In 2018 the hotel industry adapted to significant social and technological developments. Independent hotels had a standout performance in key areas; however, the battle for direct bookings continues. Hotel technology saw the arrival of voice assistants tailored for hotels and new blockchain technologies. Digital security was a key topic with physical and online threats demonstrating the risks posed by technological change. In hotel management, staff safety and sustainability were at the fore.
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Read on to find out what turned out to be some of the most important developments in the hotel industry in 2018:
Marketing and distribution
Strength of independent hotels
In 2018 independent hotels saw greater growth than branded hotels in terms of both average daily rates (ADR) and overall revenue growth.
There was also a continued trend of large chain hotels groups launching smaller boutique “soft” brands. In many ways, these soft brands seek to imitate independent hotels and counter the trend toward alternative accommodation. They offer experiences tailored to a specific market segment or incorporate more local flair. This highlights how independent hotels are well positioned in the current market to take advantage of the focus on unique and authentic experiences, and deep personalization.
Battle for direct bookings
According to market data from Phocuswright, the value of direct bookings continues to grow in absolute terms. However, the overall share of direct bookings is in a state of gradual decline. OTAs are already the dominant players in all major regions except North America, where large chains command significant market share.
One standout, however, is the increasing role of metasearch as a critical tool for travelers booking hotels online. A recent report from EyeforTravel and Fornova showed that 73% of surveyed travelers use metasearch regularly, with 44% using it every time they book.
Metasearch presents a valuable opportunity to empower hotels to receive high-impact direct bookings. Tools such as trivago’s Rate Connect allow hotels to set up effective cost-per-click (CPC) campaigns. This enables them to compete right alongside the big OTAs, globally or in selected markets. An intelligent automated bidding system also makes it simple to manage a budget for campaigns.
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Voice assistants are becoming increasingly common on phones and in the home. This year Amazon rolled out Echo devices customized for the hotel industry. These allow guests to ask hotel-specific questions, make concierge requests, and control the lights, temperature, television, and music in their hotel room. For hoteliers, the quickly developing voice assistant space could present an opportunity to increase revenue and guest satisfaction. This can be done by encouraging engagement with on-site revenue-generating services and enhancing communication between hotel staff and guests.
A small number of pioneers have begun using Blockchain for core hospitality applications. So far this has included functions such as secure payments, ID and security, and loyalty programs. However, despite the hype around cryptocurrencies in 2018, for most hoteliers blockchain technology is still some way from making a big impact. A report from Phocuswright described the field as the “new wild west.” It cautioned that while the technology has the potential to change the industry, hoteliers should take a careful and skeptical approach. Early adopters should question if blockchain adds value to a product or is simply an empty buzzword.
Digital security was a notable theme of 2018. The growth of the Internet of Things (IoT) presents new entry points for hackers and challenges to network security; the risks for keeping the physical hotel premises secure were exposed this year by an exploit for a common type of electronic keycard that would enable the creation of traceless master keys. While there are no foolproof solutions, hotels of all types should consider their physical and digital security and take practical steps to secure the storage of customer data.
In the US a series of legal reforms and hotel policy changes led to the rollout of panic buttons for hotel staff members. Some unions criticized the move as not going far enough and called for industry-wide bans on guests accused of sexual assault. In the age of #metoo, the move reflects the expectation that businesses provide a safe working environment for their staff and that this extends to preventing sexual assault.
2018 also brought into focus guests’ expectations for environmentally sustainable hotels. A research report from Hilton revealed 20% of respondents said they actively seek out a hotel brand’s environmental and social efforts before booking. A further 13% saying they would use this information if it was easily accessible. On the other hand, 62% of survey respondents would switch brands, based on reports of unethical business practices, such as environmental mismanagement. This suggests that a significant minority of guests are actively swayed by hotel’s environmental credentials, but that a bad news story caused by poor environmental management can have a huge impact on a hotel’s brand.
The choice to become more sustainable can also be motivated by the bottom line. One example is reducing food waste. A research report from Champions 12.3, an international partnership of businesses and government leaders, showed that hotels received a $7 return on investment for every $1 spent on trialed kitchen food waste reduction programs. By adopting such programs and making information about their environmental programs easily accessible, hotels are in a position to appeal to an ecologically conscious segment of the market and increase their profit in the process.
Are there any other major hotel industry changes or events in 2018 that you think were important? Don’t hesitate to let us know by commenting below.
Champions 12.3, Eyefortravel, Hotel Management, New York Times, Phocuswire (Voice Assistants), Phocuswire (IoT Security Risks), Phocuswright (Blockchain), Phocuswright (Market Sizing), Reuters, Revfine, Security Intelligence, Skift