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The Hoteliers’ Roundup of 2021

December 21, 2021 6 min read
Hoteliers Round up Cover image featuring people reading the newspaper

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The Hoteliers’ Roundup of 2021

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At the start of this year, we predicted our top 10 Hotel Trends to Watch in 2021. But after 12 months of unexpected twists and turns, which of those trends actually held strong this year? Keep reading this article to find out.

The Hoteliers’ Roundup of 2021

If the pandemic taught us anything, it’s that market conditions and trends can change rapidly, and at any time. Hotels and the wider tourism industry know all too well that long-term forecasting in the current climate is an extremely challenging undertaking, which has been tough to get right. So, did we get it right?

Looking back on 2021, we’ve concluded that 7 out of the top 10 trends predicted at the year came to fruition. Despite volatile market conditions at the start of the year and over the summer, as we predicted, hotels adapted, holding the line on price and targeting local markets.

According to our ongoing Hotelier PULSE research, where we have continued to survey hundreds of hotels about their top recovery priorities each month, we did not register a significant uptick in the demand for personalized services, contactless technologies, or soft brand membership over the course of 2021. Each month over a period of nearly two years since the start of the crisis, Hoteliers have consistently ranked ‘joining a soft brand’ and ‘implementing contactless technologies’ on the low end of the list of business priorities for the next 12 months.

Here is a more detailed rundown of what we predicted at the start of the year, and whether or not our predictions came true.

1st Prediction: Hoteliers will Prioritize Saving Costs in 2021

Although bookings and occupancy levels exceeded pre-pandemic levels over the summer of 2021, independent hotels continued to implement an array of cost-cutting measures which are now here to stay. One of the most notable of these is the widespread adoption of digitalization to both improve operations and reduce costs.

According to a recent study by Skift and AWS, published in November 2021, 67% of Hoteliers stated that digitalization was very important to their business. Of these respondents, 51% reported a commitment to cutting unnecessary costs and running leaner.

Below are some of the other ways that Hotels have been saving costs in 2021:

  • Reducing energy consumption, for example through reducing housekeeping in a joint effort with guests to improve sustainability
  • Self check-in technology to reduce front-office costs and improve efficiency
  • Decreasing the size of hotel teams, or delaying their return to business.

What other ways have you been saving costs in 2021? We’d love to hear your feedback in the comments sections.

2nd Prediction: Hotel Direct Sales Channels will Propel Recovery & Help Hoteliers Regain Control of Distribution

In 2021 year to date, hotel direct bookings have consistently outperformed all other channels and significantly exceeded pre-pandemic levels – benchmarked at 2019. Furthermore, throughout the duration of 2021, the majority of Hoteliers surveyed for our ongoing Hotelier PULSE Report continue to prioritize their direct channels as the top source of reservations.

The crisis drove Hoteliers to focus on leveling the playing field in terms of their distribution mix and took many steps to optimize their direct channels in 2021.

But as OTAs ramp up visibility marketing investments, whether this trend will hold in 2022 remains to be seen.

3rd Prediction: Hotels will Ramp Up Direct Interaction with Guests at all Stages of the Journey – Pre-stay, Stay, and Post-Stay

Typically, price-conscious guests book with the OTAs because they expect these channels to deliver the most cost-effective deal. However, mass travel bans and cancellations of 2020 highlighted a series of problems with OTAs, in terms of refunds and customer service. According to the U.S. Department of Transportation, OTAs received 14,604 complaints from January to December 2020. Following unsatisfactory experiences with OTAs, more guests began reaching out to hotels directly.

Hoteliers have continued to adapt to this demand up until now, doing an excellent job of responding with flexible options for guests to adjust their bookings when market changes occur, and also in communicating what guests could expect at their booked destinations. 2021 also saw widespread adoption of ChatBots, which have not only helped hotels better interact with guests directly but are also converting these interactions into stays.

WhatsApp has also grown increasingly popular among hotels seeking to strengthen their direct links to guests, and it goes without saying that phone lines have continued to be extremely busy since 2020. Hotels have also embraced social media as a means to engage guests directly.

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

While widespread vaccination brought the hope of fully reopening travel corridors in the spring of 2021, unexpected new variants and restrictions meant that hotels once again largely pivoted toward the local market. Throughout the duration of 2021, the majority of Hoteliers surveyed (most recently 60% in our November 2021 survey) reported that domestic leisure travel continued to make the most significant contribution to recovery.

A new report by the World Travel & Tourism Council (WTTC) and Trip.com Group shows how severe and confusing travel restrictions around the world drove a significant rise in domestic tourism, with a surge in domestic hotel bookings of more than 200% on Trip.com’s platform this year compared to 2019.

As destinations tentatively reopened for travel over the summer of 2021, domestic travel continued to dominate. Numerous Hotels and groups throughout the globe continued to collaborate in promoting local destinations and incentivizing customers to contribute to the local economy by investing in home-soil travel experiences. Hotels didn’t just capture more of their existing demand but also attracted new business by reinventing their offering with small events, family reunions, staycations, and remote working facilities.

5th Prediction: Ever-changing Measures and Restrictions Means Hoteliers will Need to Increase Market Agility

Hoteliers certainly had to contend with some unexpected restrictions in 2021, particularly during the tail-end of the winter period, and the start of the summer. In response, Hoteliers continued to implement and communicate flexible cancellation policies and give potential guests the confidence to book.

As vaccination levels improved and opened up the markets, most destinations had a reasonable summer in terms of business. However, it’s safe to say hotels underwent a learning curve with the opening and closing of borders, and have come to accept these disruptions as the new normal.

6th Prediction: Increased Consumer Appetite for Outdoor and “Hinterland” Travel Experiences

As travelers continued to avoid crowded destinations in 2021, many pursued destinations and activities that allowed for social distancing. With a focus on small group outings, less-frequented destinations, and vast, open spaces, adventure tourism has proven to be a favorite go-to for travelers in 2021.

Furthermore, the outdoor travel market is expected to grow exponentially over the next 10 years, according to the 2021 Global Adventure Tourism Market Report, published in October 2021. The report forecasts that the global adventure travel market is expecting an elevation of $2.02 billion by 2030 and is witnessing a compound annual growth rate of 10.7 percent from 2020-2030.

7th Prediction: Pricing Will Hold with Increased Focus on Alternative Revenue Streams

At the start of 2021, we predicted that Hoteliers would hold the line on price. Hoteliers interviewed monthly for our Hotelier PULSE Report shared this sentiment, and since May 2021 we continue to see an upward trend in Hoteliers planning to maintain or increase prices over the next 12 months.

The graphs below, based on our analysis of thousands of hotels across Europe and the US, show that ADR in 2021 (vs 2020 and 2019) remained stable throughout the past 12 months.

History shows us that whether hotels face good or bad times, pricing above direct competitors yields higher room revenue. On the other hand, pricing below competitors does not stimulate sufficient demand to give the hoped-for revenue boost to make up for the lower rates. The data shows that independent hotels are aware of this, and have not lowered prices to stimulate demand.

Instead, Hoteliers have pivoted towards the local market, and also new markets that have emerged as a result of the crisis. We expect this to continue in 2022, particularly city center hotels that currently pivot toward leisure guests while business travel remains below pre-pandemic levels.

Conclusion

Looking back on 2021, most of our predictions came to fruition. Furthermore, we expect a number of these trends ( including the need for market agility, heightened focus on local tourism, and cost-saving measures) to continue until at least the first 3 to 6 months of 2022. Other trends are likely to prevail in the long-term, including direct interaction with guests and focus on optimizing direct sales.

But as OTAs ramp up visibility marketing in the new year, Hoteliers may need to fight harder to maintain control of direct channel distribution. We may also begin to see Hoteliers pivot more toward international markets as global travel fully resumes. Our December 2021 edition of The Hotelier PULSE Report is already showing signs of a shift from domestic to international travel, and the majority of hoteliers surveyed expect international (Nearly 57%) and leisure (Nearly 84%) to significantly contribute to recovery over the next 12 months.

Although the industry is already recovering, it’s critical industry continues to collaborate in sharing information to support business decision making. Hoteliers are invited to do so through our ongoing Hotelier PULSE research each month. Through this cohesiveness, the industry will have a stronger recovery in 2022 and beyond.

We also need to continue to lobby for restrictions to be based on science, and in a way that does not harm the industry.

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