by Kristi Froehlich
Looking to make the most of the future, hotel executives sat down a few years ago, put on strategic planning caps and developed “2020 vision plans.” But with only a short 365 days until that magic date arrives, hoteliers may need to re-evaluate to see if current world events and economic conditions match the realities of what they thought back when they initially laid out their 2020 plans versus what 2020 will likely bring now that it’s closer. Let’s look at what’s likely to happen in several key areas.
The Millennial effect
Research shows millennials will continue to be the top spenders of travel dollars in 2020, outspending baby boomers according to research conducted by Hotel News Now. This shift means hoteliers will likely need to continue to focus on interacting with this group of travelers to better appeal to their sensibilities such as in-room streaming, use of smart speakers, and more use of public spaces.
However, baby boomers are still the largest customer in our hotels, according to Ron Pohl, chief operations officer, Best Western Hotels & Resorts. “Travelers aren’t all that different in their desires. However, we do find that millennials spend less time in their hotel room. They are wanting to experience the local area so that is what drives their stay more so than the room amenities which matter more to boomers.”
“Most of what we’ve outlined for our mobile goals for 2020 are the same as they are today,” says Pohl. “This includes continued use of mobile apps which are at the top of our minds, though most important is we’re still using too many key strokes. Customers are saying, ‘you’re too slow compared to what we do in other industries.’”
There are more than 39 million Americans with smart speakers in their homes, such as Alexa, Google, and Siri. However, they don’t have them in their bedrooms. “There’s still a level of discomfort for them wanting to have them in their hotel room. The fear is that the device is listening all of the time, even when the guest isn’t communicating with it,” Pohl explains. “So even though the things that an Alexa can do are something guests want, it’s still an experiment to determine if guests really want the device in their hotel room.
“Integrating that technology is a component of the guest stay that we’re not giving up on,” he says, “But we’re still not sure where that application should go by 2020.”
Pohl says something as simple as when in your guest room you ask Alexa for more towels, that’s certainly more efficient for a hotel. “There are not many times we can add efficiencies, but having this technology available decreases the number of calls to the front desk and allows the guest to communicate by text.
He also said that there has to be a way that introducing smart speakers into hotel rooms will change. “There has to be a way it’ll change,” he says. “But when you’re having a conversation and Alexa pops up and answers unexpectedly, it can still throw people off.”
Another key 2020 vision difference between millennials and baby boomers is the streaming capability so they can watch what they want on the devices they carry with them versus watching the television in the room.
“Netflix is the largest base of streaming,” Pohl says. “We find that guests stream YouTube as well. Another difference is that millennials would rather spend time socializing in the lobby area rather than in their guest room, so our new public space design creates a Starbucks-type approach or living room space to meet that need.”
Online Travel Booking Agencies (OTAs)
The OTAs are one area that hotels should experience some significant growth in 2019 in terms of senate and house lobbying efforts to help put a stop to the use of scam booking sites.
“What they do well is easing the decision-making of choosing a hotel by travelers shopping for lower price hotels. It’s a frictionless experience for the travelers,” says Pohl. “But OTAs are using fake booking sites, so customers think they are using BestWestern.com, but they are scam booking sites. We believe that’s an infringement on our brands, so we’re trying to get in front of the senate, house, and local authorities to let them know that this is an issue,” Pohl says.
Being socially responsible is still top of mind for millennials, says Pohl and recycle programs are a simple way to approach that. “Energy costs are big for our industry and our customers. LED lighting is another way to help recoup energy costs within a year along with keeping a cool room only when people are in it.”
Pohl says bathroom amenities are a big area of focus for keeping costs down. “We’ve partnered with another company to use sustainable small bottles to keep costs down.”
The idea of refillable dispensers that have been talked so much about lately are not necessarily a cost savings, but are perceived to be so. Best Western uses those more in European hotel properties as opposed to U.S. Properties.
The economic landscape
When the United States implemented steel and aluminum tariffs on June 1, some may have wondered if this would have an effect on the new hotel construction pipeline or hotel expansions. But according to JP Ford, sr. vice president of Lodging Econometrics, it really has not led to a groundswell of discussion. “It still may be early, but very little talk is going on now,” he says. “I have not been asked a question on the topic; we will need to see how it plays out. No one has been able to measure it. When we close out the 3Q pipeline, we will have a better idea on what the effect has been.”
Ford says sales are down for those transactions with a reported selling price, but the expectation is that they are not going to increase dramatically. “For all lodging transactions, 2018 will be roughly at 2017 sales numbers, or slightly less.”
Ford also says there is not a lot of expansion of hotels looking to add 150, 200 rooms to their properties. “If you have some extra land and demand is strong, you might do it.”
Overall, he says, the horizon looks good for the continuation of their lodging cycle.
“Demand is good, there is a high level of consumer confidence,” Ford says. “This has been a prolonged lodging cycle that started in 2010. We all know that the hospitality industry is cyclical and that at some point we will plateau and decline, but it is hard to pinpoint when that will be. Probably in 2020 we will see things start to go that way.”
Ford likened the lodging cycle to a baseball game. “Everyone wants to know what inning we are in. If we relate it to that, then this cycle has been so long that it seems like we are somewhere in the second game of a doubleheader.”
With just a year remaining until 2020, it can’t hurt to pull out those vision plans, dust them off and see if there’s something you can do with your hotel properties in the short term to make a positive difference in the days left until 2020 comes to fruition. Current world conditions may or may not keep you from forward progress, but it never hurts to check.