Hoteliers can no longer afford to stay behind the crowd, highlighting three main industry trends to stay on top of.
The shifts within the global hospitality industry have made it important to adapt to changes in the way hotels operate. This includes how guests select where to travel and stay, how they prefer to book their hotel and their expectations upon arrival.
Staying on top of these changes can feel exhausting, but can make sense when narrowed town to three main trends to keep an eye on.
TREND #1: The hard work that hotels have done to drive more direct traffic is starting to pay off
For years, hotels have been working to direct more traffic and bookings via the direct channels but, due to the huge marketing budgets, innovative features and cost-saving loyalty programs offered by the OTAs, travellers have been slow to make the shift.
While the OTAs are still coming out on top, the tide is beginning to shift, signaling good news for hotels’ bottom lines in the future…
According to Skift Research's Hotel Distribution Outlook 2024, by 2030, direct digital channels will surpass OTAs as the primary booking source for hotels, generating USD 409 billion in gross bookings, compared to USD 333 billion from OTAs.
While this is a development that is just starting to take shape, it demonstrates a shifting preference among travellers for booking direct, likely because of the hard work that hotels have done in improving their direct rates, offering more personalized experiences, providing additional value and the development of loyalty programs that add even more value for repeat guests.
Hoteliers who don’t prioritise improving their direct booking channels will lose valuable business to savvy hoteliers who have already updated their revenue and reservation management strategies accordingly.
What can you do today to boost your direct bookings?
First, hotels must use a CRS with a built-in booking engine to offer the best booking experience to guests while optimising their reservation management and front-office operations. To encourage guests to book directly, hotels should offer value-added services, such as free breakfast, discounts on on-site amenities, free airport transfers or room upgrades.
Obviously, websites and booking engines need to offer a frictionless booking experience, both on desktop and mobile, but that’s no longer enough. Integrated AI chatbots on your website can enable better customer service by automating the process of answering repetitive questions, making it possible for your staff to do more, with less.
Create a loyalty program that will provide exclusive incentives to members to encourage repeat customers and consider upselling pre-stay options, room upgrades, etc., thereby creating a new revenue stream.
Finally, retargeting previous guests (or those who visited your website previously) with social media ads, trends and emails can also dramatically increase conversion rates and maximise the revenue earned via your direct channel.
TREND #2: Guests are looking for more flexibility in booking and payment terms
Immediately after the pandemic, last-minute bookings were at an all-time high but, today, hotels are experiencing a guest preference towards a longer booking window, with guests booking 32 days in advance. With that increase in advance booking, guests now expect more flexibility in hotels’ cancellation policies to minimise their risk. While offering flexible cancellation terms may feel risky to hoteliers, recent statistics show that it’s a worthwhile risk as “cancellations are now falling below 20 percent” and, based on an industry report, “more than half of [guests] are willing to pay extra for a hotel that offers free cancellation… [with] nearly one in five [saying] they’d pay USD 50 or more.”
In addition to flexibility in cancellation, guests are also looking for flexible payment options that enable booking without paying upfront or which offer price alerts (and the ability to change the reservation) if the price of the hotel room decreases during the cancellation window.
If your property isn’t already offering flexible booking and payment options, you should update your policies across all channels to maximise conversions. Finally, making it easy for guests to modify or cancel their reservation online (if necessary) will go a long way towards encouraging guests to book early, as it will minimise their stress levels.
TREND #3: Modern revenue management strategies for modern guests
Revenue management is becoming more sophisticated every year, especially at the group level where cluster revenue management is being deployed with a few clicks across an entire portfolio of properties, enabling the implementation of brand-wide (rather than property specific) revenue management strategies.
Today’s guests are willing to be brand loyal, if they are offered valuable incentives to do so innovative cluster revenue managers should implement strategies to ensure that brand-specific strategies cultivate loyalty over the long term.
In the luxury and all-inclusive market, we’ve seen growing trends of membership- or subscription-based travel, in which a guest earns stays at any of a group’s properties by paying a subscription or membership fee, either to get free stays at different locations or to receive a discount on all hotel bookings. For example, Accor implemented a subscription program in 2023, called Accor Plus, which gives members discounts of up to 50 percent on dining and hotel stays (with one free stay per year) at more than 1,000 participating Accor properties (under their various brand names) in 20 countries around the world.
If properly marketed and promoted, the subscription- or membership-based revenue model could prove very valuable for hotels because it incentivises repeat guests (the guests who spend the most during their stay) and frequent travellers to fill rooms, especially valuable if implemented during slower travel periods.
Also, groups can leverage a brand-level revenue management strategy by offering portfolio-wide packages to loyalty members to book within a hotel group rather than switching to competitors’ properties when they visit a new destination.
Today, the guest booking journey is constantly evolving, and hotels must evolve along with the trends to stay competitive. Hotels that don’t prioritise innovating to match guests’ changing needs risk losing bookings and revenue to more savvy competitors.
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