The Skift: Future of Lodging Forum took place May 11th – 12th attracting over a thousand attendees and industry thought leaders who shared their insights on the current state of the accommodation industry and what lies ahead. Hospitality heavy hitters, from top hotel operators and brands to property management providers, discussed a number of pressing topics ranging from shifting traveler mindsets, loyalty and subscription services, the rise of short-term rentals (STRs) and advertising strategies. Here are a few key takeaways from the forum:
The “Great Merging” and birth of the “Digital Nomad”
Skift analysts and guest speakers dedicated a considerable amount of time to the consumer behavior shift post-pandemic. The Great Merging is a bi-product of COVID-19 and an aggregate of three factors: an increased flexibility in work from home or work from anywhere policies, inspiration-driven trip planning and alternative accommodations.
Because of the flexibility in the work/life balance, travelers are more inclined to extend their stays, as the traditional concept of an office no longer applies to an increasing majority of the workforce. This has given rise to the “Digital Nomad” persona, the current traveler, who is seeking to live and visit different locations while working online.
As travel and lifestyle continue to blend, travel companies must focus on loyalty and membership programs to transform the traditional planning cycle and create a feedback loop. There is an immense opportunity for brands to build and advertise products in this space. Some companies, both established and emerging, have already begun capitalizing on this model; for example, Marriott’s Bonvoy Rewards, Expedia’s sole source loyalty program and Selina’s “Nomad Passport”. Membership programs, paid or free, alter the booking process by creating a more engagement-driven experience, rather than a transactional one. These programs will act as a precursor to brand commitment and will increase customer lifetime value. As a result of these programs, traditional metrics such as RevPar and ADR will take a backseat to more current evaluation criteria such as churn, engagement, first party data and value over many years.
The last facet of the Great Merger focuses on lodging itself. Alternative accommodations have become more mainstream, making-up a fifth of the U.S. market. Many institutional investors are taking note of this trend and beginning to enter the STR space. In Q1, VRBO reported that 50% of their bookings were new customers, signaling that travelers will continue to value unique spaces. With sustained growth of the alternative accommodation sector, STR’s can look to hotels as a guide, evolving from a local owner/operator framework to a professional management company. Likewise, hotels can learn from the STR market and its proven ability to cater to the needs of the current customer. Marriott’s Homes & Villas and Standard’s Bunkhouse have shown that hotels and STRs need to take cues from one another to remain nimble in today’s landscape.
Elevated standards and unique stays will be the driving forces in the future of lodging
The traveler mindset has changed and so have their needs and expectations. Digital Nomads want more than just a two-night’s sleep and free breakfast. The current traveler wants to experience something new, whether it be a unique property or an authentic cultural experience. Travel companies need to understand the desires of this traveler and build experiences and products to match.
With a myriad of lodging options, alternative accommodations are well positioned to cater to the shift in traveler needs. Companies such as AutoCamp, Selina, Blueground, Mobile Citizen and Sonder offer a plethora of choices to the current traveler and have shown consistent growth in the sector. From airstreams and luxury tents to communal workspaces and fully furnished apartments, catering to a variety of consumer tastes will dictate success.
STRs have shared in this success, as their core values are rooted in creating lifelong memories. This industry is the biggest creator of entrepreneurs in the world, according to Futurestay, a leading software provider for vacation rental owners. 70% of bookings in the STR industry are for properties run by “Rentalpreneurs”. While they’ve seen substantial growth since the pandemic, their continued success will depend on the ability to provide consistent services to customers both in terms of experience and cleanliness/safety standards. They will need to adopt technologies to bolster competition through multichannel distribution, dynamic pricing, and direct guest marketing.
Brand awareness and revenue growth through always-on marketing
Hotel revenue is up by 55% according to Sojern, a leading hotel marketing platform helping brands reach, engage and convert travelers. Predictable booking patterns have been uprooted due to the changes in traveler behavior. Business and leisure continue to merge, a term coined “bleisure”, resulting in evolving lifestyles and more last-minute trips. Airbnb recently reported that 21% of their Q1 stays were booked for more than 20 days. Hotels and accommodation providers will need to think more strategically to increase visibility in market, capture demand and drive bookings. With many properties offering promotions for extended stays, loyalty perks, reliable Wi-Fi, communal spaces for Digital Nomads, they should communicate this in their marketing message.
People are always traveling, and frequency of travel will continue to grow, including off season. Brands will need to employ flexible, always-on advertising strategies to capture traveler attention at the right moment in their journey. To ensure a competitive edge and revenue maximization, brands need to use the power of travel intent data to get in front of travelers year-round and run across all marketing channels including display, OTT, search and social to maintain a consistent presence and drive demand.
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