An ad agency recently asked me to articulate the five most important trends affecting the U.S. hotel industry. Their request coincided with an annual exercise we do at Lodging Hospitality to look at the important issues facing the lodging business and then create an editorial calendar for the following year's issues.
After some reflection and a little additional research, I narrowed a longer list of trends down to the five the agency requested. In doing so, however, I realized that pinpointing trends only has value if people in individual busineses can take these ideas and apply them both to their daily operations and to their long-term planning.
Here are my five trends and a few thoughts on how they can improve operations and profitability at lodging properties and companies:
Unprecedented increases in demand and RevPAR without corresponding increases in profit margins due to increases in mainly uncontrollable costs. Hoteliers need to forget about the widespread media reports on hotel industry prosperity and operate their properties as though we're in a downturn. It's time to closely scrutinize staff additions, renovation plans and other controllable costs, since it's tough to keep a lid on items such as energy, insurance and, to an extent, taxes.
Slowly increasing levels of new construction, particularly in the select service segments. Again, media reports have focused on the current favorable imbalance between hotel supply growth (low) and increases in room demand (high). Yet, according to Lodging Econometrics and reported on page 16 of this issue, the lodging construction pipeline is beginning to fill, and soon a new hotel may be opening across the street from yours. It's time to market your property as though that new one is already open and competing with you.
Introduction of new lifestyle brands, e.g., aloft, Hyatt Place, Cambria Suites, Hotel Indigo, NYLO, to cater to an expected boom in travel among Gen Xers. The face of the lodging guest is rapidly changing (see the April 1 issue of Lodging Hospitality for an in-depth look at the boom in Gen X travelers), and while you probably don't operate any properties in the new chains catering to this demographic, you should be cognizant of ways (amenities, technology, room design, f&b offerings, marketing and more) to appeal to as wide a range of potential customers as possible.
Continued increase in the popularity of alternative lodging products, i.e., condo-hotels, timeshares, fractionals, destination clubs, and their threat to traditional lodging performance. Lodging properties in some resort areas, such as Orlando, have noticed a slight downturn in business in recent months, at least in part due to the growing number of timeshare, condo-hotel and club units that are draining away customers. It's always a concern when new competition arrives in town, but it's easy to overlook timeshare as a threat. Don't be fooled; vacation ownership can steal your business as easily as any new hotel property can.
Continued concern over labor availability and cost, particularly as negative sentiments increase toward immigrant labor, both legal and illegal. The hotel industry runs on immigrant labor, mostly legal immigrants but also some who don't have documents. And no matter your politics, it's important to remember that the current negativism toward immigrants — particularly Hispanics — may ultimately affect your ability to staff your property adequately and at a cost that is in line with your bottom-line goals. Political activism on this issue will be a matter of survival for some hotel owners.
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