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What Hotel Business Strategies should you Implement in 2022?7 min read

October 27, 2021 5 min read
Hotel business strategies 2022 blog cover image, featuring hotel porter carrying luggage

What Hotel Business Strategies should you Implement in 2022?7 min read

Reading Time: 5 minutes

According to Hoteliers surveyed for our 18th Edition of the Hotelier PULSE Report, published at the start of Q4, the industry appears to be cautiously optimistic about business performance over the next 12 months, ranking 6.6 out of 10, which equates to ‘Extremely Optimistic’. But what does that mean for your hotel business strategies in 2022?

But although the future is looking much brighter and hotels worldwide are capitalizing on revenge travel and seeing significant growth in international bookings – with destinations such as the US now consistently growing above pre-pandemic levels in terms of hotel bookings, it’s crucial that Hoteliers continue to apply the lessons learned from the recession to their business in 2022 and beyond.

5 Hotel Business Strategies to Implement in 2022

Our previous article on this topic covered the important lessons Hoteliers learned from the recession. Read on to find out how you can continue applying these lessons to your 2022 hotel business strategy.

Below are 5 hotel business strategies to implement in 2022:

1. Analyze Cost vs Profit across All Channels to Make Smarter and More Balanced Distribution Decisions

Given their marketing prowess and dominant position in the online travel space, there’s no denying that OTAs will continue to play a significant role in the hotel online distribution ecosystem. However, it’s important hotels don’t fall back into the trap of blindly giving away inventory without considering the long-term costs or implications to revenue growth.

During the budgeting season, Hoteliers would do well to weigh up the cost of OTAs (and other third-party intermediaries) against the profits generated from these channels. This will enable hotels to make smarter and more balanced distribution decisions that bolster revenue growth and profitability.

When tallying up your year-end revenue to shape next year’s distribution strategy, ideally, Hotel managers should consider the following:

  • How much revenue does each channel return when commission costs are accounted for?
  • What’s the Average Daily Rate for the channel? It may surprise you to see it’s your brand site delivering that higher ADR! Do your own analysis, and remember: numbers don’t lie.
  • Research which days of week bring in the most bookings from each channel. Are some channels simply cramming the higher demand dates for your hotel and contributing less to other nights? If so, it might be wise to evaluate how much availability you offer to those channels.

To find out more about what you should consider when shaping your distribution strategy, read here.

2. Re-evaluate and Re-negotiate distribution and supplier partnerships – Who is helping your hotel business grow.

When reflecting on the early days of the pandemic, it’s important for Hotels to remember who their true partners were in the fight for survival, and those who let them down. This applies to partners across all hospitality and travel sectors, from OTAs to technology vendors.

While it’s impossible to know upfront everything there is to know about a prospective technology supplier or distribution partner, below are some core questions you should ask a prospective partner before investing:

  • How will your solution solve our hotel’s operational and business challenges?
  • How does your solution align with our hotel’s business needs?
  • How does your business innovate and adapt to change?
  • How will your business manage and mitigate risk for our hotel?
  • Do you understand the impact of guest experience and engagement?

Of course, it goes without saying that you should only consider those who respond with a proven track record of how they can help your business in the long run.

And finally, if you are rethinking your current partnerships, we suggest you ask yourself this question: “Did my existing partner support my hotel’s business recovery when times were tough or were they just dead weight?”

3. Prioritize Innovating your Hotel Tech Stack & ensure your Hotel has the Skills to Respond to the rise of ‘Revenge Travel’

As revenge travel increases following nearly two years of lockdowns and changing travel restrictions, consumers are more demanding than ever. It’s vital that every step of the customer experience continues to be optimized, from online search to pre-booking to check-out, and beyond. It is crucial that hotels have both the technology and the skills to meet these demands.

Speaking at our June 2021 COLLECTIVE #HotelierPULSE session with Techtalk.travel, David Chestler, Partner & Snr. Managing Director at Provision Partners emphasized how crucial it is for hotels to have the technology to respond to guest demands. He said: With today’s vocal travel audience, who are comfortable using devices and instantly sharing information, it’s critical that hotels are prepared to respond.”

He continued to elaborate on what hotels are doing to innovate their tech, “Many hotels are developing voice to talk AI and chatbots that make it more efficient for hotels to both engage with their guests and guide purchasing decisions.”

Chestler then emphasized that hotel staff must be empowered to manage the technology, thus reducing repetitive tasks and giving employees more time to manage the guest experience. He said: “Removing pressure from human resources will be a critical path to recovery. Businesses need to ensure their teams can manage the technologies to deliver more efficient experiences to very demanding consumers. Employees need to be supported so they are comfortable operating in the current environment and demand.”

Without the right technologies and skills in place, hotels risk hurting the guest relationship, and ultimately, the bottom line. Therefore, it is imperative that hotels, on an ongoing basis, continue to analyze customer behaviors and trends, and respond with technological innovation. To help you get started, read this article with 6 Steps to Upskill your Workforce.

4. Continue Optimizing your Hotel’s Direct Channel

Throughout the duration of the pandemic up until now, the direct channel has shown the most resilience and growth in the upturn. The tone has been set by how hotels and OTAs have engaged with guests during the crisis and the direct channel continues to outperform all other channels. But what will happen when the business outgrows pre-pandemic levels?

Hoteliers must continue to make direct channel growth a core objective in their sales & marketing strategies. The good news is that many hoteliers have implemented and continue to implement strategies that optimize their hotel websites and other direct channels.

According to Guestcentric’s September 2021 Hotelier PULSE survey, nearly 79% of Hoteliers will prioritize growing their direct channel to become the top source of reservations over the next 12 months and beyond. Notably, when asked which incentives Hoteliers currently offer to guests who book direct, the results show 50% of Hoteliers currently offer more attractive rates to guests who book directly instead of OTAs.

5. Think Local for Business Travel, Think International for Leisure Travel

According to our ongoing Hotelier PULSE research, international hotel bookings continue to outperform domestic bookings since August 2021, and the majority of Hoteliers surveyed expect international leisure travel to significantly contribute to business recovery. However, it’s important to note that business travel is recovering much slower. This is not only due to the rise of remote working, but also budget constraints as businesses continue to manage costs during recovery.

Speaking at our October 2021 Hotelier PULSE panel, Jens Egemalm, Director of Distribution at Pandox AB recommended that business travel dependent hotels should continue targeting regional or local business travelers.

He said: “When we analyze the volume of leisure bookings on channels such as Booking.com and Expedia, we see that most of these bookings are actually driven to some degree by business motivations from small businesses and entrepreneurs. So although more large-scale business travel is recovering slower, due to policies and restrictions, there are opportunities to leverage on a local scale.”

Pedro Colaco, CEO of Guestcentric and Great Hotels of the World added, “While large businesses may not resume travel as quickly due to restrictions, we need to consider that the small to medium-scale businesses have been hurting from the economic downturn and eager to get back on the road and drum up business. Therefore, it is essential that hotels continue to pivot towards these regional business travel opportunities.

Conclusion

The Covid-19 recession forced Hoteliers worldwide to rethink all facets of their business, from operational efficiency to guest engagement, and bolstering direct revenue. As hotels prepare their business strategies for 2022, it is crucial that they continue to focus on the good habits and strengths they cultivated during nearly two years of volatile market conditions.

What business strategies is your hotel focused on in 2022? Leave your feedback in the comments, or share what is top of your mind in our latest Hotelier PULSE survey here.

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