The hotel industry has a lot of reasons for positivity.

For one, we are no longer gripped by daily uncertainty, unsure where our next booking is coming from or when. Additionally, the economics of travel have held firm over the past few months, with consumers continuing to embrace the aspirational nature of travel and creating a significant upswing in activity across nearly every segment.

However, hospitality is far from immune to the unexpected, and it’s time to take stock of some of the most significant trends and headwinds facing the industry throughout 2024.

Here is a look at five of the most prominent trends hoteliers must navigate this year.

The current U.S. economic forecast is all over the place, but there are still many reasons for positivity. The U.S. economy grew roughly 3.2% in the fourth quarter of 2023, slightly under expectations but supported by lowering inflationary pressures that were up just 1.8% annually, down from 2.6% in the third quarter.

These are all good signs for the future, but the problem is that hyperinflationary trends have set the bar for long-term recovery higher than previously expected. Today’s compound inflation rate is up 19.9% since 2019, and up 30% since 2016. Furthermore, wages have risen roughly 20% in our post-pandemic world. Until the economy experiences actual deflation — which isn’t on the table — U.S. businesses will continue to feel the impact of higher costs and will be forced to retain high rates.

Inflation has also heavily affected hoteliers’ ability to provide the amenities and services guests desire. The aspirational elements people travel to experience — from food and beverage to events — have struggled to contain costs. Operators are paying more to provide these experiences, and guest expectations are only rising. With operating expenses remaining a challenge in 2024, hoteliers will look for new ways to rein them in by the end of the year.

The hotel industry experienced some of the lowest interest rates in recent memory in the decade leading up to 2020 — and today, we are enduring some of the highest. One of the reasons the hotel industry came out of the recessions in 2001 and 2009 so efficiently was the availability of inexpensive debt, which is no longer the case. It’s enough to keep owners across the industry up at night as they wait for the Fed to budge.

Experienced hoteliers have noted that today’s interest rates are not a complete outlier. Taking a 10,000-foot view of the industry reveals many periods of activity with interest rates comparable to what lenders offer today. However, today’s market fundamentals snuck up on an industry used to inexpensive debt, severely affecting forecasts for the rest of 2024. High interest rates gobble up the typical reserve funds allocated for seasonal business and other nontraditional hotels, creating an uncertain future for some of our industry’s most precarious properties.

The cost of labor only goes up; it never comes down. However, the U.S. hotel industry has historically paid workers above minimum wage. The American Hotel & Lodging Association anticipates that U.S. hotels will pay an estimated $123 billion in wages, salaries and other compensation this year. Meanwhile, hotels remain understaffed and undertrained in the short term.

This challenging labor market is here to stay. While the worker shortage is less acute than in 2020, the competition for skilled workers has become more involved. Experienced hotel workers have greater value, and we are still years away from attaining the quality and quantity needed to staff our industry to where it should be. All these factors put additional upward pressure on wages and have forced us to look at long-term strategies to cultivate labor and improve operations.

Hospitality’s resilience has been its saving grace. Our industry remained desirable and was able to bounce back from the pandemic market by market. However, we are still seeing a shift away from urban markets for various reasons. More consumers know alternative destinations, and travelers are seasoned deal hunters. As a result, hotels are forecasting based on historical data that most know is outdated, as our markets haven’t finished settling into familiar patterns.

Hotels are still waiting for business travel to return, but some elements will never return. It remains to be seen how reduced business travel will influence the events sector or how well hotels can pivot to accommodate smaller or more infrequent meetings.

One positive trend is an uptick in inbound travel, which will continue growing throughout 2024 and 2025. Economically, the cards are in our favor as international travelers return to the U.S. to capitalize on a weaker dollar. Much of the world is still in the economic recovery phase from the pandemic, and the longer the period of stability, the more inbound travel will resume.

Artificial intelligence is already the buzzword of the year. While the tech industry is experiencing widespread layoffs as a result of the implementation of AI and similar technologies, hospitality will likely use AI to augment guests’ daily experience and improve operational efficiency. However, AI and its impact on the global economy must be considered to avoid either the reality or the negative perception that it will consume us.

This technology is evocative of the first flight of the Wright Brothers. Their first successful takeoff saw them stretch the length of a field. Sixty years later, we landed on the moon. AI will have a transformative effect on travel and hospitality, but the reality of its impact will take some time to develop. However, with shifts in attitudes happening all across the workforce, from diversity and inclusion to the changing wants and needs of the labor force, operators must recognize the utility of this technology and its ability to improve guest interactions.

Bob Habeeb is founder and CEO of Maverick Hotels and Restaurants.

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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