In the USA, Luxury is becoming increasingly differentiated from what the rest of the world thinks of luxury. It was the great US of A, for instance, that piloted, and grew, the idea of ‘resort fees’, automatic extra charges for things you might not need, say beach towels and valet parking (and of course those valet parker still expect cash tips as well). Brands apparently like resort fees as consumers have to pay them, real money, on top of loyalty redemptions.
Now, in his list of predictions for hotels in the USA in 2025, the highly-respected Jan Freitag, SVP of Lodging Insights at leading sector-analyst STR, says we can expect to pay an automatic extra sum to have our hotel bedroom cleaned. IN THE U.S.A., THAT IS. Read below:
Jan Freitag says:
The last 10 years have certainly brought their share of creativity, from the rise of the commercialized shared-accommodation providers to global capital flowing into the U.S. and the continuing proliferation of brands. Some of the changes may have been foreseen as industry participants exited the Great Recession in 2010; other changes truly were unexpected by most.
Cleaning fees: Love ’em. Hate ’em. Embrace them.
The U.S. hotel industry should light a candle at the Altar of Ancillary Fees in the Cathedral of Airbnb to thank the wise women and men of Silicon Valley who made cleaning fees part of the accepted cost of staying away from home.
As more former Airbnb users embrace alternatives to the alternative-accommodation providers (read: hotels), hotel operators should use the lessons that have been taught to those travelers to their advantage. Just like alternative accommodations taught travelers to embrace the authentic, local flavor of the market they are staying in, so should hotels embrace that these travelers have been taught, and taught well, to expect (yes, expect) a cleaning fee. In a time of flat room revenue growth, the search is on for additional revenue streams, and many hotels have made themselves no friends by applying the dreaded “resort fee” for services that are levied neither in a resort nor are fee-worthy.
Now imagine a fee that provides a useful, tangible benefit: cleaning of the room. Everyone can relate and everyone needs it (well, wants a clean room anyway). Airlines have taught the consumer that unbundling works, so why not embrace the concept when selling the hotel room? In the next 10 years, attracting the right line-level talent in the housekeeping department will be more important than ever. But just increasing wages simply hurts profitability. A cleaning fee could be directly related to the prevailing market-level housekeeping costs and therefore be adjusted as wages increase. Of course, the staff actually doing the work needs to benefit from this increased revenue stream. When looking around the accommodation landscape, cleaning fees are already in place in some areas. By 2030, they will universal.
He also predicts:
Climate change will be the dominant influence on hotel operations.
Climate change and the more extreme weather patterns will shape the way hotels operate. More extreme wind, rain and high tides will impact coastal areas and islands. Designing resilient buildings and solutions for interruptions of the energy supply are key ways to prepare for this.
Summers will get hotter for longer, winters will get much colder, and both will impact energy usage. Some markets will be consistently too hot (in the South) or too cold (Northeast and Northwest), and meeting planners will stay away to avoid exposing their clientele.
Milder winters and longer summers will make some destinations in the North more accessible, and even may get some “snowbirds” to rethink their travel patterns to Florida. In the mountains, snow conditions will be feast or famine, and in the better years the winter season will stretch out well past Easter. In the summer months, the mountains are already being recreated as an outdoor theme park, and destination marketing organizations will get ever more creative to attract visitors year-round.
So, what do shifting weather patterns mean for U.S. hoteliers? First and foremost, be a Boy Scout and “be prepared.” By now, business interruptions from weather should not be a surprise but should be an expected event. When I present to meetings planner groups, I always suggest: “Every hotel salesperson shows you their pool and rooftop bar. Shouldn’t they also show you their emergency generator?” Secondly, make sure your hotel renovations and CapEx spend is created with resiliency in mind. In 10 years, your guests (and investors) will thank you.
The brand is dead. Long live loyalty.
The single hardest part of working as a hotel industry analyst is keeping up with which entity controls what brand. New brands are launched monthly, all designed with their own marketing “swim lane” in mind and often un-differentiable by the average traveler.
Full-service brands once named after founders such as Hilton and Marriott, with easily discernable standards, evolved as owners and parent companies—nudged by the alternative-accommodation providers—came to understand that travelers crave differentiation. Travelers also crave loyalty points and an easy booking experience, hence the move to soft brands, started by Choice’s Ascend collection and Marriott’s Autograph collection.
The logical next step is clear. In the next 10 years, industry players will have abandoned the idea of the brand and simply focus on loyalty. No need to keep track of umpteen brands and what brand belongs to which company—just communicate clearly which hotel belongs to which loyalty suite. Allow the hotel designers to break the mold, give owners free reign to explore what their hotel stands for, but provide standardization on the back end. Over the next decade, that will make for happier guests, owners and parent hotel companies.
It’s Amazon’s world, we just live in it.
After a few false starts, Amazon will finally be a force in the lodging distribution game. The fees paid by hotels to third parties to attract guests are just too juicy to be left alone for too much longer. Amazon has access to customers via their “walled garden” app, continues to entrench itself ever more deeply with convenient delivery mechanisms (drones anyone?) and has a true competitive advantage when it comes to understanding customer behavior. Amazon’s algorithms can suggest what other customers with similar purchase patterns bought that you might like. It is not a leap to imagine that the Amazon Intelligence (AI by another name) can suggest with some specificity a vacation destination that matches your income level, family status, activity interest and travel preferences. What hotel operator would not want to be included in that set of recommendations once Amazon Travel launches?