Must-Know 2020 Hotel Industry Trends

Must-Know 2020 Hotel Industry Trends

Budget planning is around the corner, and we want to share information to help you plan for a profitable 2020. It’s always a good practice to look back and apply any learnings from the last year as well as look forward to what is predicted for the remainder of 2019 and into 2020.

Review of 2018: YOY Profits Up As Hoteliers Hold Down Costs

Despite worries over a shaky domestic economy, interest rate hikes, and trade tensions with China, the US hotel industry had a profitable 2018. Compared to 2017, RevPAR increased 2.4 percent, mostly due to rate growth, which increased 2.6 percent over prior year. Occupancy decreased slightly, dropping 0.1 percentage points over 2017 to 77.2 percent.

In addition, labor costs continued to escalate in 2018, growing 4 percent, up from 3.2 percent growth in 2017. However, STR data suggests that payroll expenses are slowing down as hoteliers are getting better at managing schedules, seasonality and implementing cross-training measures.

The good news in 2018 was that other revenue sources—such as F&B and other operations such as spa, parking, etc. achieved larger revenue gains. Full-service hoteliers were able to capitalize on other ways to drive revenue through food and beverage. F&B on a per-available-room basis grew 2.8 percent YOY.

Miscellaneous income had the largest revenue gains for the fifth year in a row, which shows an industry-wide emphasis on fee-based revenues, specifically cancellation fees and resort fees – which is a hot button topic at the moment.

2019 Projections: Stronger Third and Fourth Quarters

According to STR Strategy Officer Elizabeth Randall-Winkle, for the first four months of 2019 demand was up 2.4 percent which was very strong. However, ADR growth was at only 2 percent in three of those months. Even with that consideration, STR still expects the second half 2019 to be stronger than first half. They also predict growth to continue in 2020, although it will be at a lower growth rate than previous years.

STR and Tourism Economics project a 0.2 percent decrease in occupancy to 66.1 percent, a 2.2 percent lift in ADR to $135.17 and a 1.9 percent rise in RevPAR to $89.36. The highest overall rate of RevPAR growth (+2.2 percent) is expected in the luxury segment, while the lowest (+1.4 percent) is projected among midscale chains.

STR Strategy Officer Elizabeth Randall-Winkle recommends several steps that hotels can take to be ready for a potential slowdown. She advocates that hotels should continue to focus on operational efficiencies, invest in efforts to support relationships with their loyal guests, and use marketing dollars to secure future guests. Booking group travel will be more competitive in a slowdown, so it’s important to be strategic in choosing the right groups at the right price. In the bigger picture, she believes that the US travel industry should work to make travel to the US more attractive to those outside the US.

OTAs Role & Contribution In 2020

A Kalibri Labs report shared earlier this year noted that in the 12 months ending August 2018, OTAs accounted for 14.9% of US hotel bookings. It is clear that Brands have been effective in slowing down the shift to OTA & 3rd Party Bookings, resulting in 22.8% of occupancy coming from Brands have ramped up their loyalty programs and spent considerable dollars on marketing campaigns and it shows when looking at those results. On average, 51.5% of a hotel’s business came from their direct marketing efforts and remains to be the largest contributor to occupancies.

If all indications are that the Industry is not growing in occupancy, hotels will need to continue to rely on OTAs for a good share in keeping their YOY occupancies intact.  However, the Kalibri study shows that the ROI is eroded from OTAs due to fees, commissions, transactions fees etc. even though they are selling the room at the same rate per Rate Parity. Based on their study of 19,000 hotels, bookings generate an ROI that is nearly 2X that of OTA bookings - $8.33 as compared to $4.77. This is the bigger picture for hotels to keep booking share from OTAs and shift it to This fact will continue to drive the brands in promoting loyalty programs to their guests to ensure their future success.

Growth of Mobile Users

Travelers have become a highly mobile audience, so it is important to keep an eye on the devices guests are using to book their hotel rooms. It’s not surprising that among all travel categories – airline, care rentals, cruises, hotels, activities - most generate more than one-third of their bookings on mobile devices, according to research by Criteo. The highest amount of bookings occurs in the Hotel category. Criteo’s research shows that over one third of people now use a mobile device to book a hotel room. 

Google research shows that consumers expect to find relevant travel information faster than ever before and that having a fast, easy-to-use mobile experience is critical. They found that the most common mobile travel activity is looking for discounts or offers and when consumers find a great offer, they are willing to convert on their mobile device. The claim to fame for OTA channels has been that travelers can find what they are looking for quickly and book it easily within two minutes. Hotels need to do the same. Offer competitive pricing upfront - one or two offers to choose from rather than a plethora of choices - and make it easy to book without a fuss.

Future of Voice Search

We have seen Voice Search evolve in the past few years. What exactly is Voice Search? Voice search allows users to search by using their voice. So, instead of typing a phrase into a search engine, people use their voice. You’ve probably seen or used it on your computer, tablet or phone. Voice search also includes all kinds of digital assistants: Siri if you’re using an iPhone or Apple computer. Cortana is Microsoft’s digital assistant. Plus, digital assistants at home, like Amazon’s Echo devices using Alexa or Google Home device. With the growth in these digital assistant technologies, more consumers are asking these devices for information through the use of voice search. Google also reported that 20% of its mobile queries are now activated through voice, and the overall use of digital assistants and voice search has risen over 40% in the past year.

As more people use their smartphones and tablets to research and book their travel, the use of voice search has the capability to offer a more streamlined process. Many love the convenience of replacing typing with speaking so it’s easy to see the potential to speed up the hotel booking process. Envision a busy consumer planning a trip asking their Alexa device to help them find a room in a particular location, at a particular price, and then being able to book their room without ever touching their phone or computer. The convenience of voice search has the potential to make the user booking experience easier and faster.

Hotels can prepare for this shift by optimizing their website content to have a more conversational style. People ask questions through voice search in a conversational manner; therefore, you should begin to explore how you can present your on-site elements in a similar way.

Knowing these trends can help you make smarter decisions as you create your business plans for next year. Keep an eye on trends like these by attending one of our monthly free webinars and following our blog.

Do You Need a Strategic Partner?

At iResponze, we know that responding to guest feedback & reviews and managing social media requires consistent attention and a strategy for developing and maintaining your hotel’s personality. We have helped many clients meet the challenge, and we have learned a lot about how to be successful with your current and future guests. We would welcome the opportunity to show how we can meet the challenge for you and your staff, leaving you all with more time to interact with the guests in front of you. Contact us for a free consultation today.


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