Opportunity and volatility abound as we look ahead to what 2024 may bring.
The year ahead is already filled with key moments: this will be a major year for elections and sporting events.
Elections Impact: With over two billion people in 50 countries expected to participate in elections, the travel industry may experience fluctuations, particularly around election periods. Previous data from US elections suggests a potential lag in travel bookings during such times.
Sports Events: Major sporting events like the Paris Olympics, football Euros, and the African Cup of Nations are anticipated to impact global tourism. Hosting such events can be lucrative for the host city, with increased tourism spending, although high prices may deter some visitors.
Both will present opportunities and elicit caution from hotel revenue teams.
New and re-emerging markets are also coming to the fore. China, having reopened its borders, is seeing a surge in domestic travel. However, international travel from China has not fully recovered, due in part to delays in the issuing of travel visas.
We will continue to see innovation and development in technology, as AI and machine learning become more mainstream.
Technological Shifts
Investment in hotel technology looks set to continue throughout 2024, as we have seen in our Trends & Predictions survey.
Jordan Hollander, CEO of Hotel Tech Report, predicts increased consolidation in hotel tech and an increased demand for specialized software in finance, accounting, and business intelligence. He naturally sees hotel tech spend continuing its upward trajectory in the year ahead. This concurs with the results of our survey, with 71.4% of respondents predicting an increase in hotel tech spending over the next three years.
Automated processes in revenue management are gaining traction, with 64.3% anticipating their increased importance in 2024. Among RMS users, automated pricing recommendations, real-time insights, efficient forecasting, ease of use, and market intelligence data are considered essential features.
Looking ahead, Hollander believes generative AI will impact the industry, and AI integration in search engines will reshape hotel customer acquisition strategies.
“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 Gen AI 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,” he said.
Further Tech Spending
Revenue leadership at Frasers Hospitality Pte Ltd believes that technology spend will increase in 2024, with tech infrastructure, cybersecurity, integration, and AI solutions being at the top of the priority list, according to Sheran Loh, Vice President, Revenue Management (Corporate), Frasers Hospitality.
Again, this aligns with our survey findings, in which 60.7% of respondents said they had spent more in 2023 compared to 2022.
Loh believes there are three key revenue management trends to look out for in 2024.
She lists them as:
- Revenue management becoming a commercial strategy. Future commercial leaders will be capital allocators who understand the business and make investments to influence the business mix.
- Centralization of revenue management functions. This will help teams to leverage cross-border economies, talent, and technology to provide maximum returns.
- Dynamic optimization and monitoring. No longer should RMs be looking at price optimization three times a day. The industry needs to move to live optimization and real-time alerts.
Maximizing Groups Business
Many hoteliers and industry analysts are predicting 2024 to be the year conference and meeting business truly returns.
However, that may be a double-edged sword for hotel businesses. After all, business has been strong in the transient and FIT market for a while. Hotels need a better understanding of the revenue being displaced by a meeting or group. To do this, they need to focus more on total guest spend, rather than focusing solely on room rates. Alongside that, revenue teams need to balance demand. Market data will be crucial in understanding the peaks and troughs that local markets may experience in the next 12 months and beyond.
Loh from Frasers Hospitality believes hotel revenue teams need to work to identify and close opportunities between their transient/FIT segment and their managed segments.
Her focus for 2024 will be:
- Transient/FIT - To have control over parity, drive digital marketing budget for top-performing properties, and reduce distribution costs.
- Managed Segments - To renegotiate corporate rates.
- Long Stay – Cost management and balance over transient segment mix.
Contracted business, meetings, and events will play a central role in the revenue strategy of Minor Hotels Europe and Americas in 2024, as key drivers of revenue, while maintaining a healthy segmentation mix.
“B2B will be a key part of our business mix in 2024, as it can help to mitigate the potential impact of decreasing guest spending on B2C segments. By focusing on managing contracted and group business, we can maintain our advantage and continue to drive demand and optimize results in 2024,” said Cori Galindo, VP Commercial Growth, Minor Hotels Europe and Americas.
“For us, the focus is building the right segmentation for each type of property as it’s the main pillar for creating a successful commercial strategy. A healthy business mix in terms of segments, channels, and feeder markets is the best approach to optimize revenue. In terms of distribution, our focus is on maximizing and improving our profitability through the right distribution model, keeping the focus also on direct digital channels’ growth,” he added.
Our survey showed that 51.8% of hoteliers hope to increase group revenue through optimized pricing strategies. They are looking for dedicated group analytics to help with both rooms and meeting space rate optimization.
Total Revenue Management & Profitability
Understanding total guest value has long been the central tenant of total revenue management. Hotels are starting to move away from RevPAR as the only metric of worth when considering revenue success.
Added to this, revenue teams need to be even more aware of the macroeconomics going on around them. Their hotel business cannot operate in isolation from the market pressures that continue to come into play.
Wilhelm K. Weber, Chief Strategy & Digital Officer, Grand Metropolitan Hotels, urges hotel revenue teams to be mindful of the impacts of cost increases on their bottom line. “Revenue without profit is worth nothing,” he said.
For Weber, revenue teams need to be focusing on profitability, not revenue. One way in which Weber sees hotels creating further revenue opportunities is in F&B.
“It's just the next logical step once you master rooms revenue and I'm pretty sure we will see dynamic pricing, soon. The only problem is that we still print menus, and we don’t change them too often. However, through the pandemic, takeaway delivery increased a lot and customers got used to a new F&B app format. Now, customers can make their table reservations online, order, and pay through the app. It’s all electronic menus, so yes, the prices can change,” he commented.
Lennert de Jong, President, Hospitality, Planet, also believes more could be done to revenue optimize F&B.
“During challenging economic times, every cover counts. So, restaurants need to make the most of each booking. Securing spots with deposits helps reduce no-shows and dynamic pricing means restaurants can make the most of those busy Saturday nights,” he said.
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.