7 hospitality industry trends to watch in 2022: Part 1

7 hospitality industry trends to watch in 2022: Part 1

It’s a milestone moment for the hospitality industry. The impact of the pandemic is undeniable, and with that stress comes mega-trends that ripple throughout the industry. Some of these - such as the unique labour market dynamics we are seeing -  will level out in time.

Others are likely to play out over future decades, creating fundamental ripples and long-term change that hotels need to be working towards right now. In part one we look at three major trends that are going to change how you operate your properties themselves, and how they can be future-proofed to make the most out of what is yet to come.

Stay tuned for part two, where we look at the digital and data trends you need to be thinking about for the rest of 2021 and into 2022.

1. Hard to hire, harder to keep: Why you need to address the labour shortage

It has been a year of wild ups and downs for many within the hospitality industry. Few industries have been hit as hard as we have, causing widespread job losses across the sector, despite the extension of government support in many places.

According to the US Department of Labor, for the year from February 2020, (when the pandemic was first arriving on American shores), just under 40% of the total jobs lost were in the leisure and hospitality industry. Now, while it might be the case that consumers are now returning and the sector is rebounding, the same cannot always be said for hospitality workers.

Job openings have reached record highs in the sector across many major economies around the world. For example, looking at the most recent ONS data for the UK, vacancies for accommodation and food service businesses have increased more than ten-fold from their lowest point. The bottom was hit in April to June 2020, where there were just 8,000 vacancies, compared to 117,000 now. Even this estimate is below trade body UK Hospitality’s estimate of a 188,000 shortfall of workers. In the US, unemployment for leisure and hospitality workers is now reaching pre-pandemic levels, and pay has now exceeded levels commonly being paid before COVID hit.

All of this means that retaining your employees, and then achieving the best results with them are now paramount as we move towards recovery for travel and tourism globally. It is also now time to make an investment into technology solutions to alleviate the pressure of running a hotel with a smaller team and ensure your staff can do more with less.

It also makes sense to up-skill and re-skill your staff. This will serve to help with retention, mitigate the effect of constraints in hiring capacity, and help maintain effectiveness at a time of reduced budgets in many hospitality businesses.

While the idea of increasing any budget right now can seem like a risky move, investing in tech and focusing on staff retention makes both good economic sense and represents a sensible long-term strategy. When it comes to technology, today’s ‘good enough' is usually outdated by tomorrow. Not only will an investment in new technology improve efficiency at present, it will pay dividends in the future.

Estimates vary on how much it costs to replace a staff member, but none of these approximates are cheap. A review of research by the Centre for American Studies noted that, “the typical (median) cost of turnover was 21% of an employee’s annual salary.” It’s unlikely that in this unusual labour market staff recruitment has reduced in cost. Instead, the reverse is most likely the case on the ground for most hospitality businesses.

So, how can you make the most out of every staff member and keep them working in your hotels?

One of the simplest ways to increase efficiency with limited staff numbers is by implementing new technology solutions to take the heavy lifting out of your day to day. From a revenue management perspective, efficiency is based on freeing the team up from tasks to focus their efforts on maximising revenue. It's vital that revenue management teams make timely decisions based on reliable and accurate business data.

By removing time-consuming manual tasks with innovative tech solutions, you can have actionable insights at your fingertips, save considerable time and can switch focus to positively impacting your bottom line. Now is the best time to adopt newer technologies that will drive productivity and stimulate growth. See how much time you can save with our ROI calculator.

Studies show that while pay is important, the biggest reasons for not being able to retain staff are just as often a lack of progression and opportunities. Therefore, the number a key objective for hotel managers in dealing with this trend is to build comprehensive training plans that lead to structured and clearly laid out employee progression upwards through the organisation.

This then creates the benefits of:

  • Retaining knowledge in the organisation.
  • Reducing the direct and indirect recruitment and initial training costs.
  • Increases resilience through organisational flexibility and back-up in key positions via cross-training and mentorship.
  • Improves productivity.
  • Increases customer satisfaction, particularly when customer service and digital skills are taught.
  • Raises the bottom line.

Other elements that can enhance that all-important retention are flexible working conditions, a focus on workplace safety and retention-focused compensation. All of these should help you to do more with less and keep your most valuable asset, your staff, ready for the full return of demand and the next challenge for our sector.

2. Coping with a crash in corporate demand


Let's face it: corporate travel is in a very different place versus pre-pandemic. Where once business travel seemed vital - enough so that airlines could base their entire road to profitability on the premium business traveller -  now the corporate traveller is a comparatively rare sight. The restrictions in international travel and the rise in video conferencing have lessened the importance companies put on face-to-face interaction - with huge consequences for hospitality.

The Global Business Travel Association estimates that across 2020, business travel spending crashed by 52% and that the sector is likely not going to return to pre-pandemic levels until 2025.

Instead, the hospitality industry is now far more reliant on the leisure traveller, and the green shoots of recovery are now very much present when it comes to this sector. We have previously discussed in  a blog post why domestic demand is a key driver right now, and why this dynamic is set to continue for the foreseeable future.

Although international leisure travel is now returning to growth as well, new variants mean this is shrouded in uncertainty once again. Hoteliers will need to address this mega-trend of reduced corporate demand and a reshaped travel market head-on.

What's required is not only a long-term strategic outlook but also one that starts right immediately. There are two primary paths that hoteliers need to be taking when it comes to making up for the loss of business travel: re-allocating marketing spend and introducing flexibility for facilities previously utilised primarily by corporate clients.

The first strategic consideration is likely already in place for your properties, but it is worth emphasising how important it is to be effective in directing marketing spending. The shifting nature of travel restrictions and changing government advice is creating a highly fluid situation. At present, demand can rise rapidly and fade away just as quickly. These shifts are largely dependent on the situation in the leisure market, and are minimal overall in the corporate market.

A great way to maximise the effectiveness of this strategy is by drawing on strong business intelligence that shows accurately where demand is, and will be, generated. Take a look at our Global Market Insight tool, which not only provides a real-time picture of demand and its origin but also incorporates GDS search for many locations (a good indicator of corporate travel).

When it comes to property resources once devoted purely or largely to corporate travel, hoteliers need to be considering how they can adapt to new conditions. Consider working with local businesses to meet their needs on a flexible basis. For example, hotel meeting space might be useful for hosting companies that have downsized corporate office space, operating as flexible working spaces.

Another way to maximise space utilisation and continue to drive revenue from it could be to try to zero in on companies that need large meeting spaces located close to their employees. These companies might need these to reduce costs or to fulfil social distancing requirements, but the key is to look less at the traditional opportunities and pivot into whatever demand is available.

3. MICE might never be the same


Hoteliers need to face the fact that even the 2025 estimate of a return to pre-pandemic corporate travel spend may be optimistic, and that this segment has fundamentally changed forever. Not only have businesses been forced to consider work-from-home policies in a way that could not have evolved without the shock of the pandemic, but there is also a growing body of evidence that remote work is here to stay. Events will change too, moving from live in-person events that focus purely on the face-to-face, towards hybrid meetings and events that put together a digital broadcast (and increasingly interaction) with the live event.

A 2020 survey by Cvent of 700 event planners, managers, coordinators and directors in Western Europe found that more than three-quarters are looking at putting together a hybrid event in 2021. Hotels can move towards this future by creating environments that support these kinds of events and allow those booking them to really show off their product. Most critical to this is having the tech support necessary for hybrid meetings and events. Nobody wants their event, which is being broadcast to the entire internet, to go down unexpectedly. Those that make this process as convenient and slick as possible are most likely to capture the market.

Hoteliers with significant MICE space who want to move towards this should improve digital infrastructure and support in the following ways:

  • A must-have is to invest in fast bandwidth internet, and preferably on-premises 5G capability.
  • Have space and power outlets for AV stations and equipment.
  • Think about how the space is going to be utilised and prepare accordingly. Use the space to record interviews and break-out sessions throughout the exhibition area. Make sure the lighting is suitable for livestream events.
  • Create a list of AV and technical partners who can strengthen proposals for hybrid events. These can also be useful advising and filling in for where you lack expertise.
  • Create a microsite advertising your capabilities, and make sure the visitors can fully visualise the space and its capabilities. It may be worth creating a virtual tour, but at the very least have detailed floor plans.
  • There may also be value in investing in a dedicated studio space to support very high-quality recordings.

Remember to test, test and test again. When it comes to events, if it can go wrong, it will go wrong, especially as your set-up will need to work with a wide range of devices, systems and applications. The Cvent survey underscores this need, with 77% of respondents choosing the reliability and speed of connectivity and A/V equipment as their most valued factor in choosing a hybrid experience.

This concludes part one of our seven trends to watch in 2022. Coming up next are the evolutions and revolutions in the digital and revenue management spaces.

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