The three Rs – recruitment, recession, and rates – are being seen by many as the challenges of the hospitality industry in 2023. But what if they are also opportunities? Handled correctly, these three Rs, coupled with the right technology investment, could help hoteliers to a more streamlined, strategic, and profitable 2023.
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I disagree with some of the commentary around staffing challenges. When we look at the data, we are consistently seeing layoffs across the board from industries including technology and banking. As a result, my prediction is that staffing challenges will ease a bit. It's going to be easier to attract talent into hotels because when you lay off thousands of workers from Amazon, those workers aren't all engineers. I think a lot of these individuals will start turning towards industries like hospitality that are craving that new talent.
When Covid hit, we had a lot of talent in the hospitality industry retire early. We had a lot of talent moving to other industries, and a lot of that talent may be gone forever. The next generation of hoteliers is likely coming from some of these other businesses. And so, the challenge for the hotel industry is how do you train your staff.
We are seeing interest rates at record highs. And that is why we saw mass redundancies from the mortgage departments of banks like Wells Fargo. The interest rates are so high, they're unable to write enough mortgages to justify the level of staffing that they have. What that means for hotels is that we're going to see a slowdown in mergers and acquisitions, across all categories in private equity. What that means is that supply will grow less quickly. That’s an opportunity for hotels that are currently open.
Rates across travel and, and tourism in general, whether that's flights, accommodation, or other services, are extremely inflated.
What happens when you have lots of layoffs, lots of unemployment, and downscaling, is that all these people cut their travel budgets. The corporate budget is less because there are fewer employees traveling, and the leisure budget is less because of the layoffs.
And I think that's going to lead to a decrease in rates for hotels, airlines, and other travel service providers.
Hotel Tech Spend in 2023
The solution to many of the challenges created by the above is in technology and finding ways to automate manual tasks, and streamline and drive efficiencies. As such, hotel technology spend will continue to increase in 2023.
The pandemic gutted divisions in hotels and whether staffing is light or new talent is coming into the market, in both cases, we need technology to standardize our processes and to deliver a consistent guest and staff experience. That shifting workforce has created more demand for technology for hotel owners to be able to drive the requisite levels of net operating income and profitability.
Automation is critical to the efficiency of any business. Having a workforce that is stuck at running business insights in Excel worksheets, cleaning and migrating data between systems, and running manual processes around all of this, is a waste of time, which ultimately is a waste of money. In addition, it makes those employees' jobs extremely tedious, challenging, and error-prone.
And so, automation is already absolutely critical, and not just for hotels, but for any business in today's market, because you're not just competing with the hotel down the street, you're competing with Booking.com, Expedia, and Google, and you're competing with really sophisticated players that are upping the gameplay.
Another reason I think it will increase is new and innovative business models amongst the hotel software players. Historically, technology such as central reservation systems worked on a commission-per-booking model. Then we moved to a SaaS model, with a subscription rate.
Now we are evolving into an embedded payments model. Companies like Planet Payments, Adyen and Stripe are innovating here and enabling technology companies to monetize payments in addition to their SaaS revenue. The good news is that despite hotel technology spend increasing, going forward, the hotels might not actually feel this because that budget was already out of their pockets and going to payments processors.
New hotel tech innovations
There are several new and exciting hotel tech innovations to watch in the year ahead.
Selfbook has some compelling technology; it's the best booking experience I've ever seen. It eliminates the need for hoteliers to reroute prospective guests on their website to a microsite for booking. This increases the conversion rate. And it offers slick mobile payments and mobile checkout.
Canary is doing some interesting things, consolidating the guest experience tech stack, providing contactless check-in, guest messaging and upselling in one integrated solution.
And ALICE by Actabl is an extremely interesting combination. They combine data from operations platforms like ALICE with data from a BI platform in ProfitSword. This enables hotel teams to see how operational changes may affect the P&L, which will enable hotels to create more iterative operational efficiencies. As we think about those labor challenges this type of tech is going to be critical for hotels to be able to see demand changes in real-time and quickly adapt their processes at their hotel.
And as far as what is new at HotelTechReport.com, we are working on providing a suite of tools to help hoteliers identify proactively, rather than reactively, which areas of their tech stack require investment relative to other hotels.
Discover more trends & predictions from industry leaders in our latest eBook: Targeting Greater Profitability In 2023. Download your FREE copy today: https://www.duettocloud.com/special-reports/targeting-greater-profitability-2023-trends-predictions-to-boost-your-revenue-strategies