Adrien Lanotte, Senior Analyst at MKG Consulting, presents the “new normal” in three stages: pre-stay, on-site, and F&B. He analyses the trends that will shape tomorrow's hospitality, and which are already at work.
This is what hoteliers imagined the future to be like during the Covid period. It was a world of masks where operations were extremely different from what we had experienced in the past. Now that we have the necessary hindsight, it's time to ask ourselves the question: “What is the reality of this new normal?”
The change has spread to the various stages of the customer journey:
Stage 1: pre-stay
One of the things that has changed is the rise of the digital players such as Booking, Expedia, Ctrip, and Airbnb, which together have a market value of €200 billion. In 2022, they sold 31% more rooms in France than in 2019. In Europe, the increase is more moderate, up to 7% on average. In Spain, the level is almost the same as in 2019 for these digital players in terms of booking volumes.
These players came in and captured a part of the market whose offering was growing. Today, however, competition from these platforms is not as fierce as it used to be. Their growth has slowed, which is promising in terms of pricing power.
France is somewhat of an outrider of what is happening in Europe. The level of future bookings to date is higher than last year. Consumers are booking further in advance to protect themselves against price rises. We are still seeing a slowdown, particularly in terms of prices, but volumes are staying strong. We are also seeing a further rebalancing: in Paris, where the recovery had been fairly slow, there is now euphoria. On the other hand, some areas that benefited from “revenge travel” are rebalancing, and booking levels are falling back a little.
It's important to engage in conversation with users before their stay. The idea is to talk to the customer so that the experience begins even before they check into the hotel. This means that they can choose their room or make specific requests, for example.
One element that is gaining in value is the synchronisation between the various elements of the service, such as the Property Management Systems and AI, which improves the way in which hotel operations are carried out. For example, Expedia is experimenting with synchronisation with ChatGPT to turn it into a virtual assistant that will help customers make bookings.
However, building interpersonal relationships remains one of the fundamentals of our business and it is through this that we can enrich the on-site experience.
Stage 2: on-site
The customer journey has gone digital, and there are new ways of dealing with customers through greater use of digital technology.
The real change is in terms of staff. It is evident that there is a shortage of labour in the sector, which has resulted in a rise in staff costs. In the fourth quarter of 2022, unit wage costs were 11% higher than in the same period in 2019. The annualised growth rate was in excess of 3.5% to 4%. The issue of rising labour costs is both cross-sectoral and global, with very sharp rises, so the situation has not been resolved.
One of the changes we are seeing is that business models are evolving: post-Covid, there has been a sharp rise in permanent hires. In France, we have gone from 185,000 in the second quarter of 2019 to 220,000 over the same period in 2022, this is an increase of more than 20%. The aim is to retain these resources and get the additional employees to stay longer.
Another driver that has changed significantly is energy costs. In France, before Covid, energy costs were on average 3% to 5% of turnover. In 2022, this rose by between 1% and 2%. This was even more significant in Germany, where the energy crisis has had a major impact. In Spain, on the other hand, average prices have risen sharply, and they ploughed their own furrow in terms of energy, so the levels are roughly equivalent to those in 2019. This therefore creates differences between markets within Europe in terms of competitiveness.
How can we be more efficient? When a hotel switches from gas to electricity, it consumes 18% less, and 44% less if it is connected to the urban grid.
One of the elements of the new normal is the greater importance of CSR. This means classic elements such as water and waste, but also a holistic approach to purchasing, staff, social and societal commitments, and single-use materials.
Stage 3: F&B
F&B has made a return to the core of the hotel industry. Today, fast-food establishments account for almost half of all food services in France. Hoteliers are also thinking differently and looking for new restaurant concepts in their properties.
How do we roll out these concepts? We're up against consumer habits in terms of cuisine and operations, such as opening times. This varies from one market to another. Opportunities are emerging, such as all-day dining in large cities for example.
Another change is the focus on the customer experience. Boundaries are breaking down, and we are seeing the world of hospitality expanding to include other businesses. The Lavorel Hotel Group has its own boats, for example. It is a breeding ground for opportunities, and it illustrates the convergence of different fields. The hotel industry can therefore look to add other elements to these experiences.
A new future for the hotel industry is also taking shape within operations. We need to look for new business models and new expertise, particularly via the medium of partnerships. Hyatt, for example, is working with Spotify on an auditory experience of its rooms.
The major change that we have seen in operational terms since Covid is that of lifestyle habits. A prime example is the upsurge of working from home: 38% of employees do it on average two days a week.
The rise of leisure is changing the balance between weekdays and weekends. As a result, RevPAR has increased by 10% on weekdays, compared with 30% on weekends.
Hoteliers are fighting to make the most of the increase in available time. How do we capture this available leisure time?