Whether it’s full-service or budget-friendly, hotels are an important sector in the commercial real estate world.
In its latest 2018 U.S. Market Outlook, CBRE projected an increased demand in hotels. And in the 2018 Emerging Trends in Real Estate Report, it was determined that “U.S. hotel occupancy levels are expected to be approximately 65.6 percent, the highest level of occupancy since 1981.”
But with changing demographics, updates in technology, and competitive hotel brands, it’s important that commercial real estate practitioners, investors, and developers stay on top of major trends affecting the lodging industry.
Increasing Brand Diversification
In recent years, several hotel brands have been introduced to the marketplace. Larger hotel companies are expected to diversify their brand by creating independent properties through soft branding.
Emerging Trends reports, “hotel owners and developers are expected to create campuses featuring two or more brands with distinct products and price segments that share back-of-the-house facilities.”
By creating these distinct brands, they are able to offer entirely different experiences that capture different crowds. One of the campuses may provide more high-end luxury features, while the other site could cater to budget-friendly travelers.
A Shift To Leisure Travel
According to CBRE, leisure travel will outshine business-related travel in the coming year and will become increasingly important in the hotel/lodging sector.
Hotel demand is projected to grow, but this shift to leisure travel means some markets will need to adapt to “fluctuations in international travel.” CBRE reports that the “growth in leisure [travel] demand is particularly explained by shifts in the hotel guest profile and the spending habits of U.S. age cohorts.”
People are craving the experiences that travel can offer. In fact, the 2018 Travel Trend Report by TrekkSoft says that the 30 to 50-year-old crowd (Gen X) is more interested in relaxing getaways, while 65+ (Baby Boomers) are looking for adventure outings and ways to socialize with other travelers.
More Smart Room Features
Hotel and lodging brands that successfully harness the power of technology are at an advantage. All areas of hotel design are adding more technology to provide flexibility for guests, along with offering more personalized services.
For instance, apps that guide guests throughout the experience are becoming the norm. Booking, check-in, service requests, and checkout can all be taken care of by the touch of a button on a hotel-branded app. Texting the concierge is replacing calls to the front desk. And rooms are adding more amenities such as personalized tablets where guests can control lights, temperature, and streaming services like Apple TV and Netflix.
But even with an increase in technology, studies show that hotel guests still crave human interaction and a personal touch. The challenge for hotels will be creating an environment that supports both.
Simpler, Natural Design Elements
U.S. News & World Report has noted a few evolutions in hotel design. Most notably, a trend toward pared down rooms and enhanced common spaces. (Many experts credit millennials for this change.)
Design is trending toward more simple and natural concepts. Trivago recently shared that in addition to larger communal spaces, hotels will feature more “live greenery” and “natural light.” The goal of connecting guests to the natural world is aimed at improving wellbeing and decreasing the stress of travel.
Curious about what other trends are affecting the hotel industry? Read more in the 2018 Emerging Trends in Real Estate report here.
Have you seen other trends in the hotel industry worth noting? Let us know in the comments below!
CRUNKLETON COMMERCIAL REAL ESTATE GROUP