How hotel trends in 2017 took shape – and where they’re headed.
by ALICIA HOISINGTON
With the start of every year comes the start of a new set of trends. But what is unclear at the beginning of the year is whether those trends are truly in it for the long haul or if they’re just fads that will soon be distant memories.
But with every new year also comes the opportunity to look back on the year that was and see how the industry’s biggest talking points fared.
Here’s a glance back on four of 2017’s biggest trends in the hotel industry and whether they were winners and losers for owners and operators.
Technology to enhance the guest experience was a big trend in 2017, according to Paul Sauceda, director of sales and marketing at The Godfrey Hotel Boston, Oxford Hotels & Resorts. Many hotels added streamlined ways to order room service, via iPads instead of calling, for instance. The check-in experience continued to be transformed in the way of kiosks, allowing guests to bypass the front desk.
But perhaps the biggest trend last year in the way of upgraded tech came in the form of bolstering in-room entertainment options, offering guests an easier way to connect to streaming services such as Netflix, Hulu and HBO Go, sources said.
“Hotels are catching up to the way we’re living,” Sauceda said.
Beau Benton, president of LBA Hospitality, agreed, calling the implementation of entertainment systems a “big winner.”
Whether the tech trend will continue remains to be seen, Sauceda said.
“It’s like anything. We have some pretty basic core disciplines in a hotel. We provide beds, showers and meals. All these tech amenities are great if they are enhancing that core discipline experience,” he said. “If we can make life easier and more enjoyable by adding tech that guests desire and understand, then it’s great and it’s a trend.
“If we’re offering tech just because and it’s not improving life or it’s so complicated that people can’t operate it, then that’s a fad,” he added.
Millennials continued to be top of conversations throughout the industry in 2017, and hoteliers don’t seem to be slowing down their focus on this coveted cohort.
“It has to be a trend because they are our customer and the customer of the future,” Benton said.
When it comes to millennials, Sauceda said that defining millennials as a homogenous group is what’s the fad.
“The reality is that there are a lot of people in that age group, and they are coming of age around the world, so we do have to recognize that generation,” he said. “But what I think will change is we’re going to stop trying to define millennial characteristics based on the fact they are a certain age and start seeing them as individuals with buying habits.”
He said that the phrase “catering to millennials” is similar to saying “catering to women.” There are many individualized women, just like there are many individualized millennials.
“It’s just such a broad thing to say,” he said.
Benton agreed that the phrasing might need to see a shift. “I think some things get lumped into ‘catering to millennials’ when they are features that benefit all travelers. It doesn’t matter if you are 25 or 55, you need more and better connectivity, and you want more entertainment options and better food and beverage.”
Personalized, localized experiences
It seems hoteliers couldn’t attend a conference without hearing during a panel that today’s guests want personalized and localized experiences. But were these ideas just buzz in 2017, and this year will the conversation dwindle?
Sauceda said the idea goes beyond just the buzz words; at the core, it’s about connecting with people. Thus, the phrasing “living like a local” will probably go the way of 2016’s obsession with the mixology class at every hotel bar, but the idea of connecting with others is here to stay.
“If it’s a bar that connects you with people, a tour with a local or dinner in someone’s house, that’s connecting with people,” he said. “We want to connect with people more than we ever have. If we as hotels are scoring 100 percent on our core disciplines, then why not add some additional component that helps people connect?”
He said hotels have a unique opportunity to bring hundreds of people together in the same building to facilitate kindness and connection, and it’s an opportunity hoteliers should leverage in today’s world. If hoteliers can do that, the trend will continue to be a winner moving forward.
“Hotels are personal. When you stay in a hotel, it is your temporary home and you do personal things in that building,” Sauceda said. “Most of us are craving some sort of peaceful connection to other people.”
Benton said food and beverage played a big role in localized experiences in 2017, such as craft beer and local food. He checks it off as a winner because these elements can be easily changed if trends happen to shift, offering owners and operators options to adapt to changing customer demands.
“That is not the case if you customize your décor to localize the experience,” he said.
The sharing economy
Airbnb and its ilk continued to be talked about at length in 2017, and Sauceda said that was for good reason.
“We need to for sure continue to watch out because Airbnb is growing quickly. We would be stupid if we didn’t recognize that,” he said.
In 2017, 25 percent of leisure travelers and 23 percent of business travelers were expected to book a stay on Airbnb, a respective increase of 19 percent and 18 percent since the previous year, according to research by Micrometrics. Additionally, 50 percent of Airbnb users in the previous year chose to replace traditional hotel stays with Airbnb stays. In March of 2017, Airbnb reached 4 percent of the hotel industry’s demand and nearly 7 percent of its revenue, according to the research.
Sauceda said he doesn’t buy the talk that Airbnb and the sharing economy will replace hotels.
“I think there’s a lot of potential inventory, and it will compete with hotels just like hotels complete with hotels,” he said. “Lifestyle hotels, beachfront resorts, all-inclusive resorts – we all compete with each other. People are attracted to each one of those offerings.
“For the home-share industry, we’re going to compete just like everyone else.” ■
Weighing in on U.S. markets
Every year, prognosticators forecast which markets will be hot and which ones will lag behind the rest. Sometimes those predictions are spot-on and sometimes not, especially when unforeseen events happen that can help or hinder performance.
Here’s the run-down of which markets were on fire and which ones needed a little more fuel, according to Jan Freitag, senior vice president of lodging insights at STR.
The opening of Music City Center has helped to boost demand over the years, and 2017 was no exception. Strong leisure demand also continued to have a positive impact on performance, Freitag said.
Year-to-date September 2017, average daily rate (ADR) was up 5.8 percent to $142.01, while revenue per available room (RevPAR) increased 4.5 percent to $107.01, according to STR data.
The nation’s capital experienced strong performance in January that lifted the market’s data for the remainder of the year, according to Freitag. Thus, the presidential inauguration did have a positive influence on the market.
Year-to-date September, the market’s ADR was up 4.4 percent to $160.32, and RevPAR increased 4.4 percent to $118.68.
The 2016 Democratic National Convention, which was held in Philadelphia, had a positive effect on performance that year. However, without such an event in 2017, the data didn’t fare so well.
Year-to-date September, ADR was down 3.4 percent to $128.91, while RevPAR decreased 5.7 percent to $89.
San Francisco’s Moscone Center closed from April through September in 2017, and that had a reverse impact on the market’s performance.
Year-to-date September, ADR decreased 2.2 percent to $229.55, and RevPAR was down 3.5 percent to $193.86.
The good news? With the convention center reopened, 2018 should be a great year for San Francisco when the groups return for business, Freitag said.
New York and Miami
A tale of two cities: Both saw about a 4-percent increase in room supply, which brought down performance figures.
As of September 2017, New York had 25,607 rooms under contract in the active pipeline, and Miami had 13,310 rooms. New York saw ADR and RevPAR decrease 1.9 percent and 0.7 percent, respectively. Miami’s ADR decreased 3 percent, and RevPAR was down 3.9 percent.
“The rooms available in these markets are growing at double the pace of the national average,” Freitag said. “It’s having an impact on pricing and, more importantly, the psychology of pricing. Hoteliers are not comfortable increasing room rates.”
New York, Miami and Houston are the trifecta that has historically brought down the total United States average RevPAR, according to Freitag. However, due to hurricanes in the market, Houston saw its performance skyrocket toward the end of 2017.
The market saw RevPAR driven up almost 60 percent due to occupancy increasing by about 43 percent. Year-to-date September, ADR increased 0.7 percent and RevPAR was up 1.8 percent.
“Suddenly, Houston wasn’t so bad anymore, but it was purely driven by a one-time event,” Freitag said.