2022 vs 2023: How were things and the way forward for the hotel industry

Being a part of the larger hospitality industry ecosystem for more than a decade, I never doubted the industry's resilience. Hotel owners, operators, and technology providers - we all did well in our attempt to revive the sector as soon as the market opened up and travel resumed.

After the pandemic-led upheaval, hotels learned many critical lessons when things limped back to normalcy in 2022. Those were essential to survive in a market still dealing with uncertainties. But then, they were quick to spot opportunities and make suitable amendments to the changing business dynamics and guest preferences.

2022 learnings and outcomes

The most significant and impactful learning for them was they understood the power of technology. They realised that not using technology is not an option anymore. It was clear to them that technology is the only thing that can help them allow their non-guest-facing staff to work remotely, offer contactless services to guests, and even sell packages around workcation and staycation, etc., to attract more guests. These technology-led transformations provided the much-needed platform for the rapid recovery. Another important lesson learnt was - deriving value by efficiently serving domestic travellers and exceeding their expectations.

The third quarter of 2022 ended well for hotels in India as they continued to register solid yearly growth. The sector witnessed a 90% YoY growth in its RevPAR. Plus, the average occupancy rate hovered around 60% to 66%.

How does 2023 look?

According to the credit rating agency ICRA, the Indian hotel industry is set to regain its lost sheen in 2023. From occupancy to ARR, everything will improve. While the occupancy is expected to cross 68% to 70%, the ARR shows signs of touching the bracket of Rs 5,600-5,800.

The role of technology in 2023

The Indian hotel industry will leverage everything it learned in 2022 to advance in 2023. And when they focus on it, they will have to keep technology at the core of everything - from handling operations, adding new properties, selling more rooms, serving guests better, and enhancing revenues. The point is that tech adoption will rise in line with their ambition to grow with a competitive edge.

Operations

The role of technology becomes even more imperative given the current high inflation rate, where hotels are dealing with increased operational expenses. For example, a cloud-based hotel property management system can streamline operations across departments while controlling costs. It adds additional value, as hotels can implement it on a subscription basis while not being worried about hefty annual maintenance costs and other additional hardware investments. In short, it will help them reduce IT overhead costs.

Expansion

Many of our customers, especially hotel groups, who expanded their portfolio by acquiring new properties, have found our multi-property solution as the right IT infrastructure. It supports them by allowing them to add and go live with new properties quickly. And we are sure that this trend is here to stay.

Guest Service

Additionally, technology will fuel the industry's hunger to exceed guest expectations. A significant chunk of hotels in India are yet to offer full-fledged contactless guest services, and we understand that 2023 will see a definite spike in this.

Big data, guest data processing, and data analytics 

For hotels, data will be the key to understanding everything. In fact, it has already happened. Data analytics offers many insights to make informed decisions, from automated revenue management to targeted marketing and inventory/stock management. And then, we can also look at another important area - guest sentiment analytics. This provides actionable insights to hotels and points towards the areas of guest service where they need to focus on to enhance guest experience. We are expecting a lot to happen in this segment in 2023 as hotels are getting ready to harness the power of technology.

What do hotels need to do?

When working on technology adoption, they must think long-term and have a well-thought-out plan keeping the desired outcome front and centre. For example, we can look at their IT budget allocation. As per our observation, hotels in India spend less than 0.75% of their revenue on IT. Now is the time for them to revisit it and increase it to witness the full potential of technology. Moreover, they must stop looking at technology as a tool to address only one aspect of their operations. Adopting a Hotel PMS to streamline only the front office and housekeeping will not work. Instead, they should 

consider it as the centrepiece to work with other solutions to drive their overall growth via more sales, increased occupancy, etc.

What do tech vendors need to do?

As one of the critical stakeholders, hospitality technology providers have an equally important role in the industry's full revival in 2023. They must understand hotels' needs before offering any solutions. Customisation is another key area in serving hotels with the right solution. This will save time and money for both, as it will significantly reduce the failed implementation. Above 80% of hotels claim to have experienced tech implementations that failed to meet their expectations. Yes, that's right.

As we enter 2023, we have an enormous task of ensuring the industry's robust growth. And during this phase, all of us should have our ears to the ground to keep up with critical changing dynamics and respond to them with agility. This is where having the right technology will play the most crucial role.