Hotel industry trends and predictions for 2023

Conscious considerations and decision making

Oliver Brown, the general manager of Wivenhoe House Hotel, said: “In 2023, hoteliers will be expected to build their business strategy on conscious decision-making behind the scenes. Where budget allows, investment in better accessibility, sustainable operations and strong CSR values, will become the expectation not only among customers, but staff too.

“As an industry, we’re great at listening to guest feedback, but that doesn’t always come directly, and sometimes the housekeepers, reception staff, F&B team and groundsmen, will have just as valuable insights for business changes.”

He added: “As the hotel industry may well experience some inevitable lulls in business next year, this is the opportune time to focus on low-cost investments within the infrastructure that will lead to minimal disruption and significant gain.”

Revenue recovery and the investor landscape

Andrew Robb, CFO of RBH Hospitality Management, said: “2022 has been a unique year with really strong revenue recovery, offset by extreme inflation levels and utility costs that have impacted everyone. As an industry, we remain in a strong place and all RBH forward booking data continues to be positive. However, caution remains within forecasts, with a number of previously predictable cost lines potentially subject to change as everyone, including suppliers, settle into a new cost base.

“I remain hopeful that inflation levels will return to more manageable levels within the first half of 2023 and that we will continue to see the downward trend in staffing related issues that we have seen across the sector over the last few months. The UK transaction market has been very slow in 2022, driven by a lack of stable trading coupled with increased cost of capital, which has seen many investors pause and take stock in recent months.”

He added: “I fully anticipate that we will see much increased transaction activity in 2023, which I believe will be dominated by the institutional investors who, as long-term investors, are perhaps the best placed to capitalise versus private equity funds that generally have a short to medium term view of the market. That being said, I also feel that there will be an element of sales processes which will be driven by funding challenges, such as pending refinancing.”

Stronger demand from overseas

Max Winder, resident manager of Farlam Hall in Cumbria, said: “The expectation is that 2022 will repeat itself in terms of occupancy, so lower than a ‘normal’ year, mostly due to the energy crisis and Brits flooding abroad. However, we expect an increased number of overseas travellers again. The American market in particular is looking healthier, which we expect to show with bookings in the new year for spring/summer trips. We are already seeing a good increase in web traffic from the US, which we put down to a good rate of exchange and King Charles’s coronation in May. 

“We already have more on the books for 2023 than we did this time last year for 2022. We have seen Christmas and New Year 2022 fill quite a lot easier and quicker than 2021. I think this shows a trend of consumers spending more on a special occasion than spending little and travelling often. I think this will continue, though with both energy costs and wage costs increasing next year, the result is that average rates will have to increase again as profit margins are slimming.”

A credible approach

Dan Rose-Bristow, owner of The Torridon, said: “The last 12 months has proved that people still want to travel but we need to look at what booking behaviours to expect from our guests next year and how we will need to adapt to focus on their changing needs and expectations.

“Sustainability will evolve. Talk of sustainability will move to carbon neutrality and net zero. Green washing and even the use of the word ‘sustainable’ will lose its prominence and be replaced with more CSR-focused activities, which must be underpinned by authenticity and measurability. To prove a credible approach, I believe there will be big growth in carbon accreditation as companies seek to ascertain a benchmark to showcase their efforts.

He added: “It will be even more important to get our marketing right to ensure we stand out from the crowd and showcase the uniqueness of each hotel and our people. In particular, personalisation and the ability to make people feel special will become ever more important as customers look for added value in a higher price market. 

“Menus will need to be flexible but still inspiring and good value. Despite the supply chain challenges, hotels will still be expected to provide a good F&B service that includes nutritional and sustainable adaptations. Working with local farms, developing your own kitchen garden and working with local growers and local fishermen, will all become more attractive to navigate the supply chain.”

Partnerships are key

Marc Saunders, director of marketing at Splendid Hospitality, said: “The staycation market will remain strong due to the economic conditions and weak pound globally. In turn, these factors will see inbound travel increase, especially from Europe and America. Consumers with less disposable income will demand more for less and this will gather pace, particularly with regards to the experience trend within hospitality.

“As a result, I predict hotels will maximise their partnerships with retailers and become more multifaceted in their approach. The hotel industry is still trailing retail in this respect and hasn’t fully grasped how to maximise its public spaces efficiently yet, especially in areas like open lobbies.”

Employee Retention is more important than ever

Dan Rose-Bristow, chairman of Master Innholders, said: “It is clear that the tight employment market and rising costs will continue in 2023. This will lead to potential new hospitality concepts as employers try to overcome the challenges. While hotels offer a bed and food to their guests, they ultimately serve a higher purpose of connecting people with their friends and family. People still crave the duality of time off and new experiences. 

“AI and IT continue to introduce more automation into hospitality to try to overcome the lack of staff and willingness to work in the industry. Small changes such as self check-out, QR codes, room service, self-ordering and paying at the tables are all ways hospitality is evolving. As an industry we will need to look into those sectors already championing new ways of working to counteract the supply chain and people issues.”

He added: “Employee retention is now more important than ever in the search for that edge in the employment market. Healthcare benefits, mental health programmes, discounts on hotel facilities and new learning opportunities are key ways to aid retention. Hotels will need to ensure they are focused on the training and development of their teams and will look to outside support to continue to do this.”

Collated from clients of Custard Communications