The number one way for lodging brands to get ahead of the curve (and, therefore, to stay one step in front of the competition) is to keep on top of industry trends. So, as the new year kicks off, we’ve identified a handful of key trends we expect to impact the lodging industry – be that short term rentals, hotels, multifamily, or coliving.
We’d all like a crystal ball to tell us what the future holds for hospitality technology innovations, for example, or how the latest work and travel preferences will play out in booking patterns for different types of lodging. Plenty have voiced their predictions for the year ahead, like Expedia highlighting the comeback of cultural capitals as hot destinations as well as more travelers ‘set-jetting around the globe to visit the destinations where their favorite TV shows take place’. Trends like these have the power to influence accommodation choices and, in return, the lodging sector as a whole – if they stick around.
Here is our top pick of lodging trends that have the potential to shape 2023:
The influence of technology
Tech has played a pivotal role in shaping the lodging industry so far, but how will it continue to influence and improve the sector in 2023? We believe hospitality tech will be essential for accommodation providers trying to survive and thrive in the challenging year ahead. Property managers are currently facing rising energy, labor, and supply costs thanks to choppy economic waters, but if they adopt the right tech at the right time, they have the opportunity to increase operational efficiencies and improve the bottom line. For many, these savings will be the difference between failure and success.
Which tech is the right tech? In a time when tariffs are high, property managers are able to increase sustainability using HVAC and water monitoring solutions, such as those provided by PointCentral. These property technologies provide insights into usage and send real-time alerts to prevent major damages – for energy, water, and maintenance cost-savings. For those keen to combat labor costs, automation technology can help to streamline operations for a more efficient use of resources.
AI is beginning to gain more traction in the lodging industry. From automated solutions that support operational streamlining to guest messaging chatbots – AI is simplifying property management and advancing the service guests receive. Some are skeptical about AI taking over the ‘human touch of hospitality’, however, these solutions manage menial and repetitive processes freeing up employees for more important tasks. When used appropriately, AI solutions can work in tandem with employees to better business operations.
The sector will also begin to see an increase of tech solutions that tackle regulatory pressures, such as noise issues, helping property managers prevent costly fines or bad relations with authorities. And those looking to improve their strategic approach to business will rely more on data platforms, such as Key Data, which can inform and guide decisions based on market demands, trends, pricing, and more.
Business travel and the extended stay
What business travel looks like today is vastly different from the corporate travel world we knew only a few short years ago. Influenced by flexible working opportunities and the pent-up demand to travel, employees now have much higher expectations of work trips. Last year we witnessed the rise of the bleisure trend – where business travelers tacked on extra days to trips in order to explore the destination. Now, this trend is making way for blended travel (seamlessly mixing work and leisure by making the most of evenings, lunch breaks, and weekends).
Led by increased remote working opportunities, we’re also observing a rise in digital nomadism. People are travel hopping from location to location, while continuing to work from their devices. These trends are affecting how and where people are choosing to stay, including the type of accommodation they opt for, how long they stay, and the amenities they require.
Extended stays are also being driven by companies themselves, which are actively combing work trips to help meet environmental goals – and likely reduce costs spent. Beyond the business travel sector, extended stays continue to become increasingly popular. Travel demand is high (Expedia found that nearly half of those surveyed value travel as more important than before 2020), and people are willing to pay more for longer once-in-a-lifetime trips (43% are upping their budget this year).
For the lodging industry, this means that guests will be looking for accommodations suitable for stays of up to 30 days, with advanced amenities to meet their needs, such as self-catering facilities and separate spaces to set up a workstation.
Hybrid, flexible lodging
To meet the morphing work, life, and play balance of remote workers, business travelers, and digital nomads, the lodging industry will have to become more diverse. Because of this, we expect to see a rise in flexible rentals and subscription living (think loyalty programs, short-term commitments, and ‘alternative’ rental spaces). Build to Rent and coliving sectors are also expected to grow substantially in 2023.
Hotels are already investing in the hybrid lodging trend – a dynamic space that offers guests the traditional hotel experience alongside coworking and coliving opportunities, as well as spaces to work out, eat, and shop. But we predict companies will go one step further in the months ahead by building flexible properties that include different types of accommodations (apartments, aparthotels, short term rentals, long term rentals) all under the same roof.
As work and life blur for the market, industry sectors will respond with further merging between hotels and short term rentals. They will continue to take learnings from one another, cherry-picking amenities to attract the needs of each market. Hotels, for example, will incorporate more living facilities, such as self-catering amenities, to appeal to those looking for extended vacations and business trips. On the other side, short term rentals are professionalizing, unifying under one brand and improving management strategies.
Booking windows
According to the Duetto Pulse report, the short term booking window, which was originally influenced by travel uncertainty, remains. Airlines are also witnessing the effects of shorter booking windows, with ‘peak travel times’ becoming less apparent as flight frequency variability over days of the week decreases.
The industry has previously responded to uncertainty and short booking windows by putting more comprehensive cancellation policies in place that protect both the property manager and the customer. But the question arises – what does the continued trend mean for the lodging industry?
Shorter booking windows make it harder for operators to predict performance as they can no longer rely on historical data. Therefore, we may see an increased reliance on dynamic pricing solutions, such as PriceLabs, which help property managers make the most of sudden shifts in periods of high demand. Some companies could opt to increase the appeal of booking in advance (90 days or further) by using discounts.
Key takeaways
- Proptech will be the key to operational savings.
- Remote working opportunities are changing business travel.
- Extended stays are disrupting travel habits.
- There will be a rise in hybrid and flexible living options.
- Booking windows remain short.
By the end of the year, the lodging industry may look very different. Property managers will increasingly rely on technology solutions to combat operational costs. Changing travel habits, in both the business and leisure sectors, will affect what is offered by accommodations. And it’s likely that lodging sector lines will merge even further as hybrid properties are created.
If you’re interested in staying up to date on trends, topics, and goings-on in the lodging tech industry, sign up for our CEO’s monthly newsletter, Pillow Talk.
