Hospitality Industry
7 min read

2021 Top Hospitality Industry Trends

EHL Insights
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What are the latest trends in the hospitality industry? Well, it goes without saying that the coronavirus outbreak and ensuing safety measures have had a significant impact on hospitality throughout 2020 and will no doubt spill over into 2021 and beyond. Some responses to this extraordinary situation, attempting to entice patrons back into food and beverage outlets and assure holidaygoers that it is indeed safe to enjoy a hotel stay, have accelerated existing hospitality industry trends and triggered lasting change.

Meanwhile, evolution at the societal level - consequence in part of shifted values in the aftermath of the pandemic’s most acute phase and in part of increased consumer awareness of all things sustainable and purposeful - has set new benchmarks for hospitality enterprises. EHL Insights presents to you current trends in the hospitality industry.

The 10 trends that have reshaped (and are still reshaping) the industry despite Covid-19

#1 - Staycations

In stark contrast to last year’s no. 5 hospitality industry trend “booming global tourism”, travel restrictions in 2020 have facilitated the rise of the staycation. Some vacationers may also be choosing to stay closer to home for environmental or budgeting reasons, with this year having seen a marked uptick in holidays spent more locally. Surging online content promising to “create a balcony haven” or “a garden oasis to be proud of” are a sign of the times.

#2 - Digitalized guest experiences & Contactless Technology

Apps, in particular, are increasingly important in the way hoteliers manage the services they provide to their customers and can now control many aspects of the guest cycle and experience.

Needless to say, the trend towards digital and contactless services has gained new momentum in 2020. Traditionally customer-facing services are being given an overhaul, thanks to the more widespread use of technology-assisted options, such as mobile check-in, contactless payments, voice control and biometrics.

Consumers who have become accustomed to unlocking their smartphones and laptops using facial and fingerprint recognition will soon come to expect the same convenience in accessing their hotel rooms, say. Unfortunately for the establishments looking to welcome them, however, these upgrades may be costly to install and maintain. If you want to stay ahead of the curve, we recommend you dig deep and make the investment.

#3 - Personalization

Today’s guests have grown to expect to be recognized and treated as individuals. Establishments are going the extra mile to personally greet their guests, while tools such as Mailchimp and Zoho have made personalized e-mail marketing accessible to the masses, ensuring highly target audience-specific communications. Far beyond simply adding the customer’s name to email greetings, data provides insight into past buying habits, enabling hotels to tailor their offers and promotions and automatically provide similar services to previous stays.

#4 - Experience economy & essentialism 

Customers request extreme personalization, unique experiences, and so on. This could very well lead to the death of the travel agent and the rise of the independent traveler.

Travel guilt is real. Minimalism has reinvigorated the otherwise somewhat dusty saying “less is more”. Travelers are decreasingly seeking lavish displays of wealth, preferring instead to spend wisely, purposefully and make a positive impact on the world. Unique experiences that give back to local communities in meaningful ways are in demand, as are niche properties, adventurous holidays and relaxation retreats.

#5 - New Hospitality skills & asset management

The asset-light approach has become prevalent in the industry. The separation between the management of operations and real-estate assets now allows hospitality companies to focus on their core business, thus improving efficiencies.

It however induces additional complexity and potential agency problems, explaining the emergence of new  types of jobs, such as asset managers.

In addition, new job profiles have emerged following the increasing complexity of the hospitality industry. In parallel, the need for quantitative competencies (for forecasting, budgeting, etc.) has also increased.

#6 - Solo Travelers

In the age of mindfulness, many have embraced the meditative value of spending time alone and venturing out into the big wide world unencumbered, interacting and making friends to whatever degree suits. In an effort to make solo travelers feel comfortable, barriers between hotel staff and guests are being lowered, interior design choices made to evoke a sense of homeliness and an informal atmosphere cultivated. This, along with a less stark divide between guests and locals, encourages a feeling of hotel community.

#7 - Generations X and Y

These new generations have different requirements and needs compared to older generations. A respondent said “Older generations think about hotels and car rentals. Younger generations think about Airbnb and Uber.

#8 - Sustainability

Last but not least, a hospitality trend that is both current and a hallmark of recent years: “sustainability” once again assumes rank no. 10. A natural extension of avoiding disposable plastics, eliminating unnecessary paper consumption thanks to opt-in receipts and reducing food waste, more far-reaching ethical and environmental considerations are shaping decisions made at the hospitality management level. Decisions about things as simple as which towel rails to install during renovations have disproportionate repercussions when implemented at scale. Simple eco-friendly switches include replacing miniature toiletries with larger, locally sourced dispensers, choosing ethically produced bedsheets made from organic materials and reducing energy consumption with smart bulbs, etc. Vegetarian and vegan options also harbor well-known environmental advantages.

People are becoming increasingly sensitive to environmental and social issues. A respondent said that this “has to be considered in branding, but beware of green-washers: consumers are now well-aware that window-dressing exists, and they will not buy it.”

#9 - Virtual & augmented reality 

Following on from the orientation towards visually appealing content, it seems only natural that businesses in the hospitality industry should seek to capitalize on features such as virtual tours, conjuring up a digital environment for consumers to picture themselves in. Videos providing 360-degree views of restaurant ambiance, sweet little café terraces enveloped in greenery or hotel beachfront locations, for instance, are just the ticket to make an establishment stand out this year. As ever, keeping the access threshold low is key to reaching as broad an audience as possible with virtual reality material: making content accessible on a variety of devices, without the need for a VR headset.

Once on site, guests should be able to whip out their trusty sidekick – their smartphone – and simply point it at real-world artefacts to summon up additional information. Augmented reality uses graphical or informational overlays to enhance in-situ environments. Once they have downloaded the respective app, guests can use this tool to access restaurant opening times, reviews or interactive tourist information maps or even create user-generated content. 

#10 - Automation & technology

This broad, sweeping category speaks to the technological developments that have been seen to reduce waiting times, “outsource” menial tasks to robots and use big data to optimize processes, for example. AI-powered chatbots have proven to be a customer service asset both during the booking process and in responding to the recurring questions on the protective measures pertaining to COVID-19.

Hotel operations more generally are increasingly shaped by the use of management systems to monitor and optimize revenues, customer relationships, property, channels and reputation. Mobile, cloud-based and integrated solutions are especially sought-after. Not to mention the rising importance of integrated messaging, predictive analytics, customer profiling and middleware, which seeks to connect any disparate systems. (See the respective infographic based on research undertaken by SiteMinder et al.).

It seems what has undeniably been a very challenging situation for many an industry in 2020 has yielded benefits that will be felt for years to come. May 2021 bring more of the same innovative spirit!

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Today – hospitality industry 2.0

What does the future of hospitality hold? Overall, our faculty suggests the need for hoteliers to properly embrace the above mentioned trends and understand what's at stakes. Six dimensions came out from our survey:

 

#1 - Standardization can no longer be the norm.

It is becoming critical to personalize and tailor the services to the needs and preferences of the travelers.

#2 - To create value, focus on niche markets.

More customization and specialization may enable increased value creation for hospitality companies. But be careful, as a respondent said, as this requires to genuinely think about the value proposition of your offer and not “simply branding and rebranding”.

#3 - Exploit technology as an accelerator for business.

Technology will be at the core of the hotel experience both in room, before and after the trip. This will lead to the development of new concepts and more innovation in the industry and contribute to the emergence of an ever more individualized offer.

#4 - Social responsibility is a moral and an economic obligation.

The impact of global warming can today be considered a major risk for both corporations which may lose in revenues and profits and society as a whole. It is thus critical for governments but even more so for corporations to become more sustainable: “not just green, but real sustainable business models”.

#5 - Develop more responsive and resilient business models.

“Tourism, despite ever-growing flows of travelers, will become riskier and more prone to crises” as the number of travelers steadily continues to grow. This will be accompanied by increased regulation as a response to a disproportional increase in tourist flows in some places (e.g. Venice or Barcelona).

Widespread lockdown and upturned work and childcare schedules have afforded delivery services new importance this year. No longer content with (always) ordering the usual go-to pizza, Chinese or Indian takeaway, however, consumers are now looking to take things up a notch. Not wanting to forego the frills of fine dining, they are now looking to emulate the experience at home. F&B outlets are making this possible by incorporating drinks deliveries and offering extras: atmospheric candles, QR-code playlists and unexpected freebies. Whilst hotels have played their part in supporting local medical needs and turning hotel rooms into aternative work spaces for those tired with working from home. 

#6 - Manage talents actively.

The days of long-lasting employee retention as well as passive, hierarchical management styles are definitely gone. “Attracting, developing and keeping the right talent into and within the hospitality industry remains a core challenge.”

Tomorrow – The hospitality industry 3.0?

While, as seen above, the consensus revolves around the need for the industry to evolve in order to better adapt to the current environment, some respondents were more ‘extreme’ and suggested that hotel rooms, as we know them today, “will become a thing of the past”.

These respondents refer to the impact of the sharing economy and the tendency of today’s customers to avoid traditional hotels. They believe that adjustments in the offer, like the ones listed above, are not sufficient and that the industry has to truly reinvent itself.

This standpoint is reinforced by the increasing importance of technology in the hospitality industry and the power that technology firms are acquiring. A respondent elaborates:

Major technology firms will replace most hotel brands, because they can offer technology solutions and create markets to attract customers. The traditional hospitality industry will evolve into niche markets (serving specific types of customers), or extremely luxury sector (so they can afford to pay their staff reasonable salary). Those who can't identify their niche will become the money machines for technology companies. Some brands big enough may survive, but their business will get tougher.

While respondents are more or less alarmist as to the future of the industry, all nevertheless agree that it has to evolve and reinvent itself in order to exploit the opportunities and cope with the challenges it faces. The only question remaining is up to which extent this transformation will have to take place.

Need more resources on the travel, tourism and hospitality industry? 

Hospitality Industry - All Your Questions Answered

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Written by
Written by

Associate Professor of Finance at EHL Lausanne

Written by

Associate Professor at EHL

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