What are the top hospitality industry predictions for 2023? By Max Starkov AND…how does this translate for the Vacation Rental Industry?

?

1. In 2023, the pent-up travel demand will fizzle. The good news: Accumulated consumer savings during to the tune of several trillion dollars plus government handouts are fueling the current pent-demand in travel. The bad news: consumer savings are running out, the inflation is eating up savings and payroll increases, interest rates are rising to unheard of recently levels and making shopping by credit cards very expensive. All of this, the news about layoffs here and there, and the looming probability of a recession will affect negatively consumer discretionary spending, which means tourism in general.?

The result? In 2023 fewer people will be traveling, those that do will be traveling less, choosing lower category hotels, on shorter trips and to closer to home destinations.

MM - What does that say for the Vacation Rental Industry? ?Travel for drive markets will be healthy.? Traveling with groups of people will help save the guests money.? Travelers who take large-budget family vacations overseas will stay stateside in 2023. All good for the VR industry!

2. In 2023, the trend of branditization of the hospitality industry will accelerate. Hospitality has been moving from an industry of independent hotels to an industry dominated by major hotel chains for at least two decades now. Currently 8 global hotel brands dominate many major markets: already 70% of hotel rooms in the U.S. and 50% in the U.K. belong to branded properties. Post-crisis developers, owners and managers will flock in droves to the major chains, attracted by their deep pockets, ability to implement safety and cleanliness protocols, huge loyalty programs able to generate 58.3% of roomnights, dominance in the corporate travel and group markets, comprehensive technology stack, expertise in maintaining and increasing occupancy and RevPARs in post-crisis, unparalleled direct channel distribution, 2x lower OTA commissions and 3x-4x lower dependency on the OTAs.

MM - What does that say for the Vacation Rental Industry? With distribution already climbing for the vacation rental industry, we will probably fall into the same trap the hotel industry will.? More reliance on OTAs.? OTAs benefited in a large way (some say they had a boost in the 2008 recession).? If I was still a vacation rental manager, I would pay close attention to how I price, distribute and merchandise my listings.? This is expertise not available in every company.? Make sure you partner with the RIGHT company to use distribution channels to your advantage.? There are many advantages.??

3. In 2023, automation in the hospitality industry will become the way of doing business. I believe there are two macro socio-economic factors forcing the hospitality industry to accelerate the adoption of contactless, human-less and do-it-yourself (DIY) services and increase their technology investments in automation: the labor shortages in hospitality (1.5 million open positions in travel, hospitality and leisure in Q4 2022) and the emergence of the new tech-savvy travel consumer. Do guests expect human-provided services at hotels?

I believe the notion that guests are demanding human-provided services is greatly exaggerated, especially today. A great example of why guests do not care about human-provided services as much as some in our industry think comes from the short-term rental sector, where the “gold standard” is customer experience without any human contact between guests and hosts, and yet guests are not only not complaining, but gobbling up this “human-less” service and loving it!?

MM - What does that say for the Vacation Rental Industry? I have great respect for Max and have known him for years but this is one area we may not completely agree with.? Yes, Airbnb and Vrbo independent listings have “contactless”, there are nuances to this that say - consumers of leisure travel are not all “tech-savvy”.?

Believe it or not, some of these travelers even want to speak to someone before booking.? The vacation rental industry caters to “high-consideration” purchases.? These are things that are complicated (try finding a home or condo that works for you and your entire family, that also caters to your crazy Aunt and Uncle), important (time away, vacation, celebration) or expensive (vacation rentals are more expensive overall) and you will find a guest who wants to understand what they are getting.??

As far as automation goes, Max and I are completely aligned.? TNS has focused plenty of our resources on solving for less staff and more automation.? This is key not only because of how staffing difficulties in destination markets but also because profit dollars will be tight in 2023.??

IMHO,?

Michelle