The State of the Hotel Industry: 5 Things To Know for 2025 - Josiah Mackenzie

Josiah: Alright, friends - today I'm coming to you with a special solo episode to give you five things that you need to know for 2025 about the state of the hotel industry. As you may have heard on the show in the past, I am doubling down on research in the year ahead for this year for 2025, and I'm starting out by releasing a study that we have been running over the past month around what's going on in the hotel industry. Each month this year, I'm going to be rolling out a new study about a new area of hospitality, but I thought it was important to start out with the big picture. What is going on overall? And to do that, I put together a survey talking about many different elements of hospitality of hotel operations, everything from top challenges to areas of opportunity. Then, I fielded this survey by asking people across the ecosystem for their input. And so this was people on the front lines of providing hospitality, people who are managing individual hotels, including input from people working at hotel management companies, ownership groups and investment companies, hotel brands, asset managers, and even technology providers. And so I wanted to get everyone's perspective on this. Over the past week, I've been analyzing the data. We ran the survey. I need to stop saying we, it was just me. I ran the survey in collaboration with hundreds of you. And so one of the things that I am doing with these studies is that you have to take part in the survey to get the full data set. Hopefully, this episode will be valuable to you because we will talk about five key things to know. However, there were dozens of data points that are in the entire survey. And so something to keep in mind, I will include a link in the show notes where you can still take part in my next survey that I'm running this month about artificial intelligence. If you take that survey now, you can get immediate access to this full data set. However, the full data set is not available to anyone who doesn't complete the survey. So, with that aside, I'm going to run through a couple of the data points that stood out to me the most, starting with actually two data points that led to one big takeaway for me. And so the first data point was around the question of what's your biggest day-to-day challenge right now? And when I looked at the responses just from hoteliers, people either working on property or working in a corporate role, it did not include any advisors or technology companies, just the hoteliers. And I asked about their biggest day-to-day challenge. Number one was revenue generation and profitability. more than any other challenge the industry faces. And of course, there are many in running a hotel, but biggest challenge, revenue generation and profitability. I'm going to give you the next data point and then tell you what I took away from this. And the next data point is answers to the question around what is the part of hospitality that excites you the most right now? Number one answer, the most common answer was innovating and guest experience delivery. I'm going to include a link in the show notes where you can see these charts, all of the responses. But if I combine these two things together, so again, top challenge being generating revenue and the part that excites respondents the most was innovating a guest experience delivery makes me believe that 2025 is going to be the year of driving profitability through improving the guest experience. And that sounds a little bit trite at face value, but I want to explain a bit more on why I think we're going to see a lot of focus, a lot of effort in this. Any action by anybody, especially though within the context of work in business, and this is absolutely true for the hospitality business, is always a function of two things. you know, what is the pain that is driving you and what is the thing that you're excited about that is also driving action but more that you're attracted to it. You want to move toward it because you're excited by it, you see the potential there. I think that is where, you know, there of course will be this focus on driving revenue, driving profitability, but what is magical about the hospitality industry to me is that by innovating in guest experience, creating better experiences for guests, that starts a healthy cycle of driving demand, driving revenue. And if you do it right, it can drive profitability. And so that's where I found it really interesting that the top thing that excites hoteliers is that innovating a guest experience delivery. It wasn't just the guest experience, but in that whole process of delivering it, which includes operations, of course, right? And so that's going to be, I think the big thing that we see this year, it is going to be the focus that I'll have on this show. So it won't just be guest experience for the sake of it, but I'm going to try to bring on guests that can talk about how does this all tie back to driving more demand, making, earning higher revenues, and then ultimately earning more profits through that exercise. And so I think this is something that didn't necessarily shock me, but it was great to get some data around this as well. If you have one area to focus, regardless of where you are in the ecosystem, I would say really focus on innovation in the area of guest experience delivery. That is going to make your business much more successful, because as we all know, in hospitality, if you delight people, They are more likely to come back to your hotel or hospitality business. They're more likely to tell their friends. And of course, word of mouth is the cheapest form of marketing. It is the most effective form of marketing. That's going to drive loyalty, not bribed loyalty. It's going to drive that real loyalty where people want to come back to your hotel. And ultimately, because they're much more likely to book direct at that point, that's going to be the cheapest source of revenue as well, which leads to profitability. So 2025 is going to be the year of driving profitability through improving the guest experience. That's what I want to see out there, what I expect to see out there, and what I want to feature more on the show. So if you're doing interesting things in that, let me know. My email is josianthospitalitydaily.com. Would love to hear from you and potentially bring you on the show here. But moving on here, we'll touch on a couple of other data points. In the survey, I asked about what are the resources or support that would most help your hotel or hotel business succeed in 2025. By significant margin, the most common answer was people. Whether that is more staff, better talent, hoteliers are looking to people to succeed in 2025. What's interesting to me as I look across the options, the answer options of this survey, and again, I'll link in the show notes where you can see this chart, but technology was not among the top options. In fact, it was very last of this. So for better or worse, hoteliers are not looking to tech. They're looking to people to succeed in 2025. A couple thoughts on this because you can take this a number of different ways, right? It's not in my mind that technology is not valuable. There potentially could be people missing the overall potential or power of technology. One interpretation of this that I have looking at this is that, of course, technology is powerful, but you need people who know how to use that technology to drive the results from it. And so I think even for savvy operators, it makes sense that you want to have the right people to get the most out of your tech. I think there could also be a reality here where there is a misunderstanding or people just missing the fact that technology can drive significant change. And so this is something to keep an eye on and a dynamic to understand is that hoteliers are looking to people, not tech, to succeed in 2025. The next two data points I want to run through are around what is going to provide the highest return on investment. I asked this over two time horizons. One is over the next year in 2025. Hoteliers responding to the survey believe that two areas, there's a tie in the most common response to this, two areas are going to drive the highest return in 2025. staffing and talent development, and marketing and sales. Right? So again, we see hoteliers looking at people as not only high potential high impact, but as if you have some money to invest, you can invest in staffing and talent development, along with marketing and sales. Technology comes in lower on that list, as does revenue strategy, guest amenities and services. Hoteliers are really focused this year, or they believe the highest ROI will come from staffing and development and marketing and sales. If I expand the horizon and look over the next five years, though, the picture changes. And so in this case, over the next five years, hoteliers responding to the survey believe that technology and automation are going to drive the highest ROI. So it's interesting to see that. I think that may be the case where hoteliers believe that it just takes a long time to start to see benefits of technology. As somebody who's probably a little bit more optimistic about technology, I think this could just be the result of bad tech. I think great technology is designed such that it delivers very high ROI quickly. And so whatever the case might be, technology and automation are what hoteliers believe will provide the highest ROI over five years. So those are five data points. Again, there's dozens that are only available to people who take the survey. There's still a chance for you to get access to this if you take the AI and hospitality survey that I'll link in the show notes. Right after you take that, you'll immediately get access to this full data set. It's the only way to get it. But I hope you found this valuable. And I think I'll give you one more data point as a bonus before we go, and that is around AI usage. Most hoteliers want to see more AI used in hospitality now. It was about three out of four of every respondent said that they do. What's interesting to me is that of the different groups participating in the study, hotel owners and investors were the most excited about AI. They were very positive and wanted to see significantly more AI adoption. If you're an owner or investor, it's important to know what your peers are thinking about doing. If you're not an owner or investor, I think this suggests to me that we're going to see a lot more focus on AI, investment in AI this year, because typically what hotel owners and investors want has a lot of sway in what actually happens in hotels and hospitality. So expect to see a lot more in AI. Again, click the link in the show notes to take the survey on AI so that you can not only get that full data set, but you'll immediately after taking the survey, get the full data set around the survey that we just talked about here, the state of the hotel industry. So thanks for listening. Would love to get your thoughts and comments on this. You can email me, joseianthospitalitydaily.com, and I hope you found this useful.