As the hotel industry steps into 2024, it is poised to embrace a transformative era marked by significant technological advancements and evolving market dynamics. This year is shaping up to be both exciting and challenging, with a host of trends set to redefine the industry.
Before delving into the details, here's a quick snapshot of the key trends:
- Mergers and Acquisitions (M&A): Increased consolidation in hotel tech as companies adapt to tighter capital markets.
- Business Intelligence and Data: Rising demand for specialized software in finance, accounting, and business intelligence.
- Generative AI (GenAI): Broad application of GenAI across hotel software, moving beyond chatbots.
- Tech Switching: Easier adoption and switching to new technologies in the hotel industry.
- Back to the Basics: Focus on steadily grown, under-the-radar hotel brands over previously hyped ones.
- Group-Leisure Dynamics: Emergence of 'group-leisure' travel as a significant market alongside traditional group sales.
- The End of Traditional Pay-Per-View (PPV): Shift to streaming and beaming technologies in guest rooms.
- New Era in Search Engines: AI integration in search engines reshaping hotel customer acquisition strategies.
With these trends in mind, let's explore how each one is expected to impact the hotel industry in 2024.
Mergers and Acquisitions
The year 2023 was a precursor to a more intensified wave of mergers and acquisitions in the hotel tech industry. Companies such as Mews and Lighthouse set the trend by embarking on acquisition sprees, a momentum that is only expected to gain speed in 2024. This surge is primarily due to startups reaching the end of their funding runways amidst a tight capital market environment, making it increasingly challenging to raise early-stage venture capital. Consequently, growth equity firms are stepping in to back their profitable later-stage portfolio companies, enabling them to make strategic, smaller bolt-on or tuck-in acquisitions. This trend signifies a consolidation of the hotel tech market, creating larger entities with more comprehensive service offerings.
Business Intelligence and Data
In 2023, there was a noticeable uptick in the demand for specialized software in finance, accounting, and business intelligence within the hotel industry. This demand was driven by the complexity of tax codes and accounting processes, necessitating tailored solutions for hotels. As we move into 2024, this trend is expected to not only continue but also accelerate. The increasing reliance on data-driven decision-making and the need for efficient financial management tools are pushing hotels to adopt advanced business intelligence systems. These systems offer enhanced analytical capabilities, allowing hotels to optimize their operations and financial strategies in a more effective and insightful manner.
Generative AI
Generative AI (GenAI), which was a major buzzword in 2023, mainly impacted the chatbot segment of hotel technology. However, the upcoming year is set to witness a broader application of GenAI across almost every category of hotel software. This expansion reflects the industry's recognition of GenAI as a transformative technology with immediate and diverse applications. Unlike fleeting trends such as cryptocurrency or the metaverse, GenAI is seen as a foundational technological advancement. Its potential to streamline operations, enhance guest experiences, and drive innovation is immense. Here at HotelTechReport.com, for example, we are already gearing up for this shift by increasing engineering capacity with dedicated GenAI resources.
Tech Switching
Historically, the hotel industry has been characterized by long-term commitments to specific technology solutions, with hoteliers rarely switching technologies due to high implementation costs, challenging integrations, and lengthy onboarding processes. However, this scenario underwent a significant change in 2023. The removal of these barriers has led to an environment where hoteliers are freer than ever to experiment with new solutions and switch out underperforming ones. This shift towards best-of-breed products is driven by the need for modernization and efficiency. The trend of rapid tech switching is particularly notable in product categories like Property Management Systems (PMS), where hotels are rapidly moving away from outdated legacy systems.
Back to Basics
The year 2023 witnessed the decline of previously hyped tech companies in the hotel space, such as Selina, Inspirato, and Sonder. This shift has redirected attention to under-the-radar hotel brands that have exhibited steady and responsible growth over the past few years. These brands are emerging as the new growth drivers in the industry, highlighting the importance of sustainable business models over mere market hype. In 2024, the focus is expected to be on these quietly successful companies, as they demonstrate the value of steady progress and solid fundamentals in the ever-changing hospitality landscape.
Group/Leisure Dynamics
The recovery of group business in 2023, characterized by a mix of smaller breakouts and traditional large conventions, is set to evolve further in 2024. The most successful hoteliers will be those who can master both traditional group sales and the burgeoning 'group-leisure' segment. This segment includes events like family reunions and informal university friend meetups, which require different marketing strategies and tools. The ability to tap into these less conventional markets, traditionally challenging to source as leads, will distinguish forward-thinking hoteliers in the competitive landscape.
The End of Traditional Pay-Per-View (PPV)
The proliferation of streaming and beaming technologies in midscale and upscale hotel guest rooms marks a significant shift away from traditional PPV entertainment. Initially, hoteliers were hesitant to embrace this change due to potential losses in ancillary revenue. However, the realization that enabling guests to use their own devices and streaming services is critical for guest satisfaction has led to widespread adoption. Hotels that lag in this area risk alienating guests, especially the tech-savvy demographic, underlining the need for modern entertainment solutions in the hospitality sector.
New Era in Search Engines
Google's expansion of AI in search beyond its Bard tester environment is poised to revolutionize customer acquisition in the hotel industry. The implications of this technological advancement are yet to be fully understood, but it is clear that it will significantly alter the dynamics with Online Travel Agencies (OTAs). As organic Google clicks decrease and the cost per booking on pay-per-click (PPC) channels rises, hotels will need to become more strategic in their customer acquisition efforts. Experimenting with emerging channels like TikTok, as well as leveraging less saturated platforms like LinkedIn, will become essential for hotels seeking to maintain visibility and attract bookings in this new era of search engine technology.
Conclusion
The year 2024 presents a dynamic and exciting landscape for the hotel industry, shaped by technological innovations and strategic shifts. From the widespread adoption of GenAI to the changing dynamics of customer acquisition, hoteliers are facing a landscape rich with opportunities and challenges. Staying informed and adaptable will be key to navigating these trends and capitalizing on the potential they offer for enhanced operations, improved guest experiences, and overall business growth.
Download our latest special report ‘Trends & Predictions to Advance Your Hotel Revenue Strategy in 2024’ to read our full revenue management survey results and learn from industry experts on their trends and predictions for the year ahead: https://www.duettocloud.com/special-reports/advance-your-revenue-strategy-in-2024.