What does 2014 hold for the hospitality industry? David Corsun, Ph.D., director and associate professor at the Daniels College of Business Knoebel School of Hospitality Management, says we should watch for hotels to continue their quick rebounding and adapt to changing traveler demographics, while consumers will demand more and more food traceability.
Five 2014 Trends to Watch:
- Hotels rebound: The rebound from the 2008 recession has come more rapidly than in previous economic downturns and much faster than the days following 9/11, according to Dr. Corsun. “Continuing the 2013 recovery, the hotel industry in 2014 will benefit from slightly higher occupancy rates, demonstrating year over year growth in most markets, including major cities like San Francisco, New York, Chicago and Denver. But the real growth will be in rates; higher average daily rates will be the real driver in another nice jump in revenue – per available room. “
- Conventions and Meetings Planners look for bargains: The convention market will also continue its recovery, but meeting planners will still try and secure as many bargains as they can. “Many cities will make concessions to planners to draw convention business because it adds hotel and sales tax revenues, but I question whether this approach can continue to be sustainable,” Dr. Corsun says. “It is tough to win this kind of price war.”
- Hotels will change their business models and adapt to changing demographics: “Legacy” types of hotels such as Hilton, Marriott and others will begin to adapt their core brands and rethink their business models for Gen X and Y, as well as millennial travelers. “Hotels will change how guest rooms look and feel to having the latest available technology,” believes Dr. Corsun. “Perhaps even more significantly, you’ll see changes in how hotels interact with their customers. Younger consumers demand more authenticity in their relationships with service providers. Those who tend to deal with them in a staged, scripted and inflexible manner will not do well. Hoteliers will find that they need to hire employees with considerable emotional intelligence and social skills to improvise and establish genuine customer relationships.” Dr. Corsun believes that the two major pain points for hotel guests are paying for Wi-Fi connectivity and resort fees. “When internet access is free in limited service properties, how long will it be before customers in full service and luxury properties demand and receive the same? In 2014, we’ll begin to see those businesses change for their consumers.”
- Restaurants and grocery stories buy local: Dr. Corsun sees the “farm to table” movement gaining momentum. “You will see “locavores” demanding more and more local and often organic traceability, which means food will be sourced both in recipes and on restaurant menus more than ever before. There is now a concerted effort by chefs to use products that don’t have to travel as far to the plate.”
- The big economic picture is precarious for restaurants and hotels: Discretionary spending for most Americans has not rebounded fully. Those who are less affluent are spending less on discretionary items like retail, entertainment, travel and air travel. “From a restaurant perspective, this pattern is likely to have a greater impact on the family dining segment. Now families are now more likely save money by eating at home with “home meal replacements” (available at grocery/supermarkets) instead of taking their families to a restaurant. This trend may also lead to trading down to fast-casual food restaurants like Panera or Chipotle,” says Dr. Corsun. However, those who are more affluent will spend more. “In 2014, it will become easier for those who have discretionary money to spend more. Those people who had deeper pockets to weather out the great recession will now spend more freely as the economy rebounds as they benefited from the booming stock and real estate markets.”
For more information or to set up an interview with Dr. Corsun, please contact Kristal Griffith at 303.871.3379 or Kristal.Griffith@du.edu