Economic Forecast: Hospitality on upswing as offerings improve

Paul Rada
Paul Rada

When I was asked to offer some insight into what lies ahead for the hospitality industry, I thought, “Why didn’t this happen a couple of years ago?” It would have been easier to say then that, “It has to get better, since it can’t get any worse.”

During the recession, while nobody was immune to the drop in business, hotels took a huge hit from almost every market segment. The business traveler cut back to keep expenses down and began relying on Web-based meetings. The leisure traveler cut back to coin the term, “staycation.” And bus tours pretty much evaporated for a while.

Things have improved, certainly. However, during all of this pullback, some things will, in part, remain. There will continue to be some reliance on Web-based meetings and a keen eye on travel expenditures in the corporate world. Family vacations will continue, but with a sharper eye to find the absolute best deal—made that much easier due to the multitude of Internet avenues.

When looked at as a whole, 2014 was a fairly decent year in the hospitality industry. Regarding the outlook for 2015, PKF Hospitality Research, PricewaterhouseCoopers and Moody’s all forecast 5 to 7 percent increases in RevPAR (revenue per available room). Some areas will fare better than others. Delaware, if 2014 is any indicator, will be in the middle of the pack.

The advent of our new National Park, added music festivals, and a decreasing unemployment rate all speak well for a number of our market segments. That is the view from above; the view from ground level shows a still highly competitive market. 2014 added quite a few new properties, and 2015 will be no different. When the pundits have positive forecasts, shovels hit the dirt. So while there will be more travelers, there will also be more choices.

Looking forward is something that has helped our country get ahead in this world—anticipating, innovating, looking for the next trend, and finding ways to be one step ahead. In the hospitality industry, there have been many innovations and changes over the years, especially so in the past few years.

When I first started working at a hotel, the expectations of our guests were fairly straightforward: clean room, comfortable bed, hot shower, and the TV had to work. In today’s landscape, not only is the guest expectation much higher and broader—free hot breakfast, more than a dozen or so TV channels, free Wi-Fi with plenty of bandwidth, etc.—but the route that a guest takes to find a hotel is also entirely different. Just a few years ago, the big news was that Internet bookings eclipsed the bookings made by the 800 number of a hotel chain. Now, one step further, mobile devices are making more reservations than desktop or laptop computers.

Around the corner, I think that there will be a continued push toward pleasing the technology needs of the guest—whether it be more ways to access larger screens in a lobby or restaurant, making the TV offering more like or better than the home environment, or showing a room walk-through video when looking to book online. These are available now, though generally with a higher-end property.

The shift will occur as it permeates into more affordable sectors. We will also see some older properties either fade away or be reborn. That is the nature of business—either to keep ahead of the curve or become a nostalgic piece of the past.

(Paul Rada is chairman of the Board of Directors for The Hospitality School, Inc.)

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