There are amazing benefits in being a hotel owner, but there’s also a robust list of challenges that come with the role. By addressing the challenges in a smart, proactive manner, you can put yourself in a position to better enjoy the perks.
4 Pressing Challenges You Face
It’s a good time to be in the hospitality industry – and the hotel niche in particular. Demand for new hotels is at an all-time high, with more than 5,500 new hotels currently in the development pipeline in the United States. But in order to maximize the benefits of working in this industry, hotel owners must be willing to address the big challenges that have emerged over the past few months. As we explore them in detail, we’ll provide you with some powerful tips for transforming these trials into opportunities. Take a look:
1. The Rise of Airbnb
The rise of Airbnb – and, to a lesser extent, platforms like HomeAway – has been swift and impressive. It’s revolutionized a centuries-old industry and essentially democratized the lodging market. But what’s a positive trend for guests and entrepreneurial-minded individuals is something far more threatening for hoteliers.
It’s not that people are consistently choosing Airbnb listings over hotels. Though there are people who now exclusively book Airbnb listings, they are few and far between. It’s mostly an opportunistic or experiential thing. The problem for hotels is that they’ve traditionally earned their largest margins when rooms were scarce – thus allowing them to charge higher rates to a captive audience. But now, when rooms are scarce, Airbnb listings expand to cover the gap.
“Consumers don’t always pay a lower price,” says Chiara Farronato, co-author of a study on Airbnb market share. “What changes is the quality of the listings. You might find a Fifth Avenue apartment or a place by the beach at a more reasonable price than you would if Airbnb wasn’t an option. Or a listing might have additional amenities, like a kitchen. And if you still prefer a hotel room, competition from Airbnb means you’ll pay a lower price for it.”
While multiple lodging groups are currently fighting back against Airbnb (trying to claim hosts are illegally acting as commercial operators), this will be a long, drawn-out battle. The better solution for hotel owners is to focus on the experience of staying at a hotel. Simplifying the experience, offering more amenities, including complimentary meals, and more are all things that guests are willing to pay for. This is what hoteliers should be focused on.
2. Operational Complexities
Owning and operating a hotel can be very resource-intensive and draining (physically, emotionally, and financially). In fact, operational complexities often force owners out and lead to serious declines in customer service. But there are solutions for hotel owners who feel unreasonably taxed.
Many hoteliers find it helpful to hire a hotel management company to assume all operational responsibilities, including: running all departments; recruiting, training, and managing employees; managing revenues and finances; developing budgets; maintaining compliance with laws and industry regulations; and delivering excellent guest experiences.
The management space has become pretty competitive over the past few years. A quick look at the top ranked hotel management companies reveals a variety of price points and styles. If nothing else, this is something hotel owners should consider moving forward.
3. Labor Issues
For hotel owners and managers that decide not to use management companies, the hours can be long and irregular. There are no nights, weekends, or holidays off.
“This isn’t anything new in the hardworking hospitality industry. Due to ongoing demands and the nature of the hotel business, responsible individuals need to be on-site nearly 24/7. Even if those duties are divided among several people, as they usually are, a manager’s hours are often long and irregular,” Gourmet Marketing explains. “Managers must manage stress and burnout if they are to be successful in their role over the long haul.”
Then there’s the issue of finding dependable workers. Hotel labor – particularly housekeeping and maintenance – is hard to keep. The turnover is high and the collective labor pool is unreliable. Without a proper hiring and retention strategy in place, it’s easy to end up short-staffed for weeks or months at a time.
The key is to keep the talent pipeline tapped. It’s also important to treat employees right. Better hours, higher pay, and opportunities to move up in the company all send the right signals to hotel workers. In response, they’re less likely to jump ship.
4. Growing Demand for Personalization
The standard guest experience is no longer enough to keep people satisfied and returning to a hotel over and over again. Today’s guests want personalized experiences that match up with the same level of detail that they get in other areas of their lives.
Guests expect to be able to book rooms online, access in-room video streaming services, order room service on a mobile app, etc. For hotels to keep up, there has to be a constant focus on innovation.
Whether you’re in the business of selling hot dogs at a ballpark or running a luxury hotel in the middle of a major city, the same business principles apply. At the end of the day, you’re trying to overcome customer hesitancies, convey value, and keep people coming back for more.
As a hotel owner, your success over the next five-plus years will be highly dependent on how you address the challenges discussed in this article. With a proper strategy in place, you can counteract the bad with exciting new initiatives that propel you to the forefront of your industry. What are you waiting for?