Our hotel forecast for 2025 focuses on changing trends impacting occupancy and how you can prepare your property for strong results this year.
The leisure segment remains stable, while both group and corporate segments show marginal growth. International travel is weak due to the strong dollar, also causing US citizens to travel abroad to get value. Additionally, cruise ships and short-term rentals are impacting the lodging industry.
Overall, the RevPAR (Revenue Per Available Room) is expected to increase by 2%, primarily driven by ADR (Average Daily Rate). New supply in some markets is entering at less than 1%, well below the long-term average of approximately 2% supply growth. Knowing this can prepare us for the potential negative impact on profits.
“I don’t want a negative impact on my profits this year…what can I do to prepare?”
Management Response to Industry Forecast
Today’s management landscape is revolutionized by technology. Hotels are leveraging AI and robotics to enhance revenue management, streamline communications across social media, emails, and reports, and optimize energy management. Specifically, AI can assist in ramping up social media posts and adding a powerful dimension of communication. Robotics can provide delivery services while a lone front desk agent can continue to manage the lobby and desk, providing guest service rather than posting a sign that says “back in five minutes!” This robot not only helps provide security by keeping the agent at the desk, it is loved by guests and there is no need to tip the robot!
Marketing and Sales
Modern sales strategies have evolved significantly from past decades. The traditional approach of visiting every office in a building is becoming obsolete. Instead, appointments and relationships developed from association meetings, LinkedIn and others are now more effective. Digital marketing and retargeting users who have engaged with your content provide a more focused and targeted approach than traditional advertising methods.
This is not to say that sales calls are not the best way to secure a new client or keep an existing one, they are still the best way! But appointments need to be secured in most cases and gathering data on potential clients is paramount to a successful call. The real key is to establish strong relationships with clients via association contacts, social media and sales calls and use technology to optimize the touches.
Sales Promos for Hotel Performance
Need something to spark your weekend business? Try a Spinning Wheel, where prizes can include brand points, free upgrades, coupons for food, beverages, snacks and more! Host a “putt for points” golf reception in the lobby and invite all local neighborhood businesses. This is like a sales blitz in reverse—it will drive enrollments for your brand, and it is involving the whole community.
Finance & Accounting
The financial landscape is also transforming. Labor costs have surged over the past decade, and average rates are struggling to keep pace. Utilizing a combination of technology and advanced management training is critical. Effective cost monitoring is essential and this can include inventory control; accounting firms can offer valuable assistance in this area.
Strategy for Strong Market Share
Operational enhancement initiatives and cost containment strategies are critical. These efforts may include short-term measures, such as staff or schedule reductions. Long-term solutions such as revenue management, inventory control, purchasing systems and improved service standards are always helpful in profit improvement initiatives. But what about Artificial Intelligence (AI) and Robotics?
If executed well, strategy and effective use of AI and Robotics can provide for strong market share in the hospitality industry. AI can provide real-time market knowledge to assist in revenue management. Robotics can provide a “wow” factor and can assist in keeping housekeepers happy, because they do not have to vacuum. These amenities are required in today’s competitive environment and all of us can improve by executing a well-thought-out plan and adding in technology.
Hotel Forecast Summary
FAQs:
Do you have a hotel forecast specific to San Diego?
Yes! Our San Diego hotel forecast has predictions for occupancy rates and ADR for each neighborhood in San Diego.
Are hotel robots going to replace employees?
Not replace, support! Think of the robot as your 1 am housekeeper while no one has an extra moment to deliver more towels. They are your vacuuming guru to speed up check-in time when you’re at full occupancy. They make your guests smile because of how unique they are. Give them a try! Reach out to me directly if you want an introduction to our robot company.
Do I need to raise my ADR again to keep up with rising costs?
Our guests won’t love this strategy as much! Monitoring expenses is critical, and accounting firms can be helpful here. Look into utility costs, market trends to stay competitive, etc.
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