HOSPITALITY


of generative AI for the travel or hospitality industry? Probably not. “A travel platform in the US is trialling


generative AI which allows you to enter the type of holiday you want, the number of days, the countries you want to visit or the experience you want, and it comes up with a detailed itinerary you can book. That is overnight disintermediation. So, you can see how things will be disrupted. “The technology can also change


personalisation into hyperpersonalisation and redefine loyalty. Points-based loyalty has a significant appeal. But travel businesses’ points-based programmes have to extend so they’re on your credit card and you’re constantly earning points to get enough volume to earn something. That is not what loyalty is. “Loyalty is when you go on a trip and


stay at a hotel you stayed at six months earlier and at the bar they remember you enjoy a glass of pinot noir and say, ‘This is on the house’. Now you’re going to tell everybody about that. You’re not going to tell somebody you stayed at a hotel and got 362 points. Learning what you like, predicting what you would enjoy is where the technology becomes interesting.”


OUTLOOK FOR 2024


“There will be a return to more normalised performance patterns, subject to there not being major unforeseen events. The growth rate is not sustainable. The most interesting indicator is probably the US, where we’ve started to see a softening [in demand] and declines in certain markets. Historically, the US has been a lead indicator for Europe. “It appears the pent-up demand has


worked through the system, with full levels of supply coming back. [Hospitality analyst] STR expects a decline in rate performance in certain segments, not just a softening in growth to more normalised rates of 3%-5% a year but declines. “However, something underpinning


the [strong] performance has been that it is virtually impossible to get new hotel developments funded. So, you don’t have additional supply coming into the


FOUR and five-star hotels are


the preferred accommodation of three out of five UK


holidaymakers (Figure 59) FIGURE 59:


LIKELY ACCOMMODATION: NEXT OVERSEAS HOLIDAY All likely holidaymakers in 2024


Cruise 4% Camping/


caravan 2%


B&B 5% Airbnb-style


homestay 7%


Self-catering villa/apartment 7%


Hotel 2/3 star 11%


%


10 20 30 40 50 60 70 80


0 -3


Other/don’t know 12%


2.3m 2.2m


1.6m


Camping/ caravan 2%


Airbnb-style homestay 6%


Hotel


4/5 star- plus


52% +2


+2 B&B: 6%


Self-catering villa/apartment 5%


Hotel 2/3 star 13%


+1


% point change YoY


Likely overseas accommodation, by age 63% 57%


10% 11% 6%


8% 2% 16-24


£1.6bn £1.4bn £1.2bn £1.1bn £1bn £1bn


25% 16%


3% 2% 25-34


7% 6% 8% 6% 10% 1% 35-44


6% 3% 45-54


7%


£2.7bn £2.5bn


4/5 star hotel 59% 45% 45%


2/3 star/B&B Self-catering Homestay Cruise


21% 18% Other/Don’t know 16%


11% 10% 7%


55+ Source: Service Science/Kantar, November-December 2023 -3


Cruise 2%


Holidaymakers with children


Other/don’t know 7%


[EU 57%] Hotel


59% +3


4/5 star- plus


Europe 62%


market and that is not going to change in the short term. There is just not the appetite from lenders. Construction costs have also gone through the roof. “Lenders will want to see how their


overall exposure in real estate plays out. Supply pipelines are extremely low. Part of that is due to a lag because it takes at least 24 months to get a property built and there was no development during the pandemic. So, it’s partially the lag keeping rates strong. “The sector has proved resilient. Some of


the pressures have moderated. But the top line is going to moderate. The performance is likely to look less rosy in 2024. But we’ll have a more normalised, healthy industry that has recovered from the most disruptive event to where we won’t talk about the performance in 2019 anymore.”


Travel Weekly Insight Report 2024 47


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