When we think about what occurred in 2023 and evaluate what is coming in 2024, there is a lot to unpack. The past several years feel like we have been transported into the latest fantasy film. Some trends come and go, while others linger, either improving our lives or quietly being integrated into our daily digital lives without our awareness.
As with any new technology that hits the news, from generative artificial intelligence to self-driving cars to editable humans in the movies, it can feel like we are headed into a self-prophesizing science fiction film. While “HAL” from “2001: A Space Odyssey” is still a thing of nightmares for many, we are closer today than ever to the total integration of intelligent technology into our daily lives.
Below are trends that both surprised, enlightened and perhaps even terrified us. Some were expected, others didn’t mature as quickly as anticipated, some generated more questions than answers, while others may give us pause as we head into 2024.
Generative AI makes a big splash. One of the most excellent examples of the tendency of big news to make a splash and then gradually fade into the background is ChatGPT and generative AI in general. Remember the excitement it generated? Unfortunately, like many things we don’t fully understand, it also caused fear among those who only heard the narrative being touted by the news. The tech press also had concerns, as did industry giants who called to pause generative AI development (that didn’t happen, by the way), and it has been one of the key drivers in the Hollywood strikes.
Except for the concern about the use of generative AI in the entertainment industry and its inclusion as a key negotiation point for actors and writers alike, we have heard precious little from the media after all that noise. They moved on to juicier topics, and for good reason — there were more questions than answers because, in technology, we don’t know what we don’t know.
It may appear from the outside that the enthusiasm created by generative AI has died out, but it is, in fact, one of the most innovative technologies since the beginning of Search. Indeed, in our industry, while we tend to be more cautious in committing to new technology, hospitality leaders are keeping an eye on how these advancements can improve the bottom line.
Data generation will increase to 175 zettabytes by 2025. As we think about the data and increased speed of decision-making needed for today’s data-hungry world, we are seeing an incredible increase in the generation of distributed, diverse and dynamic data.
IDC’s Global DataSphere is universally referenced as the de facto source for the volume of data generated each year. It recently updated its five-year forecast for the demand of data produced worldwide from 45 zettabytes (ZB) in 2019 to 175 ZB by 2025. To bring this into context, simply put, it would take one billion, one terabyte hard drives to store one zettabyte of data.
This data will unlock unique user experiences and a new world of business opportunities. However, humans cannot parse nor understand the data streaming around us. It is up to software developers to define and present that data in ways that are meaningful to our everyday lives.
Meetings are back, U.S. travelers inundate Europe, but staffing remains an issue. Generative AI is likely the greatest technology news-driven trend in 2023. But in the hospitality industry, other trends were equally surprising. For one, how quickly meetings, events and group bookings have rebounded, as reported by Knowland and Amadeus.
The pent-up demand from the past three years resulted in an increase in average daily rates, and for many hoteliers much is back to “normal.” The meeting and event business is a crucial driver for hotel profitability, and hoteliers are looking at ways to leverage data to capture additional ancillary revenue from group business.
Another trend we saw was the increase in travelers to Europe from the United States. Many hotels were inundated as travelers looked across the pond to book those adventures that had been put on hold due to travel restrictions.
Unfortunately, staffing challenges are still lingering. Over 80% of hotels continue to experience staffing shortages, and hoteliers are offering potential hires a host of incentives to fill vacancies, according to a survey of hoteliers conducted by the American Hotel & Lodging Association.
APAC region was hit hard but is bouncing back. Another surprising trend was the time it took the APAC region to recover. For example, while China began lifting travel restrictions in January of this year, it only recently removed all pre-entry COVID-19 restrictions in September 2023. These protocols have resulted in a slower return of tourists to China. Lifting these restrictions has favorably affected travel behavior in the general APAC region. Still, while it was slow going, it appears the region will see a greater surge in the coming year.
Don’t count on a stable environment anytime soon. Even as we in the industry celebrated the return of travel in the past year, another disturbing trend continues to surface. Rising interest rates continue as governments attempt to thread the needle between curbing inflation and triggering recessions. While many in our industry have learned how to deal with it, higher interest rates will impact profitability as the costs for servicing debt rise. Even at 4%, it continues to hamper growth metrics.
As the looming real estate crisis approaches, we will see more properties convert into mixed-use buildings, but more for residential opportunities and not at scale for hotels. Commercial real estate loans are renegotiated every five years, and a 3-7% increase in commercial mortgage rates will be a problem. This certainly is another driver for uncertainty in the market, both commercially and in hospitality.
While a recession hasn’t happened in the U.S., staffing, the economic environment, climate change and global tensions mean we cannot count on a stable environment any time soon.
Revenue management is a key driver for hoteliers today. If the downturn of the early 20s taught us anything, it was to rethink our strategies. Staffing issues made everyone realize we need automation to be as effective as possible. By driving automation and technology, hoteliers quickly learn how to make their teams more efficient and productive.
Massive demands and data points came in during the pandemic, forcing a dramatic increase in the adoption of software, and today’s successful connected commercial organizations know that streamlining the data between marketing, revenue management, and sales will take their properties to the next level. By embracing that efficiency, even smaller hotels and alternative accommodations are turning to revenue management, resulting in the development of new revenue management products that cater to these expanded hospitality market segments.
The power of personalization and the data that drives it. We have seen a quick rise in room revenues with a 20 to 30% growth of ADR; however, hotels are looking more closely at non-room revenue streams. The hotel industry has always been good at retailing, but the drive to capitalize on non-room revenue streams has increased the move to include merchandising everything in the hotel. Because of this, finding ways to track ancillary revenue from group events, food and beverage, catering and on-property services is top of mind for many hoteliers.
To understand their customers and inform sales and marketing strategies, hoteliers must continue to collect better data. This information can be used to tell a stronger story and provide a unique customer experience. It also requires more cohesive integrations between revenue management, marketing, distribution and loyalty.
Everything all at once. Our relationship with technology is an ongoing adventure. We can’t know what the future might bring, but we can do our best to keep up with the momentum. While it seems we continue to be hit with everything all at once, we know that with great upheaval comes great change. It is a matter of identifying the patterns, understanding the trends and acting on that information to stay ahead of that momentum. What will 2024 bring? Likely more of everything, everywhere all at once. But hopefully, HAL will not enter the picture anytime soon.
