10 Major Challenges in Hotel Industry & Its Solutions

Furthermore, with the recent pandemic and the resultant changes in the working and social culture across the globe, hotels and other businesses were required to make additional operational changes. Guests seek contactless check-in/check-out services to ensure safety and well-being.

The pandemic also gave rise to diverse travel segments such as digital nomads, bleisure travelers, sustainable travelers, etc. Hotels and other businesses in the hospitality industry had to expand their capabilities and services to cater to the different traveler needs.

Furthermore, with the technology-driven revolution and work requirements, guests demand free WiFi with a strong connection, workspaces, meeting rooms, digital room services, and controls, entertainment systems, etc. More often than not, they expect a digital stay journey that is frictionless, with exceptional experiences.

It sometimes becomes difficult for the hotel to live up to the expectations of all guests due to resource or capital constraints.

Furthermore, the pandemic exposed hotels to the situation of change in guest portfolios. With international and national tourism restricted during the lockdowns, hotels just had their local markets to cater to. This created a problem because the bigger focus had always been the national and global markets. As a result, hotels suffered major losses, some even succumbed to the pandemic pressure.

Solution:

• To keep up with the technological developments, hotels need to sit with some experts to begin the journey of digital transformation. A SaaS company dealing in hospitality technology such as BOTSHOT could help a hotel optimize its workflows and enhance guest services. Automation of certain systems, as well as the adoption of emerging technologies such as IoT, AI/ML, etc., would help elevate the guest experience.
• Hotels could offer working spaces to attract bliesure travelers. The hotel spaces not in use or huge spaces such as conference and meeting rooms can be made into coworking spaces.
• Furthermore, hotels need to shift a little focus to the local markets and customs as well and offer subscription models or staycation packages to the local crowd, spanning the local area or further afield to neighboring towns and cities, to expand their audience.

2. Staff shortage and retention

Challenge:

Staff shortages and retention have been challenges for hotels for a very long time now. In 2022, an Office for National Statistics (ONS) report stated that the hospitality sector is experiencing 83% more vacancies than previous years, despite the industry creating around 3,00,000 new jobs between 2021-2022.

Furthermore, a lot of hospitality businesses in the UK, around 45% of hospitality operators, were forced to cut capacity or trading hours due to shortages in staff. And this trend has been continuing in 2023 as well. An Australian Government report stated that accommodation and food services were the topmost sectors in the state for staffing shortages in November 2022. Moreover, 45% of businesses said that they are in desperate need of staff

Staff retention has also been a major issue in the hotel industry with long working hours, poor working conditions, and rising competition, being some of the major contributors to difficulties in staff retention.

Digital skill gaps across many information and communications technology (ICT) and digital marketing fields, and underqualified staff are some of the other reasons that add to the woes of hoteliers and other hospitality businesses.

Solution:

• To attract the right talent and skills to your hotel, improve the hiring process, making it more in-depth and comprehensive. The background checks should be done carefully. Moreover, the compensation and benefits offered to the staff should be fair and attractive.
• Improve the working conditions of your hotels, with managers capable and empathetic enough to present the challenges faced by the staff to the higher administration, in an unbiased manner.
• For staff retention, hotels must invest in team training and offer a good working culture to their employees, with activities to enhance their mental health as well.

3. Personalization and increasing technology adoption

Challenge:

With the travel and tourism journey becoming digital at a lot of the guest touchpoints, there is more scope for personalization, and the same is reflected in the guest's behavior.

With a lot of people researching flights, accommodation, travel packages, etc., online, hotels have more pressure than ever, to adopt digitalization and personalize the guest experience through various technical platforms and tools.

As per a MarketingTech survey, 65% of consumers stated that personalization would loyalty in 2023. With the increasing demand for personalization, hotels must adopt the right and most appropriate technical tools to enhance the guest experience.

While personalization, among other factors, has built pressure on hotels to digitalize, this journey has to be undertaken carefully, striking the right balance between digitalization and the human touch.

Moreover, the hotel should employ the right tools, catering to its unique nature, services, and requirements, to make the most of the technological investment. One size fits all approach does not work here.

However, some hotels might not have the capital bandwidth to digitalize and as a result, these hotels struggle to thrive in this digital era.

Also Read - Hotel Technology Integration

Solution:

• A hotel must get in touch and sit down with a team of experts to discuss software requirements.
• Hotel websites with curated or customizable packages, deals, offers, and discounts increase the personalization quotient in the booking process. These curated packages and offers could be created based on the guest data gathered and analyzed by AI Chatbot.
• Hotel apps further personalize the guest experience, with these marketing campaigns and promotional deals being notified to the guest now and then. Moreover, with these apps, the guest journey pre-arrival as well as during the stay could become portable and hence, easily accessible. Digital check-in/out is also possible through these apps.

4. Evolving marketing trends

Challenge:

With a rise in digital platforms and the traffic on them, hotel marketing campaigns and channels have gone through a significant change. Traditional door-to-door marketing efforts aren't that trending and fruitful anymore. The world has now moved on to digital marketing techniques.

While some hotels and hospitality businesses embraced this change, others are still trying to get the desired results with the traditional forms of marketing. Some from the former category are also struggling a bit since the digital marketing landscape keeps on changing, with new additions happening every few days.

Thus, hotels need to keep pace with the ever-evolving digital marketing and advertising practices, attract the right audience, and retain them with powerful and engaging campaigns.

Solution:

• For starters, hotels need to have a strong online and social media presence.
• Engagement with guests regularly on social media is also important.
• The website and social media accounts must have both, sized, and easily digestible content as well as a content hub for those who want to know about a topic in-depth.
• Digital marketing content should be fresh, catchy, and engaging .

5. Inflationary pressure

Challenge:

Inflationary pressure has been felt by both, individuals and businesses, alike in the past few years, especially during- and post-pandemic. As a result of this, consumers are consuming and spending less, and businesses have an increased cost of operating. It is one of the most serious challenges in hotel industry.

The businesses are hence being hit two-fold. Global inflation remained at a high average rate of 7% in 2022, and a similar was expected for 2023. However, the IMF expects the rate to come down to 4.3% by 2024, and another report predicts it to be 5% in 2026.

Whatever may the numbers be, the hospitality sector might face challenges keeping up with the rising costs. The operational costs, from food and beverages to staff and property maintenance, all are rising. On the other hand, as guests also feel pressure on their pockets, their purchasing power would decrease, and necessities would be prioritized.

Even when normalcy was restored post-pandemic and guests started to visit hotels again, hospitality businesses struggled with an increase of 55.2% in operating costs, with changed rules, regulations, and provisions for guest safety and well-being.

Moreover, with an ever-increased competition in the hospitality industry, hotels are walking an extra mile to attract guests and hence, adding to their costs to stay ahead of others.

Thus, rising operational as well as daily consumable costs are some of the operational challenges in hotel industry.

Solution:

• Proper inventory management and stock control are required.
• Practice dynamic pricing to optimize revenue.
• Guest data analysis could help a hotel identify the non-performing departments and services and replace them with lucrative ones, improve them, or eliminate them.
• Automating certain repetitive tasks and leveraging technology, wherever needed, would help a hotel streamline workflows, improve efficiency, and lower operational costs.

6. Data security issues

Challenge:

Hospitality is a data-rich industry. The data often includes personal and financial information. This brings a lot of challenges for hotel sector. As the use of technology grows, so does the risk of cyber and injection attacks.

Hackers are aware of the kind of data that the industry holds and thus, are looking for ways to penetrate the database. Hilton was a victim of such data theft in the early months of 2023. User data belonging to the Hilton Hotels Honors program, with 3.7 million records, was put on sale on a dark web forum. Hilton is not alone. Many hotels have been a target of cyberattacks and malicious activities because of the amount and nature of the data they have stored on their servers. Data security is a concern that comes with the use of technology and has impacted multiple industries. Thus, it is one of the main challenges in hospitality industry.

Solution:

• The first step should be proper data storage and management.
• Secondly, adopt the right and most suitable technology based on your data storage needs, with strict data security measures.
• Look for technology that is PCI-DSS compliant and HTTPS secure for better data encryption.

7. Meeting sustainability goals

Challenge:

The climate crisis is what’s making the headlines for the last two years. The hospitality industry needs to be conscious of its energy usage not just because of the rising costs involved but also due to the changed guest’s outlook and behavior. Guests are becoming more and more conscious of their energy consumption and choosing sustainable travel.

Thus, hotels need to adopt more sustainable practices to cater to the guest’s needs and align with the industry standards and goals. Global brands such as Marriott, Hyatt, etc., made an announcement back in 2022 about setting new net-zero targets for 2030 to 2050 in line with the Paris Agreement. Additionally, they also committed to transparent measurement and reporting.

Furthermore, multiple organizations also signed the Glasgow Declaration for Climate Action in Tourism, targeting a goal of net-zero emissions across the industry by 2040.

With such ambitious targets and sustainable goals across the sector, a major challenge for hotel operators in the near as well as the distant future is to shift to the ‘triple bottom line’ business practices along with using mechanisms that measure and report change.

Solution:

• Monitor energy consumption and carbon footprint rates.
• Adopt technology, wherever relevant, to reduce the use of paper (used in large numbers in hotels) or energy consumption. BOTSHOT’s eFront Desk is a contactless and paperless check-in solution that helps hotels save paper, cut operational costs, and avoid long queues at the front desk.

8. Irregular cash flows

Challenge:

Another one of the major challenges in hotel industry is credit or irregular cash flows. Parties usually take time up to 30, 60, and 90 days or even more to pay dues. While the size of such dealings is bigger, however, during a low financial period, this may lead to losses and often many payments are delayed or recorded as bad debt.

Solution:

• Choose vendors and suppliers carefully and change in case of default or longer payment windows.
• Work out an installment strategy with ones not able to pay the full amount.

9. Online reputation management

Online reputation management is a modern challenge. Earlier, hotels used to record feedback on internal systems and work out strategies to enhance services and service gaps. However, with the introduction of multiple OTAs and social media platforms, hotels must ensure that their reputation is maintained across each channel.

This creates certain issues for the hotels as there are multiple channels where negative reviews and ratings could be posted, both organic or bought. With multiple heavy tasks on the ground, the hotel staff is already on their toes around the clock, and hence, maintaining all the channels could become a bit difficult for the hotel.

Thus, online reputation management is one of the marketing challenges in hotel industry in India.

Solution:

• Proper management of OTAs and other review platforms is extremely important. Feedback should also be taken during- and post-stay. This can be done through digital solutions such as BOTSHOT tool Heda (feedback management system) that allows hotels to collect actionable feedback while they are on the property as well as post-stay.
• With Heda, hotels can store the feedback as well as real-time sentiment analysis in one place and trigger action whenever required for instant redressal.
• Every review should be replied to, whether negative or positive. Reviews and ratings should be taken seriously, and guests should feel that they have been heard.

10. Rising competition

Challenge:

The hospitality industry is witnessing some extremely competitive times with property owners renting out their properties, and homestays and vacation rentals gaining popularity. These accommodations ensure that the guest can enjoy the local experience with the warmth and comfort of a home. Websites like Airbnb are becoming a hit amongst users and gaining more importance with each passing year.

Moreover, new hotels with fresh concepts are entering the marketplace every day, adding to the already tight competition.

Thus, rising competition is one of the biggest channels in the hotel industry.

Solution:

• Competition analysis and market research should be done every few months to update strategies and plans.
• Furthermore, study your audience, and keep curating packages, deals, offers, and other promotional campaigns for them to stay relevant and flourish in a highly competitive environment.

Conclusion

Thus, these were some of the traditional, new as well and upcoming issues and challenges in the hotel industry. While some have been there for a long time, others are just consequences of the changes in global and market innovations and conditions.

Whatever the reasons may be, these challenges in hotel industry need to be addressed and tackled by hotels promptly and thoroughly.

That's why hotel management software by BOTSHOT is the best solution to overcome every hotel management challenge that is mentioned above. Every aspect of a hotel business is covered here, including reservations and the front desk, housekeeping, and billing solutions. From streamlining processes and improving operational effectiveness, “Hotel in a Box” helps hoteliers concentrate more on delivering customer satisfaction and better positioning in the constantly changing landscape of the hospitality industry.