5 Trends that are Shaping the Hospitality Industry in 2020
By Euan McGlashan Global Co-founder & Chief Executive Officer, Valor Hospitality Partners | March 22, 2020
It's a new decade, and "New Year, New You" not only applies to your personal goals, but to the hotel industry as a whole.
In 2020, hotels will continue to build upon two of the more significant trends we saw last year: leveraging technological advances, including artificial intelligence, and adopting sustainable initiatives to help the bottom line and attract consumers who want "eco-friendly" hotel options.
In addition to these trends, this year will also be all about efficiency, delicious food and drink, loyalty programs and the guest experience.
Here are five trends that will help shape the hotel industry in 2020...
1. It's Not Easy Being Green (But we're working on it)
Environmental problems continue to plague the world. From wildfires in the Brazilian rainforests and Australia to plastics filling up the stomachs of ocean life, human impact has triggered an environmental crisis. One only has to look at our carbon footprint as evidence of this; a recent Bloomberg report shows 50,820 million metric tons of greenhouse emissions were released into the Earth's atmosphere in 2019.
The good news is the hotel industry has taken note and brands have, and will continue to, introduce more robust sustainability programs in order to help combat these issues. Here at Valor – it's become one of our own internal benchmark standards for how we operate and act day-to-day.
Ten years ago, hotels introduced linen and towel reuse programs. By reducing the number of laundry loads, hotels save on water, sewer and energy costs. While it is certainly an admirable practice that continues to help (estimates show that laundry accounts for between 15 and 20 percent of hotel water usage), the industry has come a long way since then.
This year, brands more than ever before, will look to combat plastic waste in their properties by exploring ways to eliminate single-use plastics as well as go plastic-free. And it's not a moment too soon: it's estimated that 300 million tons of plastic is produced annually (50% of which is for single-use purposes) and that 8 million tons are dumped in the ocean each year. Luckily, many hoteliers have and will continue to adopt and implement policies aimed at reducing plastic use in 2020 and beyond.
Hoteliers will also continue to explore ways to combat energy consumption by implementing more natural power sources to conserve energy. We'll see solutions similar to those implemented at The Lodge at Gulf State Park in Gulf Shores, Alabama. Developed entirely with sustainability and eco-tourism in mind, the hotel reduces the amount of energy it uses by incorporating cooling techniques such as window wood screens to filter sunlight. The property also incorporated A/C unit sensors that immediately cut off the air if balcony doors or windows are left open or ajar.
The property adheres to the three main pillars of sustainable tourism: environmentally friendly operations and facilities; support for the protection of cultural and natural heritage; and direct and tangible social and economic benefits to the local community. Jump on The Lodge's website and see the massive impact the hotelis making on the coast. Our wine estate resort, Spier, in Stellenbosch, South Africa, is also incorporating sustainable practices. Currently, 100% of its water and 95% of its waste (with a goal of 100% sure to be achieved in the next few years) is recycled. Spiers' hope is that everything will be given infinite life, including its furniture.
As we kick off the new decade, hoteliers, driven by a combination of responsible leadership teams and travelers who want green hotels, will continue to look for new ways to ramp up sustainability practices in properties around the globe.
2. The Way to a Person's Heart is Through Their Stomach
Gone are the days believing travelers want bland and boring meals; in 2020, we will see more hotels incorporate high-street retail food and beverage concepts in properties. Valor has been at the forefront of this trend for years and is helping drive this change.
It's hard to imagine as recently as five years ago F&B directors were creating vanilla experiences because they thought their guests hankered for something familiar. Guests (and revenue) were literally walking out the front door and going to the sports bar down the street or were hopping in a rideshare or taxi in search of something decent. Lucky for all of us, we now know better.
Hotels will continue to look for ways to not only keep guests on property, but also entice passersby with premium dining experiences. Today's hotel restaurants are focusing on their chefs' strengths with selective menus that highlight a few great offerings – that's why 2020 will be the year of less is more.
We will see more and more on-property restaurants pare back the size of their menus in favor of emphasizing their chefs' talents. We will also see more offerings that accommodate diners' dietary needs and restrictions, like vegan and gluten-free options.
In 2020, we'll also see a greater focus on sourcing quality ingredients and products from trusted local farmers and producers. And let's not forget another global issue. Staggeringly, one-third of food produced globally is wasted (which equates to 1.3 billion tons) and a quarter of our water supply is used to produce the food we consume. The food we waste and lose could save starving populations as well as massively reduce our carbon emissions. It's a serious issue and we need to focus heavily on how we buy, handle and manage our produce.
In addition to food, hoteliers are elevating the drink game by incorporating more hand–crafted cocktails and on-tap wine. Also, look for more and more hotels to incorporate craft beer into their beverage programs this year. In just the last decade, craft beer has seen phenomenal growth in the United States with over 7,500 new local brewery openings across the country -- some of which can even be found on hotel properties. Because travelers continue to seek authentic, local experiences, F&B directors will capitalize on craft brew's popularity by adding local suds to menus.
3. Emerging Technologies Will Continue to Reshape Customer Experience
When it comes to service, people want efficiency. That is why this year, we'll see a dramatic rise in the amount of money hotel brands invest in artificial intelligence (AI).
Hotels are relying on AI to help understand guests' preferences and what they want from their hotel experience more than ever before. One of the most prevalent uses of AI is for the check-in process, and that won't change. Additionally, in 2020 we will see hotels experimenting with new processes and technologies to provide faster check-in times. Already, WiFi setups recognize returning guests and light them up immediately. Like it or not, these advances help us know where our guests are, their likes and dislikes, and preferences, which leads to increased loyalty.
One rapidly emerging technology that will speed up check-ins in 2020 is QR codes for guest room access. Keyless-entry options like this not only allow travelers to bypass traditional check-ins at the front desk but offer a more secure alternative to RFID and magstripe room keys. The eventual goal is to limit, or in some cases even eliminate, the inefficient process of face-to-face check-ins. After all, for years the industry has set up a system where checkout has become obsolete. Hotels are continuing to look for ways to incorporate those same efficiencies for check-in.
Don't get me wrong; I'm old fashioned and love the personal touch - and we must never lose the emotional connection to our guests. But that need not happen through clunky check-in processes and long lines during busy times when guests are eager for a hot shower and some R&R to simply be passed a key!
Just look at the airlines for example: 80 percent of airline passengers prefer self-service options, like kiosks and electronic boarding passes, which essentially turn travelers' mobile phones into their boarding passes. It is evident travelers are more inclined to use their cell phones at the airport, so why wouldn't that be the case once they arrive at their hotel?
That is why we will see the investment in AI continue to grow in 2020 and beyond.
4. More Loyalty Programs and Brand-Affiliated Hotels
Loyalty programs will continue to attract travelers because ultimately, guests want points they can use for free stays, upgrades, comped drinks, discounts and more. Major groups like IHG, Hilton & Marriott combined have over 50+ hotel brands that cover every traveler's preference when it comes to offering amenities, loyalty programs and frequent flyer points.
Given the saturation of boutique hotels in the market, we will see more brand-affiliated hotels created to help make the larger hotel companies more competitive and in-many cases, bring the cost of conversion and renovation down.
According to the American Hotel & Lodging Association, in 2019, over 200,000 hotel rooms were under construction across the U.S. With the increase in construction costs, due mainly to the surplus of renovations, many developers will likely have to delay projects, which will be a big problem for hotel owners this year, as they need to be fully operating to drive revenue. Or maybe they will go ahead and the guests will pay in higher pricing. If that's the case, it's best we deliver on the experiences - both personal and technological - that I've addressed.
For hotel owners, costs are rising, but brands remain relevant to customers depending on multiple factors, including a property's quality, location, style and market. One of the key reasons hotels will continue developing "sub-brand" hotels is to reach new segments of travelers and create more loyal customers. No longer are the new 'brands' being created actually brands. For me – IHG, Marriott, Hilton, Hyatt, etc. are the actual brands and the brands they create (think 38 within the Marriott portfolio) are sub-brands.
Each fills a niche and guest preference, but at the end of the day the global reservations systems they provide, along with rewards points, are what matter to the developer/owner looking to grow market share and to the guests' needs in that specific market.
5. At One's Leisure
The Global Business Travel Association forecasts global business travel spend will reach $1.6 trillion in 2020, a 3.6% growth from 2019. In order to accommodate the growing number of business travelers, hoteliers are encouraging executives to extend their work trips into leisure vacations by offering discounts to local events, festivals, concerts and more. This has been happening for years; however, we now see far more advertising aimed at guests NOT using all their vacation time. Smart.
Being a European, I can tell you without criticism that the USA is the worst for too short or missed vacations. This is also a global issue. Sleep deprivation, too much connectivity (think checking emails on handhelds constantly), too little human connection and direct communication, anxiety and mental health have become serious topics we cannot avoid. Clearly, more leisure and downtime is a small part of the solution and we must focus on it as an industry.
Although the concept of bleisure travel was coined by millennials, nearly 80 percent of baby boomer executives are extending their business trips into leisure travel (according to a survey of over 3,000 director-level business professionals conducted in 2017).
2020 will be interesting. At Valor, we are eager to continue our drive to further enhance our personal connection to our guests, providing them every opportunity to rejuvenate and relax, be it work or leisure. And perhaps even more importantly, we are working hard to minimize our environmental impact, be part of the solution and all the while, ensure the mental health and wellness of our teams. We all have a major responsibility. Strike that – an accountability, to fix these serious issues which present real threats.
Hospitality is meant to be hospitable and in recent years it has taken on a greater meaning and greater responsibility to offer more than just a bed and warm shower. Being alive 365/24/7 – we can be part of a greater human movement and solution!
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