology to automate your pricing strategy can help you maximize profitability and occupancy.

Upsells are another great way for hoteliers and hosts to bring value to the guest experience (and earn additional revenue in the process). Determine what your guest personas value and craft compelling upsells as package offers or add-ons. For example, if you attract a lot of “foodies,” consider partnering with a local operator to provide a guided food tour.

2. The vanishing front desk

Many hoteliers never thought they’d see the day when the front desk vanished. While there’s no magic wand to get rid of every hotel’s front desk, technology is rapidly taking over its function.

Properties of all sizes are replacing front desk activities with digital solutions, including mobile check-in, guest messaging, digital keys, and virtual concierges. This shift eliminates wait times, provides a more personalized guest experience, and will help mitigate the labor challenges the industry will continue to see in 2023. An October 2022 American Hotel & Lodging Association survey found that 87% of hotels were still struggling to attract and retain staff.

What hoteliers and hosts can do to prepare:

In recent years, digital technologies have become commonplace across vacation rentals, but this is the year when hoteliers and hosts alike must adopt solutions to streamline travel experiences. A hospitality platform with robust guest engagement tools can help support this transition from a traditional to a modern front desk experience.

Rethink your welcome experience in 2023 and consider how to make it more frictionless. Deliver outstanding customer experiences by greeting hotel guests, forming connections upon arrival, and designing engaging spaces for guests to interact with each other and staff. By removing the front desk barrier, hoteliers can develop deeper relationships with guests and be more creative with their service experience.

With the support of technology replacing mundane tasks, you can also work on improving your employee retention efforts by creating more exciting and fulfilling front-of-house roles.

3. Blended travel meets hybrid lodging

Blended travel is on the rise this year, with Vasu Raja, Chief Commercial Officer at American Airlines, revealing that in September 2022, nearly half of its revenue came from blended trips – a figure that has itself doubled – and is set to drive real revenue growth in 2023. Blended travelers range from remote workers to digital nomads, families, workcations, and corporate retreats and require diverse accommodation options and amenities.

Hotel guests will expect more choice and flexibility when it comes to hotel rooms, and properties can adapt to provide options like suites, private rooms, dorms, and apartment-style accommodations all within one facility. 

This style of hybrid lodging has grown in popularity across hospitality businesses, and properties of all types have started to blend, with hotel brands getting into vacation rentals (like Mariott Homes & Villas) and vacation rentals becoming more like hotels (like Sonder). Skift refers to this shift as the great merging, and we expect to see the rise of more flexible properties in 2023.

This evolution is evident in a recent survey conducted by Hotel Tech Report in which surveyed hotels noted that 15% of their bookings come from Airbnb, an online travel agent (OTA) that previously consisted predominantly of rentals.

What hoteliers and hosts can do to prepare:

2023 will be the year of choice. Bleisure travel is expected to remain strong, with a predicted 75% of remote-capable workers staying fully remote or hybrid in 2023. This group of travelers stays at hotels for extended periods and is drawn to flexible properties with a mix of accommodation types and communal spaces.

Lodging operators must determine what room types make the most sense for their target demographics and reconfigure their offerings to appeal to travelers. Technology will play a pivotal role in supporting a combination of room types within a single property. Look for a hospitality platform that allows you to easily manage and sell flexible inventory.

Don’t feel the need to label your property. Instead, make clear what experiences guests can expect from staying with you. Highlight amenities and room types and list your property on OTA platforms outside your typical distribution mix.

4. Evolution of travel search moves toward video

When thinking about the search methods you use on a daily basis, many of us can agree that video has taken the lead in how we consume content, and the trend continues in travel search. A December 2022 survey from Google found that more than half of respondents use video in their travel research (pointing to YouTube specifically at 41%).

Short-form videos, in particular, are quickly rising in popularity, making TikTok and Instagram critical platforms for travel research. With over 1.5 billion active users, Gen Z and millennials have taken over TikTok; #Travel on TikTok has over 94 billion views and includes a mix of videos showcasing people’s travels and recommendations on places to stay and things to do. Users are inspired by these videos and are using the experiences and advice of others to plan their next vacation.

What hoteliers and hosts can do to prepare:

Google is already changing its algorithm to favor more short-form videos (Google considers anything under 10-minute short-form — but the shorter, the better!), making it an important medium for lodging operators to prioritize this year. Including videos on your website will help boost your SEO rankings, drive more visitors, and increase direct bookings.

Getting active on social media channels like Instagram, TikTok, and YouTube will also be crucial this year as users continue to use these platforms for travel research. Take advantage of user-generated content from your guests and encourage them to take and post videos that you can repost and share.

TikTok users especially trust content from other travelers more than brands, so ensure you use these videos and stay authentic in your video creation. TikTok’s 2023 trends report predicts that the three major trends this year will include:

• Actionable entertainment. Brand messaging should be uplifting, funny, personalized, or entertaining.
• Making space for joy. Users are seeking meaningful wellness and self-care. Brands should create content that helps people carve out joy for themselves through humor, relaxation, and relatable points of view.
• Community-built ideals. Brands should tap into niches and not be afraid to get specific with their content. Understanding key groups and amplifying the voices that define them will be crucial.

5. Shift from amenities to experiences

Gone are the days when travelers just looked for a hotel to provide a warm bed for the night. Today’s traveler is looking for an accommodation that fits the experience they envision for their entire vacation.

For example, an eco-friendly traveler might be drawn to a property offering farm-to-table dining experiences, in-room sustainability efforts, and excursions to local sanctuaries.

The way in which a property’s amenities and values line up to deliver a unique experience will be an essential consideration for travelers when booking an accommodation this year and will change how people research and book travel. Expedia predicts that 2023 will be the year of the “no-normal,” with travelers ditching conventional travel for experienced-based travel. Cowboy-cations, Foodie-menities, and Set-Jetters are just a few of the big new trends they’ve identified. 

What hoteliers and hosts can do to prepare:

2023 is the year when lodging operators must define their guest experience and decide what amenities and concepts to invest in. Making known your property’s offerings will be key as OTAs and other booking sites change how users shop for travel.  For example, in 2022, Airbnb introduced ‘Categories’ to allow travelers to search for specific styles of homes (ie. castles and tiny homes) and experiences (ie. golfing and skiing).

Learn about your guests and identify your guest personas to understand how to deliver better experiences. Gather guest demographic information from your PMS & CRM and consider surveying your guests for more detailed information. This data will help you develop new amenities, craft compelling hotel marketing efforts, and implement new processes to deliver personalized guest experiences.

Hospitality industry trends to watch

To wrap up our 2023 hospitality industry trend predictions, here are a few notable mentions that we are keeping an eye on this year to see how they evolve.

• AI/metaverse. One of the trendiest topics of discussion this year is the metaverse and how the industry will use virtual reality and augmented reality to create more immersive experiences. While we don’t expect metaverse hotel or travel experiences to catch on this year, ChatGPT is showing some interesting promise in delivering travel itineraries and recommendations. Many companies are discussing ways to incorporate AI-powered chat into their products; it may only be a matter of time before we see travel companies also integrating this capability into their platforms.  
• Sustainability. Hospitality companies are taking sustainability more seriously as climate change continues to have adverse effects on destinations around the world. Skift predicts that 2023 will be the year when sustainability moves from marketing to operations, with lodging operators finding more holistic ways to integrate sustainability efforts across properties.
• Smart rooms. As hotels move to incorporate more digital technologies across departments, smart rooms will become increasingly popular. Keyless door locks, voice control technology, and remote room controls are all features we can expect to see as hotels place a greater emphasis on technology in the coming years.

Delivering unique & meaningful experiences in 2023

In 2022, trends like ‘revenge travel’ and ‘trip stacking’ resulted from pent-up demand due to the lack of travel over the pandemic. Labor issues were more prevalent than ever, and new technology adoption soared as lodging operators learned that they could do more with less with the help of automation.

Moving into 2023, the industry appears confident about travel demand remaining high despite inflationary pressures; however, lodging businesses must still determine how their hotel operations can be sustained with a reduced workforce. The well-being of guests and hotel staff will be a priority, with growing demand for properties with a clear point of view that deliver unique, meaningful experiences.