Guests Increasingly Want Services To Match Rates They Pay
Leisure travel led the start of the hotel industry's recovery from the pandemic, and the demand segment is still going strong years later.
During the "Leisure's Longevity" session at the 2023 Hotel Data Conference, hoteliers and travel experts spoke about the dynamic leisure demand segment, what these guests are looking for and where they want to go.
Seeking Value, Personalization
There’s a reason cruise lines and all-inclusive resorts have performed so well recently, said Steve Contos, executive vice president at Davidson Hospitality Group. People see these two options as great deals compared to a luxury hotel. Someone could spend $1,500 a night or $6,000 a week at a luxury hotel in Orlando or spend the same and take the Ritz-Carlton yacht to an all-inclusive in the Greek islands.
“The consumer is looking for different ways [to travel], and it's really evidenced by the way all-inclusive and the cruises almost doubled their demand,” he said.
Cruise lines and all-inclusive resorts have an amazing value proposition, said Vinny Cuneo, vice president of revenue management at AutoCamp. It’s a retooling of how hotels package their offers to guests as opposed to offering discounts.
It’s about focusing on the things that are easy to add and what experiences a hotel can create to bolster the stay, he said.
Hoteliers need to take a look at how Airbnb has risen over the years and also why it’s talking about a slowdown, said Alex Cisneros, senior vice president of revenue generation and analytics at Red Roof Inn. They need to look at what hotels offer and what Airbnb doesn’t, such as daily cleaning services and other services, to differentiate hotels from vacation rentals.
“We are in a transition point on how we bring back some of the customers that perhaps went to vacation rentals because we have something to offer,” he said. “We have consistency. We have all different amenities that different brands offer.”
Airbnb is running into trouble because it’s a product of its own success, Contos said. When it started, Airbnb offered people a way to stay in a bigger space that was less expensive than a hotel.
“But now, it’s just as expensive to go to an Airbnb, especially when you factor in huge cleaning charges,” he said. “People are saying, ‘Well, if I’m going to spend that much money, I might as well go to a luxury hotel.’”
Red Roof’s teams are paying attention to how guests’ wants are changing, Cisneros said. For example, more guests started traveling with pets during the pandemic. The number of couples and individuals traveling with animals has grown about 15% since 2019, and it’s still growing.
“What’s happening is that it’s giving us opportunities to really refocus on who is the next wave of customers who we need to pay attention to,” he said.
Hotel brands have much more capacity for personalization than they ever had before, said Gabe Saglie, senior editor at Travelzoo. They can let pet lovers and solo travelers know what their hotels can offer each of them. Understanding a guest’s personal situation can win loyalty.
On a recent trip to Ireland with his family, Saglie said someone from the hotel they were staying at greeted them with galoshes ahead of their walk through a forest knowing there was a chance of rain. The hoteliers had gone through his Instagram account ahead of time to get an idea of the sizes of his children to approximate the size of the rain boots.
“That little bit of attention to detail that's personalized to me specifically can go a really long way, and I think we have a capacity now to do that in a much, much more effective way,” he said.
As hotels increased their rates, they increased the expectations guests had for their stays, Cisneros said. In the economy segment, guests are looking for good value and quality. When Red Roof's hotels were not delivering on those expectations, the team decided to go back to basics and focus on how to improve the quality and experience of the hotels.
One thing Red Roof has been working on with franchisees is making sure they are committed to brand standards, he said. The brand was flexible with standards during the pandemic, but now it’s time to take care of the properties and invest in them.
The next priority is looking at the experience and figuring out the pain points, such as reduced services or staffing levels, Cisneros said. After that, it’s about looking at the data and guest feedback to find themes on what needs to be corrected.
“That has been something that we invest in a lot, bringing all that data into one place in order to make smarter decisions on what the property needs to address,” he said. “It’s not just getting an idea of what the problem is. They’re really giving the franchisees actionable insights of this is what your consumers are saying today about your property — go fix it.”
While guests were patient during the pandemic, they want the services they used to get, especially in the luxury segment, Contos said. The decision by brands to switch housekeeping services to opt-in rather than daily service was a defensive move because of the difficulty in finding labor. Hotels are paying employees more than ever as unemployment is still at 3%, he said.
“I remember the time when luxury properties had 24-hour room service, and now they're trying to get away with 6 a.m. to 11 p.m., but the consumer expectations are definitely high, and we have to figure that out,” he said.
There’s still strong leisure demand, Cuneo said. This year, AutoCamp saw record numbers. Along with leisure demand, it’s also booking a lot of corporate groups, helping with midweek off-season. There’s also strong production out of the corporate segment from people trying to get their dispersed teams back together.
“They’re not operating in an office, so they’re doing off-sites to do a little bit of work and a little bit of play,” he said. “That seems to be the sweet spot for us right now. That is really helping sustain demand.”
Beaches are still a popular destination, Saglie said. It could be beaches on the East Coast, West Coast or even along a lake in the upper Midwest.
The urban sector is starting to rebound a little bit, but business travel is still 25% below 2019 numbers, Saglie said. The leisure sector remains relevant to cities such as New York and Chicago, and there’s a bounce back in destinations such as those after the summer season.
Group demand is coming back, but not quite to 2018 and 2019 levels, Contos said. The urban destinations and convention properties are doing better.
On the other hand, there’s been a significant decline in demand for mountain destinations during the summer, he said.
“In ski season, they’re doing fantastic, but we have resorts in the summer of 2021, ’22 that were busting at the seams,” he said. “Now they’re very slow relative to the previous year.”
COVID-19 changed the game for good, and there won’t be a complete retraction to how things were in 2019, Cuneo said. It’s about finding opportunities in these new trends now.
“Business travel, even if it does come back, we’re a few years away from that if we’re following the trend line, so it’s understanding what other segments that we can target,” he said.
In the meantime, hoteliers must find the value proposition and figure out how to create that sense of value to that specific customer to replace the business that existed years ago but is gone now, Cuneo said.
The whole notion of blended travel has been completely revamped because of the pandemic, Contos said. People’s mindsets will always put a higher value in travel and experiences. Group travel isn’t going to come back to what it used to be. Companies aren’t going to spend as much to have annual nationwide meetings, but more companies will have smaller regional meetings.
“It has changed the dynamic on a permanent basis, and it's going to shift based on value,” he said. “I think value is the key as we move forward.”
Copyright 2023 CoStar Group. All rights reserved. From https://www.costar.com. By Bryan Wroten, Hotel News Now.