Editor of BHN Eloise Hanson outlines her six key hospitality and travel trends set to shape the hotel sector in 2022.
Motels make a comeback
Motels have long been stereotyped as stale and beige accommodations. Though with the hospitality landscape now altered, there’s opportunity to breathe new life into outmoded buildings.
In the US, motels have made a contemporary comeback with the likes of Bunkhouse and most recently The June Motel, made popular on Netflix. Being small in size and with stylish interiors, you could argue that these properties are more aligned with boutique hotels. For instance Casetta Group has revived the historic Casa Cody and Life House has been selected to manage the Rancho Caymus Inn – both of which feature exterior corridors that are synonymous with motels despite the properties marketed as boutique hotels.
To better iterate my point, Mollie’s Motel & Diner from the team behind Soho House has revealed ambitious plans to open 100 additional sites within the next decade. The self-described “budget luxe” brand is catering to the many trends brought about by covid. Mollie’s is seeking city centre and roadside locations which can help to future-proof the brand by appealing to both the international and domestic markets. On premises, Mollie’s room types span double, twin, bunk and interconnecting for solo and group travellers, and there’s even coworking space at one of two already open sites to attract the mobile workforce.
Established names such as Motel One has also signed a 20-year lease for a hotel in New York City which marks the chain’s entry into the US market. The brand has also moved into Scandinavia with an opening in Copenhagen.
Combine healthy expansion plans with the fact that economy hotels are recovering quicker than their counterparts, I can see factors including affordability, high-end design, and the community vibe that motels instil helping to drive this particular accommodation as a popular choice.
Owners diversify portfolios
This year, we’ve seen many hotel owners and operators pivot to the extended-stay market. Sage Hospitality Group, which has a portfolio of around 100 hotels and restaurants, has recently announced the opening of its first independent long-stay product Catbird in Denver. Similarly, plans have been lodged to develop the first Hotel Indigo property with extended stay suites in Blackpool. These two examples show how the move towards long-stay options is beginning to pervade the boutique and lifestyle hotel segment whereas historically, upscale and luxury hotels have offered apartments and suites.
Coupled with this market shift is the fact that city centre properties have been disproportionately affected by the pandemic. Investor appetite in resort destinations has comparatively surged, evidenced by Hyatt’s multi-billion dollar acquisition of Apple Leisure Group. In fact, leisure demand has been so strong that groups such as Farncombe Estate, Another Place and Exclusive Collection have introduced new inventory including cabins, treehouses and cottages.
Just as with the pivot to extended stay, I think owners will re-evaluate their product offering and across different locations too. Exclusive Collection has partnered with Home House Collection to allow members access to respective properties – with Exclusive spread across the British countryside and Home House located in London. I think we’re either going to see similar partnerships emerge or owners deciding to expand across markets.
That’s because managing a diversified portfolio mitigates risk and balances reward. It’s precisely why the larger hotel chains (which are dominantly asset-light) launch new brands. Accor has just announced its latest luxury brand Emblems Collection, which takes the group’s portfolio up to more than 40 brands. IHG, Wyndham and Radisson have also all launched soft brands during the pandemic, clearly spying opportunity to support independent hotel owners who thus far have generally bore the brunt of rent deferrals and high operating costs imbalanced against low occupancies.
Just as the chains are showing interest in independent hotels, I think owners will also be weighing up whether to brand or unbrand their properties. Portfolios will offer variety – either by brand, location, or by product.
F&B gets a revamp
When hotels were forced to close their doors, some pivoted to offer takeaway and delivery services. It provided an alternative revenue stream when rooms could no longer drive the business. Amanda Ramsey, owner of the Stair Arms Hotel in Scotland, has since introduced a permanent drive through housed in an old shipping container as a result of operating a successful takeaway service six days a week during lockdown.
The closure of restaurants has also accelerated the growth of ghost kitchens by an estimated five years. There are several models in which the kitchens operate, the most common being a stand-alone site with no front of house offering. Some hotels have however seen the opportunity to outsource their F&B operations to a dark kitchen operator. For example, Graduate Hotels has partnered with food and beverage platform C3 to launch a food hall concept within select properties. The digital model will allow Graduate to offer an array of cuisines, available to either dine-in, takeaway or via delivery, from one place.
Emphasising a property’s on-site dining experience will be necessary to remain relevant and compete with the digital takeaway world. In some cases, it may be best to leave F&B concept development in the hands of restaurateurs.
As is the mindset of Robert Thompson, founder and CEO of Angevin & Co. His business has partnered with Lark Hotels to launch several hospitality projects across the States, the first being The Frenchmen Hotel in New Orleans. “We are designing hotel spaces from a restaurateur’s perspective and reengineering the food and beverage platform at each destination to elevate the guest experience,” explained Thompson. Restaurant brand developer Sam Fox is also moving into luxury hotels with the opening of The Global Ambassador in Phoenix, 2023.
It wouldn’t be the first time that leaders with a F&B background enter the hotel space. BrewDog opened two hotels in Manchester and Edinburgh this year, and FAUCHON Hospitality opened its second property in Kyoto, Japan with a third signed in Riyadh, Saudi Arabia. In some extreme cases, brands such as KFC even launched a themed pop-up hotel in London over the summer.
The pop-up concept has been embraced by many hotel groups. Newly launched UK brand GuestHouse recently introduced a Tipple Truck at select food festivals, and The Hoxton has opened an incubator kitchen at its site in Holborn for chefs in residence. The rotating nature of these projects lends itself to staying at the fore of food trends. Chef Mark Greenaway who runs Grazing at the Waldorf Astoria in Edinburgh has just opened a fine dining venue in London’s Covent Garden called Pivot, where the menu is reinvented each month.
When it comes to menus, the roll out of QR codes for customers to digitally browse, order and pay for their meals has seen a huge uptake. IHG Hotels & Resorts CEO Keith Barr recently called for more innovation in the F&B sector, particularly in the deployment of technology to drive a positive guest experience.
Customer-facing tech such as the ability to rate your dish with feedback sent directly to the kitchen has come into play; payment systems to accumulate orders as a digital tab with options to tip are being implemented; and with sustainability rising up the agenda, I wonder if customer’s will be able trace the ingredients used by kitchen teams, and have the choice to offset the carbon emission of their meal.
Next year, there’s real potential for hotels to be innovative, even experimental, in their F&B service and offering.
S in ESG becomes amplified
G7 and COP26 this year has pushed sustainability to the forefront of conversations. There is increasing pressure for businesses to report, track and measure their environmental and social impact as government regulations become tighter and attitudes shift.
Some of the hotel chains have upped their efforts to implement an ESG strategy (environmental, social and corporate governance). IHG has outlined five commitments which the group aims to achieve over the next decade, and Accor has appointed a chief sustainability officer to drive the company’s values.
Independent hotel groups, by virtue of having less managerial hoops to jump through, are further ahead in their sustainability journey. Exclusive Collection has recently become the first UK hotel group to achieve B Corp status, and Banyan Tree Group aligns all its brands under a “Stay for Good” program based on ESG principles. Some stand alone properties are actively pursuing social initiatives such as Lore Group’s upcoming One Hundred Shoreditch hotel, which has partnered with two local charities to offer support.
The focus on the social component of ESG has naturally been amplified by the pandemic. Consumers are shopping locally and key workers have been recognised and endorsed. In hospitality, current staffing problems has also prompted a re-evaluation of contracts and working conditions, with many employers now introducing additional entitlements such as access to a mental health counsellor and greater flexibility around shifts.
Some investment firms are even starting to pay more attention to the social aspect of ESG. CGI Merchant Group has this year launched Conscious Certified Hotels, where one per cent of hotel revenue will be donated to local organisations. “We’ve also just teamed up with a historically black school that’s building a hospitality department,” CEO Raoul Thomas said. “In that, we think we can have a recruitment pipeline of students. We’re helping to define the curriculum, to offer guest lecturers, and to evolve the students. We think it’s a great way for us to nourish and create a future pool of talent.”
To show how the S in ESG is shaping the decision making criteria for investment, Lily Wecker, vice president of Zetland Capital explained: “When we invest in a hotel or any hospitality asset… we typically look at how the operators have treated their people in the past and whether the management team has any room for improvement in terms of caring for their team members as well as the guests. It’s an integral part of our due diligence process now and our investment community treats it as a gatekeeping item before final approval.
“Since acquisition, we’ve now rolled out a requirement for all the hotels we own to complete an employee engagement survey. It’s anonymous, but the point of doing this survey is to ensure there’s enough communication across different levels and different departments around the acquisition and change of ownership, and to provide a sense of security and safety to all staff members. We do track retention rates at different levels… and we focus a lot on human resource development, promoting from within, and making sure we don’t lose people to other industries for instance.”
Wecker also mentioned a company goal to pay employees a living rather rather than minimum wage, which is being piloted at The Morrison Hotel with a view to introduce across the portfolio. Other hotel owners have made this same decision, including Red Hotels in Cornwall and Manorview Hotel Group in Scotland.
Steps have already been taken to address and improve the social arm of ESG commitments, and I expect this continue well into the new year and beyond.
Consolidation in hotel tech
Technology adoption, accelerated by the pandemic across many sectors, has set the stakes pretty high for hospitality and even more so for hotels. Customers are seeking highly personalised stays and convenient touch points (whether self-service or face-to-face) at a time when the industry is grappling with labour shortages. Digital transformation has moved from a discretionary spend to become essential infrastructure and will serve an important purpose in the route to recovery.
Some hotel brands such as PUBLIC and citizenM designed and launched their own bespoke app, whereas on the supplier side, platforms such as ALICE and Duve introduced enhanced features and capabilities – all in response to the market shifts brought about by covid.
Other tech developers are steering away from proprietary solutions. apaleo for instance created an Open Hospitality Cloud ecosystem in 2017, built from collaborations of multiple software suppliers that have agreed on a common API. Integration is one of the biggest pain points for general managers, and the ability to customise a tech stack is compromised when interfaces can’t speak to each other. If the shift towards contactless hotel stays is to become permanent, the need to easily upgrade or deploy technology will be paramount – particularly as new suppliers enter the market. Management system SIHOT has just launched an Integration Finder tool to enable hoteliers source additional functionalities and applications to enhance their internal systems.
Similarly, TripAdvisor Plus has upgraded its infrastructure to connect with partners including SiteMinder, Roiback, Derbysoft and WebHotelier. Taking this a step further, some companies such as Cendyn and Mews have merged with and acquired technology platforms to offer a more expansive suite of tools.
Life House appears to be taking the same approach. A hotel brand and management company, the group has recently completed a $60 million funding round led by new investors KAYAK and Inovia Capital to sell its software platform directly to hoteliers and operators. Although a unique example where Life House is both hotel manager and software developer, the company will leverage API-first products in the market to build the platform.
The technology solutions that hoteliers require already exist, and I believe 2022 will be the year for greater collaboration.
Hotels embrace cryptocurrencies
Several enabling factors have supported a growing interest in and the adoption of cryptocurrencies. Just as Bitcoin was born out of the financial crash of 2007-08, the economic downturn brought about by the pandemic saw the collapse of the global stock markets. With that, the price of crypto dropped. Disposable time and potentially money as a result of the lockdowns has seen user interest in crypto spike. Currently, there are around 8,000 different cryptocurrencies and tokens listed on coincapmarket.com.
Earlier this year, The Kessler Collection became the first luxury hotel group in the United States to partner with BitPay. Chief financial officer Fravy Collazo said at the time: “This move will make it easier for guests traveling globally, both in time saved from going to a local currency exchange and in money saved with a lower exchange rate.” Since then, Pavilions Hotels & Resorts has made the shift too, along with a handful of independent hotels including the Bobby Hotel in Nashville (US), The Chedi Andermatt in Switzerland, and The Cranleigh Boutique in Bowness on Windermere (UK).
The flexibility granted from independently owning and/or operating hotels largely comes in to focus here. To my knowledge, none of the top hotel chains accept cryptocurrency though I suspect this will soon change. Other hospitality asset classes such as aparthotels already accept cryptocurrency as a form of payment. In the UK, brands such as Citadines, part of The Ascott Limited, allows international students to pay for their stay in crypto. The Ascott has even issued non-fungible tokens (NFTs), which are cryptographic assets on blockchain that provide proof of ownership and scarcity for digital content, as competition prizes for its loyalty members.
The knock-on effect this can have on loyalty programmes is huge. Rohit Talwar, CEO of Fast Future explained: “The Mastercard initiative is going to accept loyalty points, so for example I might be able to bring my loyalty points in from Hyatt and convert them to crypto and use this anywhere. But you’ll see more and more brands allowing customers to take their loyalty points in a crypto. I think we’ll also see more aggregators emerge who will allow exchange between loyalty points into crypto and back again, but I think we’ll also see some new and interesting partnerships.
“For example, Singapore Airlines with their KrisFlyer program is allowing some level of conversion from crypto to their own tokens. You could start to see powerful alliances between hotel groups and airlines. We’re even starting to see some hotel brands being born as a crypto venture – whether that’s financing the property, the way they’re running the reservations business, or the way they’re running their loyalty scheme.”
As Talwar highlighted, major corporations outside of hospitality are showing greater interest in crypto. Companies such as Amazon and Walmart posted job vacancies this summer for a digital currency expert, and as industries like retail ramp up efforts to roll out a crypto strategy, others will begin to follow.
In this year’s Trendsetter webinar, Rohit Talwar (Fast Future), Lily Wecker (Zetland Capital) and Bram van der Hoek (Sircle Collection) contributed to the discussion. Watch the replay here.
Here’s my 2021 travel trend predictions – how did I get on?