There are a lot of reasons for optimism looking ahead to 2024, including an increase in international travel and an easing labor shortage. The challenge for hoteliers will be to keep the momentum building, especially if construction continues to move slowly and consumer spending habits start to cool.
This sponsored content was created in collaboration with a Skift partner.
This edition of “Industry Insights” features an interview with Alex Alt, executive vice president and general manager of Oracle Hospitality.
Alt explained that the hospitality business is at a critical inflection point going into 2024. Some of the biggest pain points lingering from the Covid-19 pandemic are finally abating as major international markets open back up for business, and employment levels are finally creeping back into healthy percentiles. On the flip side, however, those revenge travel dollars have pretty much all dried up, which means that leisure travel will be susceptible to economic volatility.
Here’s our conversation.
SkiftX: What are the biggest opportunities in the industry in 2024?
Alex Alt: Despite the strong industry recovery over the last two years, the rates of outbound international travel from Asian markets (i.e. China) still sit at just a fraction of their pre-Covid levels, which means hoteliers have a significant number of lost room nights and spend that could be helping moderate the impact of pullbacks in other segments.
Thankfully, the hotel industry labor shortage seems to be coming to an end. Research in the Skift State of Travel 2023 report suggests the industry sits somewhere between 90 percent and 95 percent toward its targeted employment, and getting those employment figures back up should lead to improved guest experiences.
Finally, the sustained recovery in hospitality has led to generational, transformative investments to modernize technology, and we see these programs continuing full steam ahead across our global customer base. Companies like BWH Hotel Group, Wyndham, Pestana Hotel Group, Gervasi Vineyard Resort & Spa, Cinnamon Hotels & Resorts, Meliá Hotels International, Scandic Hotels, and many others have committed to modernizing their tech stacks, and those investments will pave the way for properties to increase revenue and guest satisfaction levels. It’s an honor to partner with so many brands, owners, and operators globally to accelerate a long-overdue upgrade!
SkiftX: What are the biggest challenges or watchouts?
Alt: One challenge is maintaining the demand for luxury leisure, which has been a frothy driver of industry performance for the past 18 months. These numbers are already reverting to the norm in North America, which means losing the high rates garnered by luxury travel. Despite some belief that luxury demand will remain strong, I’ve heard from upscale and luxury customers that customer willingness to pay up for those experiences may dry up.
Additionally, the global interest rate environment will continue to put pressure on industry performance, especially around net unit growth, which is the universal metric that big brands use to measure success. Construction financing is expensive or non-existent, asset transactions are falling, and many in the ownership community will prioritize the recapitalization of existing assets as debt maturities loom. All of this puts even more stress on net unit growth figures.
SkiftX: How will your brand push the industry forward in 2024?
Alt: Oracle’s cloud-first hospitality solution suite significantly reduces the cost of deploying technology in hotels while also exponentially increasing the power of hotel associates to operate and serve. The days of capital expenditure for licenses or servers are gone, saving potentially hundreds of thousands of dollars in startup costs, while training new staff members on OPERA Cloud can take just hours instead of weeks or months. While others in the space are unable to even eclipse a few dozen new customer and expansion go-lives in a quarter, we’re averaging 750 per quarter year over year, and that number is growing rapidly. With this capacity and experience, we’re able to accelerate modernization of the industry better than any other provider.
Even more, Oracle will lead the deployment of usable AI in hospitality, either by embedding it in our own applications — which we already do — or by allowing customers and partners to leverage our open cloud APIs to implement their own AI-driven solutions rapidly and at scale. More broadly, with Oracle’s enterprise focus on AI, we can leverage technologies built for other industry use cases to address similar use cases in hospitality.
SkiftX: What’s your secret travel hack?
Alt: Well, I’ve been in or around the travel industry for the entirety of my 25-plus years as a professional… so I have a lot of hacks! But if I disclosed them here, I worry they may cease being available. Instead, I’ll share one habit of mine: I often probe front-desk staff and waiters/waitresses about their software. Based on the brand, I almost always know what software a hotel or hotel restaurant uses, so I ask what they like and don’t like about their software without exception. Inevitably, this gives me plenty of ideas, either of ways to improve our own product or of advantages that our products have over our competitors. My team can usually expect a note after I check in or out of a hotel with a question, idea, or suggestion.
Have a confidential tip for Skift? Get in touch
Tags: industry insights