10 Hotel Trends to Watch in 2021

10 Hotel Trends to Watch in 2021

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Following the unprecedented events of 2020, Hoteliers are bracing for the long road to recovery in 2021. With our latest Hotelier PULSE Report revealing that the majority of Hoteliers only expect to financially recover to 2019 levels in 2022 or 2023, cost-saving measures will continue to be top of mind for the industry worldwide.

In addition, local tourism will continue to be crucial for Hotels’ recovery, with increasing numbers of Hoteliers now reshaping their marketing strategies around local markets in the coming year and beyond.

In this article, I share what is expected to be the top 10 Hotel Trends to Watch in 2021.

10 Hotel Trends to Watch in 2021

2020 was a year unlike any other for the worldwide Hotel industry. And while the industry has been significantly impacted as a result, the downturn has also given Hoteliers the opportunity to rethink and reset their sales and marketing strategies for 2021. Below are the top 10 Hotel Trends to watch in 2021:

1. Hoteliers will Prioritize Saving Costs in 2021

According to our December 2020 edition of the Hotelier PULSE Report, nearly 57% of Hoteliers only expect to financially recover to 2019 levels in 2022. Furthermore, a growing percentage of Hoteliers (currently at 18%) only expect to financially recover to 2019 levels in 2023.

With this in mind, Hoteliers expect to implement more cost-effective sales and marketing strategies in 2021. More specifically, Hoteliers will increase focus on the direct channel, resulting in decreased commission payments to 3rd party distribution channels. When you consider that all other third party channels have been consistently underperforming since the start of the crisis, it’s easy to see why this is the case.

According to our December 2020 Market Trends research conducted in November 2020, Booking generated just over 50% of reservations over the same period in 2019. Expedia, on the other hand, generated just over 23%. The Direct Channel, however, generated nearly 60% in comparison.

Considering the current economic climate and ROI per channel, it’s certainly more cost-effective to generate a direct booking rather than pay commission fees to third parties.

2. Hotel Direct Sales Channels will Propel Recovery & Help Hoteliers Regain Control of Distribution

While all hotel sales channels plummeted with the pandemic to nearly 0% of 2019 levels, the direct channel has consistently outperformed all other third-party distribution outlets and is set to be the fastest sales channel for recovery.

In fact, our Market Trends research from Q4 of 2020 reveals that the direct channel generated nearly 70% of bookings in October 2020 compared to the same period in 2019, while direct bookings in November 2020 were positioned at nearly 60% of bookings over the same period in 2019. The impact is unsurprisingly reflected in stays too, with the direct channel generating nearly 72% of stays in October 2020 vs 2019, and nearly 57% of stays in November 2020 vs 2019.

Hoteliers are expected to continue focusing efforts toward strengthening the direct channel to reduce dependency on intermediaries. In fact, our December Edition of The Hotelier PULSE Report reveals that the majority of Hoteliers expect ‘Direct Bookings’ to increase in importance over the next 12 months.

Although the industry has recognized the need to regain control of distribution and reduce dependency on third-party sales channels, 2020 has sharpened the focus on strengthening the direct channel for the future.

3. Hotels will Ramp Up Direct Interaction with Guests at all Stages of the Journey

In addition to strengthening the direct channel, Hoteliers are also expected to increase direct interaction with guests over the course of 2021. Now, more than ever, guests require increased communication related at all stages of their travel experience.

According to our recent Hotelier PULSE Report, ‘Health & Safety Concerns’ have re-emerged as a significant consumer behavior concern for Hoteliers. It’s important to ensure that prevention plans are visual, easy-to-digest, and can be linked to reservation confirmation emails, pre-arrival communication, and all critical guest touchpoints.

Furthermore, staying connected with past and future guests and building a strong brand relationship is critical during these uncertain times. Hotels will likely continue to promote exclusive offers and perks to loyalty members throughout 2021.

4. Local Tourism Will Continue to be a Crucial Market Segment for Hotel Recovery in 2021

Despite ever-changing travel restrictions and cautious consumer behaviors relating to Health & Safety and travel bookings, the trend towards local tourism has not changed. In fact, our research reveals that nearly 70% of Hoteliers expect domestic travel to be the number one contributor to recovery.

After a drop of 93% in April 2020 compared with the same month of the previous year, by July 2020, domestic tourism in Europe almost returned to the level of the previous year, according to research by eurostat. In July 2020, the same research reveals that nights spent by EU residents in tourist accommodation inside their own country were only 22% lower than in July 2019, while nights spent by non-residents were 64% less than the previous year.

Meanwhile, in the US, the March Travel Tracker survey by Skift revealed that two-thirds of Americans actually said their first trip after the outbreak would be a road trip.

With international travel still largely on hold for the foreseeable future, Hoteliers are expected to continue reshaping offers around domestic travel markets. In fact, numerous Hotels and groups throughout the globe continue to collaborate in promoting local destinations and incentivizing customers to contribute to the local economy by investing in home-soil travel experiences.

The current spotlight on local tourism has also made both travelers and Hoteliers increasingly aware of environmental responsibility and economic sustainability. This trend will only continue to grow in 2021.

5. Ever-changing Measures and Restrictions Means Hoteliers will Need to Increase Market Agility

As uncertainty continues to loom over the industry, one thing is certain, Hoteliers will need to increase agility to respond to ever-changing measures, restrictions, and markets.

Hoteliers will need to prepare themselves for a large onslaught of reservations and cancellations. This is due to continuously fluctuating restrictions and domestic lockdown measures implemented globally.

Where possible, Hotels must continue to embrace flexible cancellation policies as people are still anxious about how the pandemic will evolve. This will continue to give potential travelers the confidence to book. To help assure bookings, many hotels now offer cancellation refunds in the form of a credit towards a future stay. This is likely to continue in 2021.

Furthermore, with limited flight capacity and guests actively pursuing destinations within their own countries, there has been a significant shift from air travel to rail, bus, and car travel. Hoteliers will need to think about strategies to put in place in light of this new demand, offering free parking and other perks towards the drive market.

6. The Demand for Personalised Travel Search and Booking Experiences will Continue

Personalization and guest segmentation will continue to be a top priority for the industry in 2021. In addition to focusing on more direct contact with guests, Hoteliers are also expected to customize communication for allocated market segments, engaging leads and returning guests.

A recent report by Google and Phocuswright reveals that nearly six in 10 travelers said that brands should tailor the information based on their personal preferences or past behaviors. The same study shows that 76% of travelers will be more likely to sign up for loyalty programs focused on personal preferences or past behavior. In addition, 36% would pay more in return for receiving more tailored information and experiences.

7. Hotels will Invest in Soft Brands in 2021

As hotels continue to ramp up their marketing efforts to reach prospective guests, it’s increasingly likely that huge numbers of independent or boutique hotels and groups will invest in joining a soft brand. According to research by Hotel News Now, Soft Brands are expected to rise significantly in popularity over the next 5 years.

Given the financial and workforce limitations, independent and boutique hotels and groups face a substantially bigger hurdle in implementing solid marketing strategies that reach their target guest profiles. Additionally, there is also the challenge of negotiating more flexible terms with suppliers and vendors, something that big brands can do more easily by taking advantage of economies of scale.

All of this has led to a substantial rise in independent hotels associating themselves with a soft brand, that allows them to ramp up marketing efforts, and implement brand cohesiveness whilst remaining uniquely independent.

In turn, soft brands will continue to see a big interest spike from small independent hotels to become franchisees, so the numbers of conversions may skyrocket in 2021 and beyond. A good example of this trend is the Small Portuguese Hotels soft brand we launched in 2020, where there are now more than 150 members nationwide.

8. Hotels will continue to Focus on Delivering Contactless Experiences

Given the socially-distanced landscape, 2020 saw a huge shift in focus from Tech vendors solely providing staff efficiency solutions to speaking more to the consumer user experience. Enter the rise of contactless solutions which are only likely to increase in the coming year.

In the past, platforms developed and implemented across the hotel industry have centered around enhancing efficiency and capabilities of staff. 2021 will see a continuous uptick in adhering to guest convenience, with added emphasis on how it can personalize each stay for guests.

Current technology translates guest services within a hotel to allow for personalization and convenience while simultaneously removing the need for face‐to‐face discussions between staff and guests. Front desk and concierge services can be adapted and moved to chatbots like Hiiffy and hotel apps to allow for mobile check‐in, keyless entry and beyond, putting more services and amenities at a guests’ fingertips.

Contactless communication also gives hotels the power to adhere to both the socially distanced travel landscape while offering unique individual touches that are synonymous with an unforgettable hotel stay.

9. Increased Consumer Appetite for Outdoor and “Hinterland” Travel Experiences

The need for social distance has increased demand for outdoor and adventure experiences such as water sports and national park hikes where social distancing is more easily implemented in the experience. This is likely to continue in 2021.

After spending so much time indoors due to lockdowns, more people are craving wide-open spaces and the great outdoors. Nature is calling, and nature travel is expected to be one of the biggest 2021 travel trends.

Furthermore, with studies showing that direct contact with nature greatly improves mental health and reduces stress, 2021 will likely be the year where more consumers turn to nature for peace and healing, exploring “hinterland” destinations.

10. Pricing Will Hold with Increased Focus on Alternative Revenue Streams

Our December 2020 edition of The Hotelier PULSE Report reveals the biggest decline in Hoteliers expecting to decrease ADR in 2021. Furthermore, there is plenty of data showing that destinations and properties that compromised on price in the last downturn of 2008 took significantly longer to recover in the upturn that followed.

There’s no denying that pricing will continue to be a topic of contention across the industry in 2021. However, hoteliers would do well to consider how they can diversify their offers to continue generating revenue (if only to cover maintenance costs), remain competitive, and maintain price integrity.

While there is no quick-fix to mitigate the impact to revenue during this time, two areas seeing new levels of demand are Hotel Food & Beverage outlets and Gift Vouchers.

Guests are understandably reluctant to make a booking they might not be able to attend. But they are much more comfortable purchasing gift vouchers, which can be redeemed at a later date when the situation improves. Gift vouchers have also been and will continue to be used as part of hotel cancellation policies in 2021.

Hotel dining and drinking establishments will also continue to reinvent the ways they serve their customers in order to remain relevant, diversifying the avenues through which their offerings can be delivered. Namely, the delivery and takeout side of business will continue to be widely implemented revenue strategy by Hotels in 2021.

Conclusion

While the future remains uncertain, trends that have emerged during the crisis are likely to continue well into 2021. The industry is anticipating a long road to recovery and will continue to focus tackling new markets in a cost-effective way.

Given how the direct channel continues to outperform all others, we expect that increasing numbers of Hoteliers will continue to enhance focus on strengthening their direct sales strategies. Hoteliers will also need to ramp up direct, contactless, and personalized interaction with guests.

It’s also important that the industry continues to collaborate in implementing strategies that promote local travel experiences and sustainability. Through this cohesiveness, the industry will stand a greater chance of a stronger recovery over the coming years.