The new year is upon us, bringing a fresh start and a time to reinvent yourself and your business.
How will the industry evolve this year? What will 2024 bring for travel? Where should hoteliers focus their resources? In the latest Hot Topics session in collaboration with Entegra, thought leaders discussed 2024 and the challenges and opportunities it may bring.
Moderated by Glenn Haussman, founder/host, No Vacancy Live podcast, the panelists included Jeff Porterfield, SVP, client services/chief customer officer, Entegra; Natasha Scott, VP, operations performance and strategy, IHG Hotels & Resorts; Bryan P. DeCort, COO, Hotel Equities; Richard Sandoval, VP, operations, Spire Hospitality; and Adam Cannon, chief brand officer, G6 Hospitality.
Scott kicked it off with some opportunities she’s seeing for the new year.
“What we’ve seen in the past few years is that even in the darkest days, there continues to be light in the industry,” she said. “The foundation of travel remains strong; experiences and what guests are looking for are well-positioned. The fundamentals remain strong, and we can capitalize on that to deliver great guest experiences.”
DeCort is also bullish on fundaments and is excited about consumer trends—think unique and immerse experiences leading demand, along with corporate travel picking up.
“We think as the economy improves and fundamentals improve, that’s good for everybody,” he said. “In terms of rate growth, we continue to see that year-over-year, and it helps us offset some of that inflation and wage pressure. There’s no question that folks are traveling again, and corporate travel is coming back. We’re excited for 2024 and the prospects it brings.”
Cannon is optimistic about this year but pointed out the industry’s double-edged sword—with 4% gains in ADR and RevPAR, this means hoteliers are not getting that much from occupancy. However, he sees great opportunity, especially on the West Coast and in the extended-stay segment.
“Extended-stay is running about a 10-point occupancy premium to transient,” Cannon said. “We were still doing pretty well at this point last year, and we still have some tough things in Q1 to get through, but once spring hits, I think there’s going to be a lot of opportunity. There’s a lot of demand out there.”
Sandoval reflected on 2023, noting that it was supposed to be a return-to-service but somehow turned into the year of the lender, with interest rate impacts that the industry will still feel in 2024.
“When you do 4% and talk about wage pressure and inflation, margin management is still a big deal,” he said. “One of the big factors—when we talk about a return-to-service—is getting more experiential and back to basics. One of the basics we’re focused on this year is leadership at the middle-management, department-head level.”
Sandoval said his team plans to get middle management focused on the important and not the urgent. This means having a leadership plan that allows for margin management so they can focus on their teams and get the guest experience delivered.
Managing margins will be crucial this year with the rising cost of goods and services, all while labor issues still loom in the background.
“We recognize that operators have to be very nimble and ready to adjust their strategies,” Porterfield said. “We allow operators to hit the easy button for their procurement needs and allow them to spend and promote talent and spend more time with their customers.”
So how exactly is that executed? Porterfield explained that Entegra looks to leverage size and scale, providing savings to its customers with full transparency.
“Clarity is the key to inflationary times, and I think that level of transparency allows our customers to optimize their purchases a bit better, to see all the moving pieces and allow them to make decisions that favorably impact your bottom line,” he said.
Porterfield added that Entegra allows customers flexibility and makes suggestions to drive value for them, helping to ease the process.
Streamlining processes can help with the bottom line, as hoteliers want to take care of their team members financially. Finding money elsewhere can ensure both guests and associates are happy, while bringing in returns for owners.
“It’s fun to find new revenue streams,” Sandoval said. “We’re starting to be very creative in any flex space. How can we regionalize? How can we do anything to make sure we have money to take care of our frontline folks impacting us day-to-day?”
Turning to technology
Finding new revenue streams and streamlining operations—specifically through technology—have been challenges for hospitality historically, only exasperated post-pandemic.
And, with younger generations entering the workforce, they aren’t necessarily accustomed to managing crisis.
“Whenever you have these black-swan events that force you to step back and reset, it allows you to challenge your team in a way they’ve never been challenged,” DeCort said. “They’ve never been through a financial crisis or a 9/11. There’s no context, but it’s an opportunity to teach and coach. How do you take care of that core group, drive performance but also balance that with recruiting and changing needs?”
According to DeCort, Hotel Equities is heavily invested in training and in its tech stack around enterprise resource planning (ERP) and automated systems, which allows the company to scale faster and provide empirical-driven data to make real-time decisions.
The idea is that if hoteliers are getting technology right, they won’t need as many people to run the hotel, allowing them to take care of associates and guests in a more meaningful, impactful way.
“We need to leverage tech to touch the guest,” Sandoval said. “What does the guest want for this day to be great? Get them to the service we’re already offering. Get them to try things you’re doing great already.”
Technology can also offer personalized experiences, not only keeping guests in the building but earning their loyalty in the process.
“Loyalty programs continue to win the day,” DeCort said. “Customizing pre-arrival experiences with AI and chatbots allows for the ability to interact with customers in real-time.”
Tech extends to the kitchen, as Porterfield offered what hoteliers can use to drive efficiency.
“We use innovation in the kitchen to drive efficiencies like sous vide cooking, helping customers achieve value and cost savings,” he said. “Entegra Performance Kitchen provides time and motion studies that look at efficiencies on how they’re preparing foods and make suggestions to create value.”
Keeping guests on-property is often done through food & beverage, which the panelists noted is seeing a shift, especially as more Gen Z guests are willing to pay more for experiences.
“Gen Z will pay for a nicer glass of wine but only have one,” Sandoval said. “We need to look at how they’re spending, blending locally sourced with nationally and globally recognized brands. Younger generations view themselves as citizens of the world. We have to understand how that’s impacting us. Sometimes, it’s about having the things that are recognizable but premium, and then that local experience that makes it fun and entertaining.”
DeCort noted that F&B outlets have to constantly reinvent themselves, especially if they’re in hot markets with ample outside options.
“It’s a street corner fight when you’re in markets with heavy F&B,” he said. “We give our teams a lot of autonomy. That experience is important.”
Solving the labor crisis
This engagement with employees is essential, especially given the cost to replace team members and ongoing labor struggle.
“For the young people out there, I always say this: If you don’t know what you want to do yet, you’re conflicted and confused, still in school or haven’t picked a path, do yourself a favor and get a job in a full-service hotel,” Cannon said. “You don’t have to have that job forever, but within those four walls, you’re going to learn about many different facets of business— operations at the desk, food service, sales, maintenance. Hospitality doesn’t necessarily have to be the end result, but wherever you’re looking to go, odds are you’re going to get the best training at a hotel. You learn a critical benefit of business and that’s the customer service aspect that you will not find anywhere better in any industry.”
Especially as hospitality now competes against remote jobs, it’s vital that hotels take advantage of its on-site opportunities—employee empowerment being at the forefront.
“We have such a unique opportunity where people are coming to our hotels for some of the best moments of their lives, but also for difficult experiences,” Scott said. “Our people are at the front lines of being able to deliver those experiences and create unforgettable moments of service. Drive that inspiration into frontline colleagues, find new ways to engage and motivate colleagues, because they’re very different than they were five years ago—they’re new to industry. Continuing to invest in tech on-property to remove that friction enables them to create the experience.”
Competition with other industries—and other companies—forces hoteliers to look internally for differentiation.
“Establish a credible stable culture centered around people and opportunity, reward for results, have an accountability piece—all of those things matter,” DeCort said. “As you start to differentiate yourself as an operator, brand and employer, those things are critical in today’s marketplace.”
Going green
Important to younger generations of both employees and guests are also sustainability practices. People want to know what companies are doing to make the industry eco-friendly and the world a better place.
“Whether it’s moving away from plastic or sustainable linens or including grass-fed beef [on menus], those are solutions we look at,” Porterfield said. “We also focus on waste management and reduction and have plant-forward initiatives. We look at trends to measure how to improve efficiencies.”
Entegra has also joined forces with five major hotel companies— Accor, Hilton, IHG Hotels & Resorts, Marriott International and Radisson Hotel Group—as well global hospitality group purchasing organization Avendra to launch the Hospitality Alliance for Responsible Procurement (HARP) to accelerate positive impacts across the hospitality industry, driven by a commitment to provide greater support to its clients on key sustainability goals.
“We have a heavy franchise population, and we need to think about what’s scalable,” Scott said. “[Things like replacing] single-use plastics with bulk amenities across the globe; leveraging new technology to track usage to reduce energy; community solar programs.”
For Cannon, sustainability looks a bit different in the economy segment, but there are ways to make impactful changes.
“What can we choose that can fill the gamut?” he asked. “For conversion hotels and new-construction, that’s a big job to take on. We focus on not cluttering the room, LED lights, low-flow water usage. These things seem elementary, but when you can scale that through 1,500 hotels, you can make a big impact.”
It seems that cost-savings is the key phrase for 2024, all while keeping the guest and employee experience top of mind. The balance here is critical to ensure team members’ career development and loyalty.
