There are many major issues in Hospitality Industry. As cities are brimming with leisure and work travelers, hotel lobbies are again lively places, with staff on their toes to offer their best to the guests. However, as time and needs evolve, hotels and tourism businesses need to face certain challenges that come with changed behaviors and expectations, and market dynamics
Top 6 challenges faced in Hospitality Industry
The following are the biggest challenges that the hospitality industry might have to face in 2023:
1. Staff shortages
Hotels are going through some serious staff shortages and talent crunch. Starting during the pandemic, the ongoing gap between the demand and supply of hospitality professionals has created challenges for many hospitality businesses including hotels.
In fact, EU data showed that more than 1.2 million jobs in tourism remain unfilled in Europe, while the reports published by American Hotel and Lodging Association (AHLA) stated that 87% of hotels in the US reported staff shortages in 2023.
Staff shortages have led to the loss of business and revenue for multiple hotels that report reducing their operating hours during peak periods or closing altogether due to a lack of staff.
Moreover, there are digital skill gaps that are being experienced by many hotels during the hiring and retaining process. Many hotel operators are struggling to find staff with digital skills across many ICT (information and communications technology) and digital marketing areas. Research suggests that every 1 in 3 hospitality employees have no digital literacy.
2. Sustainability
Amidst the climate crisis gripping the entire world, the hospitality industry would have to be more environmentally responsible and make sustainable choices. Moreover, contemporary travelers and guests are choosing sustainable travel and green hotels for their next work, leisure, or .adventure trip.
Industry behemoths such as Accor, Marriott, Radisson, Hilton, and Hyatt announcing ambitious net-zero targets for 2030 to 2050 aligned with the Paris Agreement. Additionally, with some more organizations signing the Glasgow Declaration for Climate Action in Tourism, hospitality operators would be required to shift to ‘triple bottom line business practices and install mechanisms to track, measure and report change. This could be new, overwhelming, and challenging for them in 2023.
However, the hospitality operators and professionals would new learn technologies, skills, and practices that would help them to grow in careers, cater to the growing number of suitable travelers and guests, and do their bit in combating the climate crisis.
3. Inflationary pressures
Global inflation has been in the news for quite some time now. It has and continues to impact people from different walks of life. The hospitality industry has its own struggles with the high costs of living and operating a business.
Due to higher rates, similar incomes, and the resultant decrease in purchasing power, consumers are allocating more of their budget to the necessities and less to luxuries that include tours, trips, and eating out. At the same time, for hospitality businesses, the operational costs rise. The raw materials, staff, gas, etc., all these things cost relatively more.
Although there are high hopes that inflation would come down in the coming months, however, it remains a challenge now. The hospitality industry would have to navigate through these times by adjusting prices, offering affordable choices, adopting cost-effective technologies, etc.
4. Personalization and greater technology adoption
Post-pandemic times have witnessed greater use of technology in hotels and changed guest behavior and expectations. Guests look forward to a personalized stay experience, with digital services that streamline their journey, whilst receiving warm hospitality.
In fact, a survey indicates that 65% of consumers would be loyal to the brands that would offer personalization in 2023, while a Forbes article states that 63% of consumers would not shop with brands that employ poor personalization strategies.
As a result, it has become a highly competitive market where hotels and other businesses are adopting innovative digital hospitality solutions for personalization and streamlining operations, every now and then, increasing the overall pressure on the entire industry. And as the pressure to adopt various digital tools and technologies rise, hotels need to find the perfect balance between humans and technology-served hospitality.
Moreover, technology is convenient yet controllable to only an extent. If the systems break or fail someday, the hotels will need to act fast and smart. They need to have all back-ups and ensure the guest doesn’t suffer during the whole process.
5. Cybersecurity issues
For businesses that have massive amounts of customer data, data privacy, and security remains a huge challenge. The hospitality industry is one such data-rich industry.
Big brands such as Hilton, Marriot, etc., have previously been victims and continue to be easy targets of data breaches and cyber-attacks. This is because they store massive volumes of personal data on their servers. A report published in 2020 highlighted that 13% of all cyber compromises that happen globally are suffered by the hospitality industry, by hotels, in particular.
Moreover, as digitalization penetrates deep into the major issues in hospitality industry, hackers would find new ways to get into the systems and get to the data. Thus, hotels need to have more bullet-proof data and cybersecurity measures and provisions in place in 2023 and the following years.
6. The battle between OTAs and direct bookings
Online travel agencies or OTAs such as Expedia, Booking.com, etc., play a major role in boosting the online presence and visibility of a hotel and other hospitality businesses. These sites help a hotel boost its sales and revenue. However, this comes at a cost.
OTAs charge commission, which is increasing as the platform gets more popular and they have been controlling the terms and conditions of bookings with each passing year, making businesses feel less in control of their operations and bookings.
Thus, for many hospitality businesses, the answer in today’s time is to maintain a balance between bookings through OTAs and direct bookings. By building their own websites and apps, optimizing them as well as being present on OTAs too, the hospitality businesses would allow the customers/guest to book as per their preference and have more control over their bookings.
Conclusion
Thus, the major issues in hospitality industry have some ongoing and upcoming challenges that could impact their operations, sales, and eventually revenue, in the short as well as long run. They need to be more mindful of their choices and should employ strategies that are appropriate to their business goals and ethos, rather than keeping the herd mentality. Additionally, they need to attract and retain new talent as much as possible by offering them better working conditions, learning and growth prospects, and suitable compensation.
Publisher
Shubhneet is an active blogger with decent experience in Hotel Automation. He researches various topics related to Hotel & Technology and pens down his research in the form of articles & blogs. He performs extensive research and adds crucial information, inputs, and statistics in his write-ups.`
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