The past few years have been a time of upheaval and uncertainty for the hospitality industry. Whether it's the impact of a global pandemic, a cost of living crisis and unprecedented labour shortages, it's been a bumpy ride, to say the least.
But you'll be glad to hear that it's not all doom and gloom. We've conducted a thorough analysis of the hospitality industry's economic and consumer landscape, which suggests that Brits will continue to prioritise travel despite having to tighten purse strings, and reveals a dynamic set of trends and opportunities, particularly in terms of technology and digital marketing, to assist your business during difficult times.
Fiona Buchner, Strategic Account Director at Etch, shares her findings below.
A changing customer landscape
The old adage that the "customer is king" still holds true today, but in this ever-changing digital landscape, customers' needs, preferences and expectations are in a state of constant flux, making it even harder for hospitality businesses to keep their customers happy.
To truly provide successful customer experiences, we must go beyond the surface level, and dig deeper to understand the customer, the context they operate in, their expectations, frustrations and the challenges that they face. With this knowledge, we can create experiences that not only meet and exceed customer expectations, but also deliver on business objectives.
Given the complexity of human nature, addressing customer needs is not a static process, but rather a relationship that involves active listening to build trust, learning and adapting to changing customer needs, empathising with customers and striving to make their experience as positive as possible - ultimately driving optimal results and customer loyalty.
The economic landscape
The economic landscape, while undeniably negative right now, is projected to recover by the fourth quarter of 2023, with the recession being shallower than initially predicted by economists. This has been a welcome surprise to many, as the effects of the pandemic have been far-reaching, impacting not just businesses and individuals, but entire economies around the world.
- The UK is estimated to have entered into a recession in late 2022, with a squeeze on incomes as the main driver, compounded by high inflation and high-interest rates that constrain household purchasing power - KPMG.
- Real-term salaries will drop back to 2006 levels in 2023, meaning a consumer spending squeeze - PWC.
- A government intervention on energy bills should limit the impact of the economic downturn and ONS data suggests that households have access to a larger cushion of pandemic savings than previously thought - EY.
- Inflation is expected to have peaked in 2022 (but remains significantly higher than government targets for the remainder of 2023) - CBI.
- 58% of global business leaders expect the recession to be mild and short. This is not 2008! - KPMG: CEO Outlook.
Domestic tourism
Seaview suite atWatergate Bay.
Domestic tourism will remain a strong source of revenue for many countries, but competition within the sector is likely to increase significantly. Meanwhile, international inbound tourism is on a rapid recovery trajectory, bolstered by the easing of global travel restrictions and the emergence of more affordable and accessible travel options.
- Memory-making travel is still high on the agenda for 2023, despite the rising cost of living with 65% planning a leisure trip in the UK - LNER / IPSOS Research.
- Staycation bookings are set to soar in 2023, as the cost of living crisis drives the trend for shorter breaks - Love Holidays Survey.
- Luxury travel is growing faster than overall travel, with North America and Western Europe accounting for 64% of global outbound luxury trips, despite making up only 18% of the world’s population - Amadeus: Shaping the Future of Luxury Travel.
- Inbound tourism predictions for 2023 anticipate over 35 million inbound trips to the UK with an all-time spending high predicted - Visit Britain: Dec 2022.
Long-term market share is won in a down economy
- 38% of consumers switched brands during the 2008/9 economic crisis.
- 60% of consumers say brands need to do a better job of listening to feedback.
- As economic reality bites, customer needs will change, with a low boundary for churn.
- Bad digital experiences result in an 8% loss of revenue.
- Empathy is what makes human interactions so powerful. Harness that, both in
digital and in-person experiences, and you’ll be rewarded.
- Qualtrics XM Institute: Global Consumer Trends 2023
People desire life experiences, sustainable credentials, personalised care, wellness, and all-inclusive options
Environmentally-friendly forest huts at The Pig.
- People will recognise travel as an intrinsic part of their wellness routine - Hilton Research: Profile of the Traveller in 2023.
- The concept of maximising nature and outdoor space, also known as “bootiquing”, is a hot trend for 2023 - Grifco PR: UK Trends for 2023.
- All-inclusive packages/options are becoming the "go-to" option - Grifco PR: UK Trends for 2023.
- Consumers desire life experiences as part of their leisure travel itinerary - unique
engaging experiences that build connections - Amadeus: Shaping the Future of Luxury Travel. - Travellers want to be taken care of more than ever and will be loyal to brands that address their emotional and physical needs - Hilton Research: Profile of the Traveller in 2023.
- Greenwashing is becoming easier to spot, and sustainability-savvy travellers are demanding more from hotels and travel operators - Eco-Travel Trends 2023.
Other trends to monitor
The cost of living crisis, sustainability credentials, and a global easing of COVID-19 restrictions have undoubtedly been major influences driving the hospitality trends of 2023. You’ll find some of the areas that consumers will be interested in exploring during 2023 and beyond below:
- Generation Alpha, comprised of millennials travelling with their kids, should have their needs catered to and understood.
- CBD products – spa treatments, non-alcoholic drinks.
- Light wellness – healthy options in the room, pillow/mattress menus, and sleep aids to combat burnout.
- Working nomads.
- High-tech spa treatments – cryotherapy, DNA analysis etc.
- Pet pampering – grooming, walking services, etc.
- Unplugged / off-grid – quiet zones, meditation areas, nap pods, reading cabanas.
- Multi-generational activities.
- Solo travel for 65+.
- Joy Seeking / Transformation – trying something new, self-improvement.
- "Entertrainment" – entertaining self-improvement.
- Membership benefits/subscription economy – NFTs.
- Grifco PR: UK Trends for 2023
Embrace technology to stay ahead of the curve in 2023
The hospitality industry is rapidly embracing technology to remain competitive and capitalise on the opportunities presented by the ever-changing digital landscape. From the use of AI and automation to enhance the customer experience, to the introduction of blockchain to ensure secure bookings. By leveraging the latest technologies, hospitality businesses can stay ahead of the curve, ensuring that they can effectively target and engage their customers, develop meaningful relationships, and maximise their ROI.
Here are 5 travel tech trends in hospitality for 2023 according to eviivio.
- Mobile apps will continue driving growth and offer peace of mind. In a world of instant gratification, mobile apps have made it easier for travellers to book on the go - and it’s becoming a standard.
- APIs and omnichannel platforms will become the gold standard. While travellers may be unfamiliar with APIs (Application Programming Interface), it’s the Holy Grail technology that allows them to effortlessly browse, book, filter and stay in a property without any glitches.
- Automation for everything. Travellers are seeing more AI in travel, from virtual travel agents to website chatbots to help curate their stay, and hosts and hoteliers are benefiting by hospitality software that helps them better understand their guest preferences.
- Virtual Reality will virtually become a reality. As indicated in eviivo’s Top Travel Trends To Expect For 2023, virtual reality will wear the crown for determining places to visit. Virtual reality will also be more common on websites to offer virtual tours, which is known to increase bookings, improve guest review scores and simply stand out from competitors.
- More powerful, independent websites. According to an eviivo survey conducted in August 2022, 29% of respondents prefer booking stays directly on the accommodation website, while 19% prefer booking through an OTA (online travel agency).
With all of that said, the technology that can facilitate seamless customer interactions and experiences should still stay true to the notion that the customer journey should be human-led. The technology should strive to bridge the gap between the convenience of automation and the personalised touch of human guidance, ensuring that customers are provided with the best of both worlds.
Digital Marketing
According to Forbes, marketers should focus on long-term brand building rather than short-term activations during a recession. And businesses that invest in their brands during a downturn outperform the market and recover more quickly. Investing in marketing remains the most effective form of defence during an economic crisis (Kantar: Media Reactions 2022).
Targeting and use of highly relevant offers can drive results, but rely on rich data which is becoming harder to access in a ‘cookieless’ world.
- Data-led targeting is essential as budgets get squeezed. Research shows that campaigns targeted at receptive audiences perform 7 times better.
- 80% of companies want their own in-house segmentation to enable media planning and activation.
- 78% of large businesses are planning to strengthen their data platforms to understand and segment customers.
- 54% of companies surveyed believe integrating other data sources with audience segmentation will become more important.
- There will be a move towards proxy-based targeting systems and contextual advertising when data gaps become more apparent.
- Kantar: Data strategies for brand growth report
TikTok, social commerce, scrappy content – but never underestimate the value of 'brand'
- TikTok is the go-to search engine for Gen-Z but its content is starting to cross over onto other social platforms and audiences.
- Mastering content creation for TikTok is no small task, use social listening tools to identify trends and piggyback on viral content.
- Investments in rich video platforms are expected to increase in 2023 (Kantar: Media Reactions 2022).
- Scrappy short-form video is thriving in social media and marketers need to become savvy to rapidly deploy SFV into a plethora of platforms (Instagram Reels, YouTube shorts, TikTok, Snapchat and even Pinterest).
- As organic reach is declining in social media, brand awareness is a marketing team's best tool for overcoming the limited exposure an algorithmic-based social platform provides.
In Summary
Although the economic landscape is undeniably negative right now, it is expected to recover by the fourth quarter of 2023, with the recession being shallower than initially predicted by economists. And while customers are mindful of spending, travel is still a priority for most in 2023. These next few months are therefore vital for any hospitality business looking to make this calendar year a success.
"To stay competitive, hospitality businesses should invest in their brand, embrace technology and invest in digital marketing. It remains the most effective form of defence during an economic crisis."
- Fiona Buchner, Strategic Account Director, Etch
Whether it's exploring new technological frontiers, developing unique life experiences, or investing in strong long-term branding, the key to weathering this recession, growing your business and getting results is all about building connections. And while individual industry shifts may come and go, getting customers to truly connect with your brand never goes out of style.
So, as we get stuck into 2023, let's trend towards that.
Our approach to growth...
We are trusted by some of the biggest names in Hospitality including The Gallivant, Lime Wood, Watergate Bay and The Pig, all of whom were recently included in Big Hospitality's Top 50 Boutique Hotels List 2022 so we like to think that we know a thing or two about hospitality.
We believe in value optimisation, a flexible approach to structured experimentation, learning and adaptation. Our tactics can be adjusted daily, weekly, and monthly to continuously deliver value growth and improved ROI for our clients. The foundations of our work are built on extensive analytics capability and deep customer insight. We use this to develop hypotheses for value optimisation, which we test in an innovation/experimentation cycle. This helps us assess, learn, and adapt, driving ongoing optimisation and continuous growth impact.
If you're a hospitality business looking to solve strategic and tactical transformation problems when it matters most, find out more about how we can help here or for a free no-obligation discovery call, please contact us.
