The Hospitality Show, now in its second year, will take place at the Henry B. González Convention Center in San Antonio from Oct. 28-30, 2024. The Show will bring together 5,000 attendees and promises to drive profitability for owners, operators and hospitality innovators through dedicated content, extensive networking and 400+ operations and technology vendors.
In this installment of The Hospitality Show Advisory Board Q&A, we catch up with Jordan Hollander, co-founder of The Hotel Tech Report.
Q: What do you think is the biggest problem for the industry currently?
Hollander: The biggest problem for the hotel industry currently is navigating a high-interest rate environment, which has significantly slowed down the deal flow essential for industry growth. In response, we must return to fundamental strategies: increasing revenue and decreasing expenses.
Reducing expenses is particularly challenging in an inflationary environment where costs continue to rise. The cost of goods, labor and utilities are all increasing, making it difficult for hotels to maintain profitability without raising prices, which in turn could impact demand. Therefore, expense reduction strategies must be more sophisticated and nuanced. This might include investing in energy-efficient technologies to reduce utility costs, optimizing labor through advanced scheduling software and negotiating better rates with suppliers by leveraging purchasing power.
Revenue growth faces potential stagnation due to already high average daily rates. Many markets are seeing record-high ADRs, which suggests that there might be limited room for further price increases without negatively impacting occupancy rates. To address this, hotels need to focus on enhancing their value proposition and diversifying their revenue streams. This could involve creating unique, high-value experiences that justify premium pricing, implementing dynamic pricing strategies that adjust rates based on real-time demand, and expanding ancillary services such as spa treatments, dining experiences and local tours.
Operational efficiency is more critical than ever. Hotels must leverage technology to streamline operations and reduce waste. This includes adopting property management systems that integrate various functions such as reservations management, housekeeping, and maintenance, allowing for real-time monitoring and decision-making. Advanced analytics can help identify inefficiencies and optimize resource allocation. For example, predictive maintenance can reduce downtime and repair costs, while data-driven marketing can enhance customer acquisition and retention.
The adoption of AI and automation can play a significant role in improving operational efficiency. AI-powered chatbots can handle routine guest inquiries, freeing up staff to focus on more complex tasks. Automation in inventory management can ensure optimal stock levels, reducing waste and preventing over-ordering.
Q: What are the two biggest trends in the hotel industry this year?
The two biggest trends are the integration of AI and the digitization of group bookings.
AI is poised to significantly impact the global economy, with Accenture predicting it could double annual economic growth rates by 2035 and PwC estimating an addition of $15.7 trillion to the global economy by 2030. However, the rise of AI also brings challenges, particularly job displacement, with the OECD reporting that 14 percent of jobs are at high risk of automation and McKinsey projecting up to 800 million jobs could be displaced by 2030, though new jobs will also be created. In the hotel industry, AI is transforming operations, marketing, and guest experiences. For instance, a Hotel Tech Report survey revealed that while 70 percent of hotel guests appreciate chatbots for simple inquiries, they prefer human interaction for complex requests, and 58 percent feel AI enhances their booking and stay experiences. Hoteliers who leverage AI will gain efficiency and provide better service, while those who don't may struggle to stay competitive.
Group travel patterns are shifting rapidly, and outdated tools and processes can lead to missed opportunities and lost revenue. The demand for small group bookings is evolving due to the resurgence of business travel and the irreplaceable value of in-person interactions, as only 11 percent of business leaders believe technology can replace face-to-face rapport. Increased local travel and headquarters visits represent new segments of prospective bookers, while non-hotel accommodations are rising as corporate travel policies embrace alternative lodging options. Hotels must integrate with corporate booking tools, enhance guest experiences and offer flexible, innovative solutions to stay competitive and capture business travel growth. Without modern sales tools and strategies, hotels risk losing immediate revenue and future opportunities.
Q: What do you think the industry's biggest accomplishment has been in the past year?
The industry's biggest accomplishment over the past year has been the successful reintegration of innovation capital. For years, venture investors were hesitant to engage in deals within the hotel industry. However, we have recently witnessed significant investments and acquisitions that mark a turning point. Notable examples include Growthcurve Capital's acquisition of the revenue management system Duetto, Mews raising funds at a valuation exceeding $1 billion, and Canary securing what is likely the largest capital round for guest experience software in the industry's history.
These achievements are monumental and can be attributed to a dual shift within the industry. First, hotel operators have become more sophisticated in their understanding and adoption of technology. This increased tech-savviness among operators has made the sector more attractive to investors looking for innovative and scalable solutions.
Second, the willingness of hotels to invest in innovation has grown, driven in large part by the necessity imposed by the COVID-19 pandemic. The pandemic forced the industry to rapidly adapt and innovate to meet new challenges, such as enhanced health and safety protocols, contactless services and changing guest expectations. This environment fostered a culture of innovation and a recognition of the critical role technology plays in future-proofing operations.
The past year's biggest accomplishment in the hotel industry is the resurgence of investment in technology and innovation. This has been made possible by a more tech-savvy operator base and a renewed commitment to innovation driven by the challenges of the pandemic. These investments are not just financial milestones; they represent a broader transformation in how the industry approaches technology and prepares for future growth.
Q: What are you most looking forward to at The Hospitality Show?
What excites me most about The Hospitality Show is its unique focus on learning and networking for industry leaders. Unlike traditional trade shows where the emphasis is on booths and exhibits, The Hospitality Show prioritizes content that helps us connect and enhance our skill sets. It's a place where top executives come together to share insights, discuss trends and explore innovative solutions. This collaborative environment fosters meaningful interactions and professional growth, making it an invaluable opportunity for anyone looking to stay ahead in the hospitality industry.