GLOBAL REPORT—Running a hotel ultimately comes down to what guests want.
Budgets and logistics certainly come into play, but every decision a hotelier makes takes guests into consideration.
Design, F&B options, services, amenities—each choice requires determining whether a guest will like it or hate it. Though it might seem impossible to see into the future, guests are sharing clues now that can help the hotel industry adapt to what they will likely want in 2025.
The traveling population is generally getting older, and the older demographic typically has more available time and discretionary income to travel, said Chris Davidson, EVP of MMGY Global’s insights and strategy division. While millennials and other younger travelers want to be and will be, to some degree, active travelers, they are more burdened than older generations of travelers by the lingering effects of the Great Recession and student loan debt, he said.
It’s interesting to see how millennials are influencing other generations of travelers in ways that have meaningfully changed what everyone else expects from their stays, HHM President and CEO Naveen Kakarla said. They’re a reason why so many older generations of travelers lean toward a certain brand, more localized hotels and, in some cases, independent hotels, he said.
“The idea that you have new generations of spending power doesn’t seem revolutionary relative to how the new travelers are influencing everyone’s traveler expectation,” he said.
The millennial generation has put a greater emphasis on having a hotel stay include an experience within that immediate neighborhood, whether it’s an art program or other calendar event offered at the hotel to capture wallet share, he said.
The next generation of travelers will be armed with more resources and higher expectations than ever, said Heather McCrory, CEO of North America and Central America at Accor. Time will continue to be the most precious resource, and travelers are seeking more balanced and healthier lives, she said. They’re also more accustomed to technologies such as artificial intelligence and machine learning that ensure their experiences are customized and fully relevant to their needs.
“Our role is to understand and fully personalize the experience of our guests,” she said. “The very nature of our industry allows a degree of face-to-face guest interaction not available to most industries, which allows us the opportunity to provide a superior level of guest care.”
Personalized experiences
One thing that does unify the different generations of travelers is their increasing desire for personalized experiences, Davidson said. In a MMGY survey of American travelers, 77% of respondents said memories they made while on vacation in the past year were more valuable than any tangible purchase they made in the same time period, he said.
“A large majority of travelers are increasingly valuing every experience they have while traveling compared to tangible items they might purchase, and that’s definitely been an ongoing trend,” he said.
Travelers increasingly expect brands will know them and what they like, and often require a certain level of personalization before becoming loyal to a brand, Davidson said.
Accor continues to see a shift in guests’ desires for more genuine and unique experiences, and finding businesses that connect with their purpose, McCrory said.
“We are living in an ‘always-on’ culture,” she said. “We’re always working. Taking the time for meaningful leisure and wellness pursuits is more important than ever. Even more, we’re seeing the desire of our guests to enmesh these experiences from start to finish with the further blending of business and leisure.”
Calling it the “Amazon effect,” McCrory said guests want hotels to know them and deliver according to that immediately.
F&B
Food and beverage has traditionally been an aftermarket decision for travelers, who pick a place and then decide what to eat once there, Davidson said. Now, an increasing number travel to specific destinations because of the food that’s there, and it’s not just for Michelin-star dining, he said.
MMGY’s research found that 80% of respondents were interested in the authentic food eaten by locals. They also value new dining experiences, such as street food and food trucks, as well as getting dishes that are typically only available in certain destinations.
“It’s the real local experience that you can get from a food-and-beverage scene which are increasingly important to the traveler, but also important to driving the decision about where they want to visit,” he said.
Hotel restaurants are going to be more difficult to justify, said Ray Martz, EVP and CFO of Pebblebrook Hotel Trust. Labor costs continue to rise, and guests are looking at other dining options, he said. There’s a service in San Francisco called CloudKitchens that was started by one of Uber’s founders. The service allows people to order food from all over the city. As more guests turn to services like these, that will mean even more competition for hotel restaurants, he said.
Technology
Guests do like having more technology involved in their stays, but any introduction and integration of new technology needs to be seamless, Martz said. The hotel industry has at times gone after the next shiny toy without handling the basics correctly, and that’s frustrating for guests, he said. When they arrive at their room, guests don’t want to worry about having to download something or sign to listen to their own music or stream movies or TV shows, he said.
The current labor shortages do create an opportunity for becoming more efficient through technology, he said. As guests use their smartphones more during the travel, they’re becoming more accustomed to the concept of using their phones to check-in and go directly to their rooms instead of stopping at the front desk, he said.
Kakarla said guests will continue to see the benefits of booking directly for their reservations. As the direct booking channels advance, guests might be able to select their rooms, customize their check-in and check-out experience or get a perk that is more available through direct channels, he said.
As the friction costs of booking direct go down, it will be easier to search prices and make the booking, which will lead to more enunciated benefits, he said. Airlines have already established benefits to booking directly, and the hotel industry will continue down toward that path, he said.
Sustainable travel
Research shows that 52% of travelers believe climate change will have a significant influence on the destinations they choose to visit over the next five to 10 years, Davidson said. Similarly, 65% of surveyed travelers said they believe tourism overcrowding will have a significant influence on where they travel.
“That tells us this is increasingly a top-of-mind type of consideration,” he said.
In fact, 8% of respondents said last year they decided whether to stay at a specific hotel based at least in part on perceptions on the hotel’s focus on sustainability and the environment, he said. That has increased to 13% this year.
“The numbers overall are relatively low, but that’s almost doubled in a year’s time,” he said. “We do believe that will have an increasing impact.”
Some brands and hotel companies have started to make moves toward more environmentally friendly practices, Martz said. Consumers are becoming more sensitive to environmental concerns and could view hotels negatively for having single-use plastics in their rooms, he said.
“If they see little bottles in the room, they’re going to be upset, because they’re educated to understand the impact they have,” he said. “Environmentalism (is) not just a box to check. You have to operate differently and be conscious and reuse and repurpose things.”