It’s usually simple and never easy to know how to approach each year.

For 2025, some key trends are critical for all of us as hoteliers to compete successfully. We must differentiate ourselves from short-term rentals; the transparency laws enacted this year will help us.

Next, we must attract guests and locals to our restaurants and bars with exciting new products and at a profitable price point — that is difficult given the high cost of food and labor. Think about using artificial intelligence (AI), as everyone else will use it soon. It can build menus, analyze market data, control room temperatures, improve revenue management, and create social media draft posts.

Interest rates remain high, but that will change as the U.S. Federal Reserve realizes that a recession can be averted. The U.S. presidential election has the masses on edge. There has been and will continue to be a downturn in hotel supply growth. If demand continues to grow with international, corporate, and group demand outweighing the slight drop in leisure demand, net income can grow and lead to more value. The four generations of likely travelers — baby boomers, Gen-Xers, millennials, and Gen-Zers — will all travel as if travel is a birthright. We have all lived through the pandemic era, and coupled with the new flexible work arrangements, the sky is the limit!

According to JLL, supply growth has slowed the most for full-service hotels in urban and other high-barrier-to-entry markets where development costs have “soared.” The average hotel development cost per key for an urban full-service hotel climbed to $742,000 in 2023, up 32% from 2019. Supply-chain disruptions and rising labor and materials costs have also had a considerable hike.

A high volume of loan maturities is due in the next 12 months, stimulating deals. The brands aggressively pursue “tough love” approaches to fixed renovation cycle management (FRCM) and property improvement plans (PIPs). The question is, will hoteliers refinance or sell? Refinancing will unlock cash for renovations.

What trends will we see in 2025? One is sustainability toward a net-zero carbon footprint. It’s not like China and India will start doing these things, but today’s travelers, by and large, want to do business with those who care about the carbon footprint and our environment. Next-level artificial intelligence will enhance customer service, provide hyper-dynamic pricing, improve wellness options, and provide personalization well beyond today’s practices.

Once we’ve acquired an opt-in, we can leverage owned channels, such as email and SMS, which give us more control, meet personalization expectations, deliver better ROI, and ultimately provide more opportunities to build relationships with our customers and prospects. This might include custom room amenities, tailored entertainment options, virtual reality tours, and AI-generated artwork or music.

Brands should be pleased to learn that email is the preferred channel for consumers to receive personalized offers and exclusive messages. Text messaging is a distant but growing second-place preference. These channels are easy to personalize and cost a fraction of remarketing with paid ads.

The next generation of AI is already here and being integrated into our technology. Personally, I lean on Microsoft’s Copilot, a generative AI chatbot. These chatbots can handle guest inquiries and sound human! AI is not replacing humans — it enables them to be much more productive and provide improved customer service.

New, nutritious menu items, new yoga mats or exercise equipment, new educational programming, food and beverage events, and a spa or relaxation experience are all good starts. Encouraging movement, whether for a meeting, event or individual travelers, will result in happier guests and attendees. Nutritious meals and breaks in the meeting facilities and restaurants will get positive feedback. More and more guests want a healthier lifestyle when they travel. Fitness now extends to recovery amenities such as white noise sleep aids, intravenous vitamin drips, and digital technology treadmills.

Have you ever been to a Coldplay concert? Chris Martin, lead singer of Coldplay, has been orchestrating sustainable, net-zero carbon events for years. The fans love it and even participate by pedaling on stationary bikes. Energy conservation and efficiency are paramount to sustainable practices. Transforming cooking oil into biofuel, adding EV charging stations, and reducing our carbon footprint are becoming more critical for today’s travelers.

The world is changing quickly — don’t get left behind! Enjoy the balance of 2024 — it will be exciting!

Robert Rauch, CHA, has been an owner-operator of hotels for several decades and is founding chairman of Brick Hospitality, owner of R. A. Rauch & Associates, Inc.

The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or CoStar Group and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to contact an editor with any questions or concern.

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