By Jeanelle Johnson
The annual NYU International Hospitality Industry Investment Conference, now in its 46th year, offers a deep dive into the current and future state of the hospitality industry. This year, I had the privilege of leading a CEO panel discussion on “Innovative hospitality concepts, new spaces for expansion.”
I describe innovation in hospitality as the transformation of how the industry creates, delivers and captures value. Drawing from PwC’s 27th Annual Global CEO Survey, I highlighted a few key statistics to kickstart our conversation:
- 52% of CEOs say their top goal over the next three years is to identify new sources of growth and new ways of generating revenue.
- 45% of global CEOs think their organization will cease to be economically viable in just 10 years’ time if it pursues its current course (up from 39% in 2023).
- CEOs identified the top three drivers of transformation as:
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- Technological change (57%)
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- Changes in customer preferences (45%)
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- Regulation, including regulations governing sustainability (9%)
Despite these findings, none of the panelists felt their business was at risk of becoming economically unviable. Throughout the conference, there was a strong sense of optimism in the industry for its mid and long-term future. But they all agreed that the key to success is to be flexible and responsive to the changing and emerging desires, needs and expectations of guests.
This insight is certainly relevant for the short term (perhaps into mid-2025), with revenue growth expected to be close to flat in all hotel sectors except luxury and extended stay. And it will likely become even more relevant in the next decade, when middle-class leisure travel is forecasted to surge, especially with hundreds of millions of travelers from China and India joining the market.
Exploring new revenue sources
Our panel highlighted various ways to identify new revenue sources and growth opportunities:
- At the macro level: Strategic acquisitions of new properties can be key. Despite currently low deals activity, valuable opportunities exist with smart, creative financing.
- Attracting new demographics: Catering to specific guest expectations can drive company-wide growth.
- Renovations: Transforming spaces, like converting an underused pool into a pay-per-use golf suite, can better serve guests and monetize choices.
Technology-driven innovation
Our discussion naturally turned to AI, machine learning (ML) and data analytics. So does PwC’s CEO Survey, which shows that 81% of companies view generative AI (GenAI) as key to reinvention, while 95% of employees value GenAI in the workplace. The panelists agreed that these technologies are key to measuring results, strengthening the employee experience, personalizing guest experiences and improving operations. They emphasized the importance of involving staff in AI priorities, as the hospitality industry is fundamentally a people-to-people business.
- Using machine learning and analytics: One top purpose of AI transformation for hospitality companies should be using ML and analytics to measure results, to help them continuously judge their performance.
- Enhancing guest experiences: AI can show guests that a hotel company truly knows them throughout their visit journey, from booking to stay to post-checkout — especially for repeat guests, and above all for loyalty program members. Hotels should know what guests always want (a certain kind of pillow, an arrival-spa reservation, a room away from the elevators) or are likely to want, and proactively provide or offer it.
- Staff-driven AI priorities: In the people-centric hospitality industry, technology should liberate staff to focus on face-to-face guest service. Trusting staff to identify how AI can assist in serving guests better is key.
Those messages certainly chime with my vision of hospitality as a human-led, tech-enabled business. And they echo the results of the 2023 PwC-NYU collaborative study of the state of hospitality technology innovationtoo.
Evolving guest preferences
The panel also touched on trends I’ve been discussing for some time:
- Destination hotels: Across most hotel subsectors, from ultra-luxury through the midscale, guests expect that hotels will be true destinations in themselves, not just gateways to a destination (city, region, tourist sites, etc.). Guests today seek unique, authentic experiences — and they choose hotels with that criterion top of mind.
- Experiential travel: In particular, younger leisure travelers who cannot afford home ownership are choosing to enrich their lives with travel experiences instead. Hotels should offer meaningful experiences and distinctive food and beverage offerings to gain and maintain mindshare.
- Lifestyle and wellness: The demand for lifestyle hotels and wellness travel is rapidly growing, becoming mainstream expectations rather than differentiators.
Proactive regulatory engagement
Regarding regulation, panelists stressed that hoteliers must aim to anticipate new developments: “the industry cannot wait for regulators.” At the municipal and state levels, hospitality companies should strive to lead the way by engaging in meaningful, constructive dialogue with regulatory entities to anticipate practical solutions to regulatory challenges. There is no excuse for being taken by surprise by new regulatory initiatives anymore.
CEO panel: Innovative hospitality concepts, new spaces for expansion
Panelists
James Bermingham, CEO at Virgin Hotels Collection
John Cohlan, CEO at Margaritaville
Larry Cuculic,CEO at BWH Hotels
Greg Juceam, CEO at Extended Stay
