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Strategic Investments in the Hospitality Industry Amid Economic Uncertainty

The hospitality industry, particularly hotels, is faced with the challenge of adapting to the current up-and-down economic outlook. In a report from STR, we see that occupancy is steady year over year. However, the impact of today’s market and inflation may make some fearful of making investments. Especially with inflation-adjusted average daily rate (ADR) at levels just under where they were in 2019 [^1^].

We are also seeing fewer hotels being bought/sold in 2023. According to an article from CoStar, there was a “36% decrease in the number of transactions priced at $10 million or more. Total dollar volume declined by 50%, and the price per key dropped 4%” in the first half of 2023 [^2^].

Amidst uncertain times, it can be tempting for hotels to tighten their budgets and delay investments. However, this blog aims to shed light on the reasons why now is the perfect time for hotels to embrace strategic investments that will drive long-term success and increase their hotel’s value by maximizing their profits.

1. Enhance Operational Efficiency:

Automated systems for room operations, check-ins, and guest services are significantly reducing staff workload, minimizing errors, and lowering labor costs.

We have a blog on the top trends we are seeing in hotel technology.

2. Personalized Guest Experiences:

Offer highly personalized, tailor-made experiences that cater to individual guest preferences. From mobile check-ins and digital concierge services to personalized marketing campaigns and authentic local experiences, hotels can leverage the latest trends and data to create unforgettable experiences that foster guest loyalty and increase ROI.

Be sure to also check out our blog on rising hotel guest expectations.

3. Embracing Contactless Solutions:

The global pandemic and staffing shortages have accelerated the need for contactless solutions in the hospitality industry. Contactless check-ins, digital menus, and mobile payments have become the new norm. Investing in contactless experiences not only ensures the safety and well-being of guests but also allows hotels to adapt to changing customer expectations and increase both staff wages and the hotel’s ancillary revenue.

4. Leveraging Data for Business Insights:

Technology provides hotels with valuable data and analytics, which can be harnessed to gain a deep understanding of guest behavior, preferences, and market trends. By utilizing this data, hotels can drive hotel loyalty, optimize their pricing strategies, create targeted guest marketing campaigns, and make informed decisions for revenue management and operational efficiency.

5. Sustainable Operations:

Sustainability is an increasing concern among consumers, and hotels are no exception. Investing in technology that promotes sustainability initiatives can benefit both the environment and a hotel’s bottom line. Smart energy management systems, IoT-enabled devices, and automated controls can help optimize energy consumption, reduce waste, and lower operational costs.

Conclusion:

The current economic outlook should not deter hotels from investing in themselves. It presents a unique opportunity for hotels to future-proof their operations, enhance guest experiences, and increase profitability by proactively lowering expenses. By strategic investments in hotel technology now, hotels can position themselves for long-term growth and value.

Disclaimer: Some of the information provided in this article is based on industry research and trends as of June 2023.

[^1^]: STR. “STR Weekly Insights: 13-19 August 2023” https://str.com/data-insights-blog/str-weekly-insights-13-19-august-2023

[^2^]: CoStar. “Slow US Hotel Deals Pace Likely To Continue in Second Half of 2023” https://www.costar.com/article/98143445/slow-us-hotel-deals-pace-likely-to-continue-in-second-half-of-2023

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