New Year Predictions: Although Pre-Pandemic Profitability Will Remain Elusive, the Industry Will Make Strides Toward Recovery in 2022

1.5.2022
Fran Worrall
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As the new year begins, industry experts are increasingly hopeful about the state of hospitality. After almost two years of an unprecedented downturn and despite ongoing effects of the pandemic—including the emergence of new COVID-19 variants and increased consumer awareness regarding health and well-being—2022 looks to be more promising as the industry figures out how to fulfill guest expectations without compromising safety.

HU recently sat down with three hospitality insiders—Hospitality Sales & Marketing Association International (HSMAI) President & CEO Bob Gilbert, Knowland CEO Jeff Bzdawka, and Kalibri Labs CEO Cindy Estis Green—to discuss their views on where the industry is heading. Although they acknowledge that pre-pandemic profitability won’t return this year, they are optimistic that business is moving in the right direction.

In fact, Estis Green, whose company evaluates and forecasts revenue performance in the digital marketplace, predicts that hotel RevPAR—which was approximately $87 in 2019, $42 in 2020 and $65 in 2021—will end up between $75 and $80 for 2022, about 10% to 15% lower than pre-pandemic levels. Looking at each market segment, she expects the economy tier to be 100% recovered by year-end; the mid-tier to around 85% recovered; and the luxury tier to be approximately 70% to 75% recovered.

“A lot will hinge on the business market, of course,” she said. “Corporate and group travel makes up the greatest portion of the top 50 U.S. markets, and many of them are still struggling. Some markets with less dependence on commercial business have successfully compensated with leisure business, while others haven’t fared as well.”

Following are 10 additional predictions from Gilbert, Bzdawka and Estis Green.

Prediction #1: Guest data will become increasingly important.

Research about guest behavior will become more valuable than ever in the post-pandemic landscape. “As COVID-19’s repercussions ripple through the industry, previously established patterns will no longer be the norm,” Gilbert explained. “Hotels that want to succeed must find ways to monitor and respond to new behaviors,” including booking trends, occupancy patterns and purchasing practices.

Prediction #2: Robotic process automation usage will increase.

Robotic process automation, or RPA, is already being used to manage a variety of everyday hotel tasks, including room reservations, service requests, concierge recommendations, online booking management and loyalty processing. Bzdawka predicts the technology also will streamline hotel meeting and convention business. “RPA can help properties sell and interact differently, especially when the workforce is lean,” he said. “It’s a way to leverage technology to increase efficiency and conserve scarce human resources.”

Prediction #3: Hotel commercial teams will become more consolidated.

According to Gilbert, the hotel’s commercial teams—such as sales, marketing and revenue distribution—will become more integrated. While the pandemic forced many hotels to reduce these teams, they are now starting to rebuild and are doing so in a more cost-effective manner. “Hotels have learned that consolidated teams work smarter and more efficiently, sharing knowledge and operationalizing strategies that maximize ROI,” he said. Estis Green added, “This move to commercial strategy will shift the focus from the legacy emphasis on top-line revenue to profit contribution.”

Prediction #4: Hotel sales teams will become more proactive.

In 2022, hotel sales teams will become more focused and efficient. “Before the pandemic, the sales process was mostly about order-taking, but now it’s about being proactive,” Bzdawka said, adding that automation not only will help sales teams source business differently but also will help them find more profitable customers. Moreover, sales managers will be required to understand a broader customer base. “They increasingly will be responsible for clusters of hotels rather than single properties.”

Prediction #5: In-person meetings and events will return, but they will look different.

In-person meetings and conferences are already returning, and Bzdawka predicts this trend will continue, but the gatherings will be different. “Many of the larger meetings will be redistributed as regional events,” he said. Moreover, virtual and hybrid meetings will continue to offer an alternative to in-person gatherings, but they won’t replace them. “There’s an increasing demand for in-person meetings, and nothing can take their place.”

Prediction #6: Face-to-face meetings will become more valuable.

Likewise, HSMAI’s Gilbert predicts that people will travel to fewer trade shows and conferences in 2022, but the meetings they choose to attend will become more important than ever. “The relationship equity bucket must be replenished eventually, even though the touch points may be fewer and farther between,” he said.

Prediction #7: The average length of stay will increase.

Hybrid work behavior is the new norm, and Estis Green predicts that it will result in longer lengths of stay. “Guests increasingly work remotely, including from their hotel rooms, so that business travel is often combined with pleasure and trips are extended,” she said. In fact, she notes that ‘shoulder nights’ are second only to Friday and Saturday nights in volume.

Prediction #8: Technology stacks will improve, with guests at the top.

Even before the pandemic, hotels were craving more seamless technology. And, according to Bzdawka, that momentum has only continued to grow. “Many technology stacks are antiquated with legacy systems and siloed technology,” he said, adding that 2022 will find vendors creating more open and integrated solutions that enable hotels to move quickly and operate more efficiently. And Gilbert predicts that guests, rather than accounting, will be at the top of the new tech stacks. “Customers will become more loyal to brand apps, and guest-facing apps will be the dominant technology,” he said.

Prediction #9: The talent pipeline will be a priority.

The hiring crunch is an ongoing challenge for hotels around the world. As a result, there is a sharp focus on finding talent—from front desk and housekeeping staff to sales and accounting professionals. “The pandemic has forced the industry to find ever more creative ways to attract employees,” Gilbert said, predicting that incentives such as enhanced benefits, educational opportunities, comprehensive training, association memberships and flexible work environments will be offered routinely as properties scramble to fill empty positions.

Prediction #10:  Mergers and acquisitions will continue.

COVID-19 set off a wave of mergers and acquisitions, and hospitality insiders predict more of the same in 2022. “The pandemic is forcing everyone to assess their strategies and direct their resources into areas with the greatest growth potential,” Gilbert said. “If there are synergies to be found, they will be the drivers.” He predicts ongoing M&A activity throughout the entire industry, including hotel brands, management companies and technology vendors.

Experts predict that the industry will make strides in 2022, although recovery may not progress in a straight line. “We’ve taken two steps forward and one step back, and every market has been different,” Estis Green said. “But the industry is resilient and we will get through to the other side, ending 2022 in a strong position.”

Bzdawka concurred, saying that 2022 will be a bridge year for the hospitality industry. “We’re already seeing seasonal trends starting to return, which is a strong indicator of recovery. What’s more, uncertain times often bring great opportunities. Hotels that adopt a beginner’s mindset and embrace change will thrive. I’m optimistic about the future,” he said.

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