2022 will be a year of experimentation for hotels as they will reconsider the needs and desires of customers
The spread of vaccinations over much of the past year has reignited leisure travel in many cities and brought the hospitality industry back from the brink. But business travel remains largely phased out, and with the omicron variant officially in the United States, hotel operators may have to continue without this key revenue stream for even longer.
And the pandemic is not the only factor limiting income.
“I remember when room service was a big source of money for hotels, but it all dried up,” says Maverick Hotels and Restaurants CEO Robert Habeeb, who opened the Sable hotel in March. of 223 rooms at Navy Pier on Chicago’s Navy Pier. “With the advent of Grubhub and Uber Eats, customers now have the flexibility to choose their favorite restaurants and have the food delivered to their room.”
Courtesy of citizenM
CitizenM Chicago Downtown at 300 North Michigan Ave.
The costs of running a hotel are also rising, creating another challenge in 2022, said Andrea Grigg, senior general manager of JLL Hotels & Hospitality Group. Labor is the most important fixed cost in a hotel, and the widespread shortage of available labor has led hotels to pay higher wages and spend more on human resources to cope with a crisis. higher turnover. Supply chain issues take even more of the bottom line.
“The list goes on and on, and as an industry we need to make sure that if these cost increases are permanent, we can find ways to cover them,” Grigg said.
Many hotels are generating new revenue by adopting practices now common among airlines, which typically charge guests for luggage, meals or drinks, and other services once provided free of charge. Grigg said going this route can be an effective way to increase revenue, provided the fees are transparent and reasonable. But operators must be careful not to bore customers with too much load and ensure they generate additional income by also offering new equipment and programs.
Hotel owners say creating new benefits for travelers will be one of the big tasks of 2022. And many of these additions can capitalize on how the pandemic has changed the behaviors and work habits of travelers. people. Some hotels, for example, are providing new, high-tech tools that allow guests to work out in their own rooms and avoid potentially crowded fitness centers. And the new hybrid work environment may mean business travelers don’t have to rush to the office, giving savvy operators the option to entice them to stay longer, perhaps for the weekend ahead.
Habeeb de Sable said it will become increasingly common for hotels to provide sweeteners such as apps that can be used to order in-room massages or deliver Peloton bikes and other advanced fitness equipment to rooms. client. But the pandemic is just one factor among many, he added, as many in the industry were launching such experiments several years ago.
“These are not new features; we just take better advantage of them, ”he said.
Other hoteliers agree.
“We did not see the pandemic as an agent of change for our business model, but rather as an accelerator in areas in which we were already investing before,” said Ernest Lee, North American general manager of development and investments for the operator of citizenM boutique hotels. “For example, really accelerating our customers’ digital journey, which ranges from offering a great mobile app to better ways to build more comprehensive customer profiles. “
His company plans to open five new hotels in the United States in 2022, including the 280-room citizenM Chicago Downtown at 300 North Michigan Ave.
The Residence Inn Chicago Downtown / Loop, a 381-key hotel located at 11 South LaSalle St., will offer, for an additional charge, rooms designed to accommodate workout equipment such as Peloton bikes and free weights during the new year, according to Prime Group CEO Mike Reschke.
Courtesy of the Prime Group
The Residence Inn Chicago Downtown / Loop at 11 South LaSalle St.
“You will find that a lot of people want to work out in the privacy of their bedroom rather than going to a fitness center at 7 am when many of these machines are in use,” he said.
But since guests occupying those rooms will be charged around $ 40 more, Reschke said he didn’t expect such perks to end up being big money-makers. Instead, it’s a way to get people to come back to hotels after a long absence and keep them coming back.
“This will ultimately lead to an increase in occupancy and room rates,” Reschke said.
Retaining guests for longer stays will be another key to thriving after the pandemic, he added. Many of these extended stays could come from converting business travelers to leisure travelers. And while the spread of teleconferencing can permanently reduce the total number of business travelers, it also means those who travel are no longer tied to an office.
“Take the typical young couple in their thirties with no kids, and one of them has to attend a conference,” Reschke said. “The two can now travel and work remotely at the hotel, then spend the weekend in Chicago, which has proven year after year to be an attractive place to visit. ”
Reschke said he plans to offer more weekend packages and deals. CitizenM also plans to explore ways to hook up with this new generation of customers, according to Lee, although there are still many unknowns.
“We are particularly interested in two second-order effects of hybrid labor,” he said. “The first is volume and length of stay: does teleconferencing cause the road warrior to decrease the total number of trips but now add a night or two when traveling? “
In addition, Zoom calls and other conferencing tools can allow work teams to expand and live in other cities rather than coming to the same office every work day.
“And does that now cause them to fly on a plane and stay in hotels every month in order to meet in person?” Lee said.
Habeeb said many hotel owners have such questions as well. All the new technologies available, along with the effects of the pandemic on business and leisure travel, mean 2022 could be a year of experimentation as the industry tries to better understand customer needs and wants.
“I don’t think the industry has responded to that yet,” he said.
Part of the answer, however, will surely include more and better services and amenities, Habeeb added. Customers have for the most part been patient throughout the pandemic, accepting that labor shortages meant hotel restaurants and bars were forced to shorten hours, and sometimes service wouldn’t be as swift. . Those days are coming to an end, however.
“I don’t see this as permanent,” Habeeb said. “They want hotels to be fully staffed and get great service in return. We should not be fooled into believing that customers in the future will be willing to pay more for less.