WL RISE 2022: The Changing Dynamics of Hospitality Industry in 2022

Like every other sector, the pandemic-induced disruptions have been a test of resilience for the global hospitality industry over the last two years. However, with international flights resuming and the business travel culture rebounding faster than anyone would have dared to anticipate about a year back, 2022 appears exceptionally optimistic, setting hospitality businesses on a path of strong resurgence.

What will the changing dynamics of the hospitality industry look like in the New Normal? What can decision-makers learn and unlearn from the experiences of the years gone by? In WL RISE 2022, conducted in partnership with ET Hospitality World, we searched for answers.

Moderated by Bikramjit Ray, Editor, Economic Times Hospitality, a panel of industry stalwarts like Nikhil Sharma, Regional Director, Eurasia at Wyndham Hotels & Resorts, Vikramjit Singh, President, The Lemon Tree Hotel Company. Samir MC, Managing Director, Fortune Hotels, and Sheik Mohideen, Senior Vice President – SMB, Partnership & Alliances, Worldline, took a deep dive into the things that lay ahead for the industry.

Here are the key insights from the discussion:

1. COVID has been a great eye-opener: Indeed, the sun is shining brighter than ever on today's hoteliers. Nevertheless, the predicaments of the past offer valuable learnings and revelations that must be weaved into the current business practices. For instance, amidst the stagnation, the F&B and small-scale events became fillers for the drop in demand for rooms. How can they be managed to hedge future risks?

2. The continued growth of the mid-market segment: While the demand for deluxe will continue to hold its sway, mid-market operators are gaining significant ground. The trend is driven by high scalability and flexible cost structures that ensure business continuity even during the lull.

“I think the midscale is the new flavor, and people have realized that the midscale hotels are the more profitable part of the business, especially when you are down and out,” says Vikramjit Singh.

In fact, the latest findings by HVS ANAROCK reveal that 55% of the room bookings in 2021 have been in the mid-market segment, with merely 25% spending on upscale options.

3. The growing Preference for brands: In the wake of the pandemic, the demand for assured cleanliness and hygiene standards has brought the focus back on the big brands. Further, an aspirational Indian middle class looking to experience travel and quality stay has inflated the customer base for the hospitality brands. Today, the average daily rates (ADRs) are trending higher than ever across cities like Delhi, Mumbai, Hyderabad, and Bangalore, and recent findings indicate a massive demand/supply gap. Consequently, the hospitality industry will likely experience top-of-the-cycle conditions for the next 4-5 years.

4. Franchise is the new buzzword: The big brands in the sector are currently cutting back on capital expenses and turning towards an asset-lite posture that offers greater operational agility and control. It is apparent that, unlike conventional models that are hardwired around the brand-owned properties, the leading hospitality brands will switch to an Owners-First approach, enabling franchisees and third-party players to operate with cutting edge tech and industry best practices.

“With the Owners-First mentality that we had, we spent the first two years revamping the whole backend, making it more accessible for the owners and the hotel teams and making sure all tools and reports are available on one platform and making it more accessible to them,” says Nikhil Sharma.

5. Seamless payment at the core of experience delivery: India is at least 3-4 years ahead of the world in online payments technology, thanks to affirmative policy thrusts and continuous innovations by market leaders like Worldline. Today, to live up to the demands of an aspirational and tech-savvy customer base, the hoteliers cannot help but embed the latest solutions into their stack, positioning it for journeys like EMI, subscription-based payments, omnichannel payments, and cross-border payments.

Further, the capability of payment solutions to integrate with systems like booking engines and channel managers will also play a key role in delivering a secured, compliant, and customer-centric booking experience for the guests.

“There are multiple types of integrations. API-based integrations, single-click integrations using plugins like Magento and Woocommerce. So you need to find out if your payment partner is capable of providing that,” says Sheik Mohideen.

6. Variation in payment as a key differentiator: While the modes of payment are already there, hospitality brands are looking for technology partners that can mix them to drive variations and come up with more exciting offerings. For instance, designing a book-now-pay-later option that permits guests to block rooms for holidays about six months from today by paying just 10% now. Also, hoteliers believe that the industry will turn to payments innovators like Worldline to implement crypto as an omnichannel payment mode as and when it becomes a legal tender in India, matching up with the advanced economies like Dubai and Singapore.

7. Changing perspective on technology: The COVID-19 situation has led the hospitality industry to reinvent its need for Digitalization and take operations online. While earlier technology is mainly seen as a capital investment, it has emerged as a strategic necessity, pivotal to managing revenue, training staff, delivering streamlined guest experience, optimizing costs, driving non-linear growth, and much more.

Samir MC says, "There are now many options available, whether from capital or operating expense perspective. There is a pay and use model available in most options. So definitely, there is a better embracement of tech. People are getting more technology into hotels."

However, while choosing a technology partner for powering a mission-critical vertical like payments, it is essential to ensure that the capabilities are comprehensive, future-focused, and guarantee end-to-end visibility.

8. Sustainability adding to brand appeal: For millennials and Generation Z, growing up to be tomorrow's hospitality customers, sustainability considerations play a significant role in purchase decisions. The hoteliers seeking to foster strong brand loyalty and have the revenues flowing in the future must leverage technology to transform operations and ensure sustainable outcomes.

As hospitality industry insiders, all the panelists are confident that the years ahead will witness one of the best times in recent memory, characterized by compounding revenue and fast recovery. Undoubtedly, at this juncture, the brands that are prepared with the right technology, partnerships, and policies in place are set to reap a windfall!