Challenges that the Hotel Industry Will Face in 2023

The hotel industry will face many challenges in 2023. It may feel like there is no way to overcome them. As a Hotel Management Company, we’ve seen how hotels can achieve success by streamlining their processes, using the right tech stack, and adopting the correct approach.

The summer of 2022 will see a surge in tourism as holidaymakers and travelers return to their wanderlust after the travel bans and lockdowns caused by the pandemic.

Despite this, there are still many challenges facing the hotel industry. With a strategic approach that is informed, hotel managers are able to meet these challenges and take their business to new heights.

Experience and Personalization: Meeting Modern Guest Needs

Hoteliers can no longer rely on looking the part. Although image, comfort, and nice hotel amenities are important, customers want more from their hotel.

The right data management technology can help you achieve true personalization by capturing, storing, and analyzing each customer’s information on a micro-level, as well as identifying trends at a macro-level. The new battlefields for hotels are experience and personalization. In a fiercely competitive market, the hotelier who can deliver on both sides will win.

The Right Employees to Hire

Hotel hiring is getting harder, from the seemingly lower-skilled positions like waiter to the specialist roles such as treasury and accounting employees. It is easy to hire restaurant and bar staff. But finding good wait staff can be a challenge. It is also important to keep them around.

Simply put, it is becoming more difficult for organizations in all industries to retain and hire good employees. This is because workers have become more demanding about what they expect from their employers. Your hotel will be ahead of the competition if you embrace this change instead of resisting it.

Your hotel can retain and attract top talent by offering more than a salary. The package could include real benefits like medical insurance, stock option coverage, travel expenses, etc. In truth, a ping-pong table or some fruit every week is not a benefit, but the bare minimum.

Workers are looking for employers that offer a complete package and that make them feel part of a cause they support. This last point is also related to the first: by having a mission that includes providing guests with a unique and true experience, workers will feel part of a service that people value.

The market and consumer demands are constantly changing

It is difficult to plan if your market is likely to change. Business is much easier when you can predict the future. The migration to hybrid and remote working has led to a slower recovery for business travel. Only 16% of companies are completely remote. 58.6% percent of the US workforce works remotely. 78% of companies expect this trend to continue. This market trend offers opportunities for those who are willing to embrace it.

Hotels can, for example, offer clients a coworking experience in order to attract customers. Hotel rooms and spaces, such as meeting and conference rooms, can be transformed into coworking areas. It is important to be flexible in order to react to changes in the market. As a result, many hotels went out of business and experienced a huge drop in their customers.

The pandemic showed how hotels can be vulnerable to external factors. Focusing on local customs is one way to increase business resilience and continuity. It could be a local area or further away from other towns and cities that offer staycations for couples, families, or individuals. Between 2020 and 2021, bookings for staycations rose 18%.

According to PwC, a good experience can lead to a 14 percent price premium in the hotel sector. In the off-season, hotels can also increase occupancy rates by providing a great experience to local customers.

Missing the Marketing Boat

Marketing is increasingly driving business from the front. This is particularly true in the travel and tourist industry. Some hotels still view marketing as a nice-to-have rather than an essential part of their business.

The right CRM system, combined with a retargeting campaign, can help hotels generate more business. A second important rule is to advertise in the area where your target market is. If your ideal client is an over-50s audience, Facebook ads are the best way to promote. However, if you’re looking to attract younger clients during the summer holidays, Instagram advertisements would be better.

What makes your hotel different than your competitors, and what is your value proposition? Focus on this to increase business.

Create a wide funnel for marketing

You can capture and retain more customers with a larger funnel. It is even better if you optimize it for hotel packages. Packages are more profitable and provide a more immersive experience.

With a blog, dedicated package pages, and paid campaigns on Google and social media platforms using relevant keywords, you can attract guests. You can position your hotel to maximize ROI if these keywords are relevant to the type of experience you provide, especially if you have a niche concept.

Rising operational costs

The world is experiencing the highest inflation rates in decades, particularly in Europe, North America, and Latin America. Inflation is currently over 8% in the United States and Europe (at the time of writing, June 2022).

The cost of operating hotels is being driven up by inflation and rising energy prices. The cost of living is also a concern for employees, who are, in turn, putting pressure on hotels to raise salaries.

This pressing problem can be addressed by integrating automation technology wherever possible in your hotel business. These technologies, which are usually cloud-based, can automate time-consuming and laborious tasks. You could, for example, integrate a smart AI-based chatbot into your website and consider sself-check-inand checkout processes as well as self-service buffets instead of table service.

Driving Direct Business

Online travel agencies (OTAs), which dominate the market in terms of spending on hotel marketing and research, are a major force. Third-party companies may account for the majority or all of a hotel’s business. They can play an important part in generating business, but you should ensure that your business mix is well-balanced and does not rely on just one or two channels.

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