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Kalibri Labs- Keeping Tabs on Trends in the Industry

By Jennifer Hill, VP, Commercial Strategy for Kalibri Labs
26 July 2022
6 min read
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There is no debate that the world has been transformed over the past three years as the pandemic and its impact have reshaped every facet of our lives: the global community and its collective response to crisis, widened political divides, bumpiness in the economy, and more specifically, the hotel industry. So, where do we need to focus our attention to be successful as we enter a period of sustained recovery? 

As 2022 progresses, the travel outlook remains generally positive. The industry has rebounded more quickly than initially anticipated, although it has evolved differently than expected. With a significant increase in leisure travel, longer lengths of stay, and more shoulder night stays on Sunday and Thursday, the past reliance on higher-rated commercial transient and group business may be permanently altered. Additionally, average daily rate has rebounded and continues healthy growth. Leisure demand especially is driving the overall ADR performance across the U.S., although recovery and performance varies widely by market type and chain scale. 

Markets defined as Resort/Destination are benefitting from the surge in leisure travel, as are most other markets, except for Large Metropolitan Areas. The chain scales that continue to lag in recovery are those we find most commonly in Large Metropolitan Areas: Luxury and Upper Upscale. 

Thursday is the new Friday

With more and more people able to work from anywhere, the industry is continuing to experience an increase in Thursday through Sunday stays, leading to an increase in Guest Paid RevPAR contribution for leisure segments on these days of the week, while remaining relatively flat Monday, Tuesday and Wednesday nights vs. 2019. In comparison, commercial Guest Paid RevPAR contribution decreased all seven days of the week in the second half of 2021 vs. 2019.

Leisure Remains a Gift in the Present

Through March 2022, commercial Guest Paid RevPAR contribution still lags the same period in 2019 by more than -15%, while leisure is up +1%, driven primarily by strong Guest Paid ADR, up +8.7% for leisure. Given the historic high ADRs the industry witnessed in 2019, this surge in Guest Paid ADR from leisure is truly remarkable, especially since it is happening throughout the week and across all markets and submarket types. 

However, this shift in business will continue to have an impact on staffing, especially in guest-facing positions like housekeeping and front desk. An important factor to consider in evaluating the costs and benefits of these shifts is to consider the cost of labor. 

Hotel Effectiveness, a company tracking hotel labor statistics for more than 5,000 hotels and 250,000 U.S.-based hotel associates, reports that “upscale, city-center hotels have doubled employment levels since the Omicron surge, with the labor index (vs. pre-COVID).” 

The Trends That Will Continue to Shape the Future

The shift in overall business mix to heavily leisure vs. commercial transient or group may persist for the next few years. How is your team working with these four trends now? How will they in the future? 

Design for Different Types of Travelers

The work-from-anywhere movement is growing, especially in the U.S. As more companies become fully distributed or work toward creating a hybrid model to offer competitive flexibility to employees, travelers will be seeking out more than a standard desk workspace in their guest rooms and hotel public spaces. Designing, or in some cases, re-designing critical guest areas to be work-from-anywhere friendly will be a necessity for most hotels in the future. 

Think about ways in which you can repurpose existing traditional meeting space or convention space. Is it possible to create attractive, flexible space to allow for day-use offices or short-term meeting rentals for virtual calls or small meetings? In what ways can the space already designed for business travelers become more useful to all travelers? Are you offering packages to encourage more of Thursday-Monday stays that may appeal to families?

Maintaining a Competitive Edge as a Year-Round Leisure Market

One of the most important and unexpected outcomes of the early stages of recovery was the surge of consistent travel to historically seasonal leisure destinations. In many cases, travelers are discovering closer-to-home locations to enjoy. As many are driving to these locations, travelers will be more likely to spend more on their accommodations and experiences while saving on airfare.

Many hotels in these types of markets have become concerned with what may happen as a result of the return to more traditional commercial transient and group business mix, or when travelers feel more confident in traveling further away, requiring a longer trip by air. The key to maintaining the new popularity in these markets and destination types will be to focus on the emerging tourism attractions. Focus on and market for the draw of the location, whether that is travel driven by sports, adventure, culture, recreation, or even health/wellness and medical tourism, as well as the specific features and benefits of your property.

Staying Flexible and Updating Your Strategies

An additional concern for the potential shift away from secondary and tertiary markets is keeping hotels relevant and visible. A 2019 study of business listings by Search Engine Watch “found that 96% of all business locations fail to list their business information correctly.”1 In some ways, the pandemic has spurred necessary attention to our business listings as hotels work to keep travelers updated on outlet hours of operation, mask and/or vaccination requirements or recommendations, as well as local updates. 

Perhaps more importantly, the study found most businesses were not optimized for voice search. The cost of not being optimized for voice search will become greater each year as more and more of the population adopt and use voice search, with some studies suggesting that as many as a third of all U.S. adults would use a voice assistant or search monthly2. This means that on top of keeping your business listing updated for physical search engines, you must also ensure it is optimized for voice search. Voice is not a dying channel of production. 

Lastly, a trend that’s here to stay is having a library of working and easily adaptable strategies to adjust your business to the ever-evolving industry and traveler trends. We should not be quick to assume that we have experienced truly unique situations over the past several years, and we recommend that you keep track of the strategies that were deployed and their success rates, so that you can go back to them in the future to repurpose or redeploy them. 

Remember that successful commercial strategy teams will deploy an operational framework, supported by a regularly updated playbook, that will ensure you and your team are prepared for what comes next.

About the author 

Jennifer is the VP, Commercial Strategy at Kalibri Labs, where she partners with clients to tailor plans for adoption and the effective utilization of Kalibri Labs’ products to optimize revenue and profit generation capabilities. She can be reached at [email protected]