2024 is an election year, but this one is unusual. Both likely presidential hopefuls have such low ratings that more than half the country would like to see them disappear. Most election years have been kind to our industry — 2008 was an exception. So, what is in store for us?
Interest rates will come down albeit slowly; transactions will increase due to lower interest rates and the billions of dollars of hotel debt coming due next year; and the U.S. presidential election will be the most expensive and hotly contested election ever.
Additionally, the remote worker conundrum of a hybrid workweek of three days in the office and two days out might become normal. Will that improve group business? Strong group demand coupled with stronger corporate individual travel would bode well for our industry.
With lower interest rates, it will get very interesting in the transaction market. Remember, many hotel loans will come due in 2025 — preparing for that will consume owners, operators and brands alike.
Revenue Growth
Beginning with revenue drivers, leisure travel seems to have peaked; and business travel has certainly come back but the remote office worker has kept the numbers below 2019. Group business is back, but not quite to 2019 levels; and international business is likely to come back from April to October this year.
Consumer sentiment is getting much better. This year will likely require better technology, powered by artificial intelligence and greater personalization of the guest experience. These require superior knowledge of the data in our hotels, something that many operators ignore.
Operationally, we have a long way to go before our teams are trained well enough to provide personalization. This is a year that those who know their guests’ preferences will win.
Using AI within a property management system, a hotel should be able to provide a list of guest preferences for every single past guest. Certainly, there are team members who can remember what a guest asked for on their last visit to the front desk or the restaurant/bar. But that employee may not be around on arrival of that same guest next week or next month.
Right now, most hotel robots are basic in their skill set, but once they speak to guests in the language the guest prefers, then we have something.
Chatbots are another value-add. They sound human on the telephone. Additionally, AI can assist with more productive scheduling based on peak demand trends — probably better than the guessing that many department heads use to schedule today.
And do not forget energy efficiency. AI can move the needle there, too. Yes, there are cybersecurity concerns. However, this year will be the first big one for AI use in the hotel industry.
Not Your Father’s Guest
Despite improved consumer sentiment, we will need to step up our game. Today’s guests are both more discerning and more cost-conscious. That can be a difficult combination, especially when adding in that many are now Gen Z.
Guests want a spotless room, a fully-enabled entertainment system with multiple viewing choices and an AI component such as Alexa, fitness rooms with more than treadmills and free weights, a restaurant with creative menus and much more. They also have shopped the competition on rates. They want more for less. They got nothing but aggravation during the lockdowns and got gouged — in the opinion of our guests — with high rates during the “revenge travel era.” And they are not necessarily loyal to the same brands.
Owners will have to walk the fine line between guest services and costs — labor costs and supply are major concerns. How does one decide to add a service or not? Does the brand dictate this? Will our marketing include enhanced digital marketing that optimizes SEO, guest experience, paid media and personalization? It must.
This year, money will be tight for renovations, but next year we might have loan defaults or we might have low-interest rates. I am not ready to predict a recession for 2025, but we should be able to avoid one this year.
My bet is for an exciting 2024 with some revenue growth at or above inflation levels, improving consumer sentiment as inflation dissipates, and a crazy election year. May we all pray for peace and revenue growth in 2024!
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. and www.hotelguru.com, where he hosts his blog posts. He sits on the Leadership Council of Arizona State University where he has taught Hospitality Entrepreneurship for 12 years and is Founding Sponsor of Women in Tourism & Hospitality (WITH) in San Diego.
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