Three Ways the Hotel Industry Will Change to Survive

Even before the pandemic, profit margins in the hospitality industry were unstable due to market fluctuations caused by seasonal downturns, staff turnover and price competition. But COVID-19 is a crisis on a global scale unlike anything the industry has experienced before. One thing is clear: it will drive lasting change and be a catalyst for innovation. As the industry looks to rebound in the coming months, here are three ways it will change.

1. More Technology

The hospitality sector, particularly the hotel industry, has been slow to adopt new technology due to several barriers including high costs, lack of infrastructure and hesitancy to adopt untried systems. According to the Diffusions of Innovations Theory, technology adoption within a market takes place in five stages – innovators, early adopters, early majority, late majority and laggards, and innovators and early adopters only make up about 16% of the market share. However, as social distancing measures are implemented, the industry is being thrust into the digital age to accommodate the new needs of travelers, forcing operators to adjust their thinking from guest-first to tech-first. 

2. No More Lobbies

The pandemic has caused an increased urgency for contactless solutions to minimize interactions and streamline the check-in process. Major hotel operators including Hilton and Virgin Hotels have already introduced contactless check-in technologies, such as mobile key entry and room temperature control, to accommodate guest preferences and reduce staff interactions. And this technology is here to stay. Despite customer service being one of the key pillars of the hospitality industry, tech companies like Uber, Lyft, GrubHub and similar on-demand services have already led a huge societal shift that makes individuals expect to be able to control everything through a mobile phone. And now that the expectation is in place, the hospitality industry will need to evolve to survive. However, this could present new challenges for smaller and boutique hotels, which do not have the financial clout of larger brands and already struggling to stay open, to front the costs of implementing this new technology.  

3. Increase in Regional Travel

Between international border restrictions and concerns about airline travel, the majority of Americans are planning to stay local for their vacations. In fact, a recent survey found that 85 percent of U.S. travelers are likely to take a road trip this summer. While there has been an increase in RV sales, the same survey found that 52 percent of respondents plan to stay in hotels. However, travelers are demanding clear communication on cleanliness measures and flexibility in bookings. This shift is causing hotel operators to change both policies and marketing strategies to attract guests. 

The pandemic has fundamentally altered the rules of the game, changing customer expectations in ways that will demand hotel owners embrace new technologies and get used to constant innovation. Hotels will have to be agile and react rapidly to evolving consumer demands, or risk falling too far behind to ever catch up.