Six hospitality industry trends for 2023 and beyond

Six hospitality industry trends for 2023 and beyond

Having worked in the hospitality business for a long time, I feel we often underappreciate quite how resilient – and adaptive – this industry is.

In just the past couple of decades we have seen the hotel distribution model upended by the Online Travel Agents (OTAs); a major competitor arrive in the shape of Airbnb (and its emulators); and then a global pandemic which forced hotels in many key markets to cease trading almost overnight, and for what turned out to be an extended period.

And yet the hospitality industry keeps on rolling; adapting to new realities and consistently treating trends as opportunities. Amid a backdrop of strong hotel development pipelines in many regions, I have selected a few of the key hospitality trends to be aware of, while also looking at how hoteliers are responding.

1. Welcoming the working nomad

With major employers like PwC embracing hybrid working models, and others such as Airbnb committing to work-from-anywhere policies, there is a huge opportunity for the travel industry – and especially hospitality operators – to embrace this new generation of digital nomad remote workers who combine employment with international travel.

While accepting that there are many jobs which cannot be done remotely, the knowledge and services economy is less restrictive in this area, especially given the exponential rise in use of videoconferencing and collaborative working applications which was spurred by the constraints of lockdown.

For hotel operators, responding to this opportunity is about much more than just installing good Wi-Fi. There has been a sea change in attitudes, too: these new generation remote workers are interested in community, in being among like-minded peers, and in enjoying a better balanced life. At the same time, when they are working to a deadline they do not necessarily want to be surrounded by vacationers.

It means the age of the bland and forbidding hotel business centre is over. I expect to see funkier co-working spaces established; also suites being reconfigured to include a desk/office setup as well as converting to a functional meeting space when required.

At the same time, I see a huge opportunity for travel destinations to create bespoke marketing programmes to attract working nomads – ideally with tourism boards and hospitality companies working hand-in-hand to amplify the message as well as ensuring that promises are credible and can be delivered on the ground.

2. The rise and rise of wellness tourism

As a hospitality consultant, I get more calls from hotels looking to reposition into health and wellness tourism than any other trend. And no wonder – this market is booming.

However, hotels need to understand that such a repositioning may not be as simple as it seems; nor is it without risk. Much depends on location: given that most hotels cannot afford to have full-time medical and wellness experts on the payroll, are such professionals available close by? Also, several brands are already operating successfully in this sphere, so it is important to check the local competitive set before making a significant financial commitment.

Often, it may be better to look at smaller changes which can appeal to health-conscious guests without breaking the bank – something I call ‘light wellness’. Putting healthier choices in the minibar is a tiny gesture that can create a warm glow around your brand. In addition, it is increasingly common now to offer pillow and mattress menus; but why not go one step further by introducing sleep and wake-up rituals aligned to circadian rhythm cycles?

My message is that you do not necessarily have to open a bespoke vegan restaurant, or spend millions renovating your spa, to be thought of as a wellness-conscious hotel. That said, what you do spend should pay back, given that data shows health-conscious guests tend to be bigger spenders than average. This can be explained by the fact that they will happily pay for things like yoga sessions and personal trainers, as well as choosing the in-house F&B options because they trust them to produce healthier cooking instead of untried local competitors.

3.    Embracing technology in spa and wellness

We are now much more engaged with our personal health and wellness; a trend which has been accelerated by a combination of the pandemic and the explosion in wearable fitness technology.

For the spa and wellness industry, this offers the promise of both creating an opportunity and nullifying a threat simultaneously.

How? Because new technologies like hyperbaric chambers, cryotherapy and the like are more demonstrably effective than many ‘traditional’ spa rituals and treatments. At the same time, working with these scientifically-proven treatments can also create fewer but more interesting and better paid spa and wellness roles; something that is essential for a segment which is struggling to attract workers amid the wider ‘war for talent’ in hospitality.

4.    Deploying smart technology in hotels

The hotel industry has an unbalanced relationship with technology. We tend not to be pioneers in technological development, choosing instead to take on applications developed for the commercial real estate sector, airports and the home, then look at how they can be integrated into so-called smart hotels.

But the hotel reception is not the same as an airport check-in – the need for a warmer welcome and a degree of personalisation is much greater in a hotel setting. If I am your guest, why not give me the option to check-in from a smartphone app while I am still in my taxi heading from the airport? In that way I know there is a room waiting for me, and when I arrive I can head straight up to it without delay.

Crucially, though, if I wish for some human interaction there are employees who have been liberated from behind the reception desk and are in the lobby to greet me, answer my questions and give me tips on the best places to go for food, drinks or sightseeing. As a guest, it immediately makes me feel that the hotel is well integrated into its surrounding community.

This kind of customer-facing role requires excellent soft skills (as well as an encyclopedic knowledge of the destination) and is thus more rewarding both professionally and potentially in terms of remuneration. If you are a ‘people person’ it is a role you can enjoy and make your own – and these are exactly the sort of jobs that we need to offer as an industry if we want to attract and retain the talent we need.

5.    Marketing gets ‘transformational’

We often talk about hospitality being part of the wider ‘Experience Economy’, which was a term coined by Pine & Gilmore just before the turn of the millennium. More recently, the same authors have developed the notion of the ‘Transformation Economy’, where experiences are elevated from mere enjoyment to actual personal transformation.

What does this mean for hospitality marketing? I think we will see a shift in messaging to amplify this notion of transformation through travel experiences, and particularly around health and wellness. Messaging will also become even more personalised – down to a granular level – especially in the luxury segment. The advantage with digitalisation is that it makes such moves easier to pull off.

The message will thus evolve to something like “I see that you are traveling because you are trying to change something in your life. We can be part of that journey by being the place where you sleep, where you look after your health and fitness, or by becoming your place of work while you explore how your career can move forwards”.

One of the brands already doing this successfully is Equinox, which began in fitness but has now opened what it calls “the fittest hotel on Earth” in New York’s ultra-trendy Hudson Yards. The promise is that a stay there will help you on your personal journey of being healthier, more focused and higher performing. It turns the transformation economy from theory to real-world practice.

6. Can the hotel ‘brand explosion’ last?

While the other trends I have highlighted can primarily be seen as opportunities rather than risks, this sixth and final one is perhaps a little more open to debate. It concerns the fragmentation of the hotel sector into a plethora of sub-segments, each with their own stable of competing brands.

While choice is generally a good thing for a consumer, has this process gone too far in the hotel business? Are customers becoming more confused than inspired by being faced with so many brands? Will they feel that once independent brands which are now part of a multinational group can still deliver authentic experiences?

I personally think that such concerns are valid, and that in time we may see some rationalisation as the larger operators focus on one brand in lifestyle, one in boutique, etc.

To finish, these are just six hospitality trends I have chosen to highlight today. There are plenty more items on the hospitality leader’s strategic agenda; some of which – such as social responsibility – may ultimately prove more impactful than those mentioned above. And the red thread which runs through most if not all of them is the hotel industry’s ongoing battle to attract and retain staff.

Much of what I have talked about is centred on delivering transformational, ultra-personalised experiences to guests. But how can a hotel do this successfully if its frontline workforce is changing every six months?

As an industry, we need to address the way we engage and excite young people to work in hospitality; deploy technology to give us more freedom to invest in people and give them roles that captivate both them and their guests; and reclaim that notion of personalised, human-to-human interactions which Airbnb used to such great effect when it first emerged as a challenger to the traditional hotel business.

If the hotel industry can pull this off, it will deliver exceptional growth, because this is the way that guest demand is going.

Mariana Palmeiro is a consultant to the global hospitality industry, specialising in the spa, wellness and health segments, and Visiting Faculty – Business Trends in Luxury – at Glion Institute of Higher Education.

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