2023 was a year of significant change for the hotel industry. Amid nationwide strikes, hotel workers clearly voiced their demands; tighter credit conditions made financing hotel construction more difficult; meanwhile, hospitality technology continued to evolve. The structure of traveler demand also shifted: leisure travelers increasingly sought experiential itineraries, while business and group travel rebounded strongly from the pandemic downturn.

A key question emerged: How will these changes shape the future landscape of the hotel industry? To explore this, Hotel Dive engaged in conversations with several industry leaders, covering topics such as workforce management, project development, changing traveler behavior, generative AI, and sustainability, to outline seven trends driving the industry forward in 2024.

Trend 1: Creating value with generative AI

In 2024, generative AI will become one of the dominant trends in hotel technology. Hotels are leveraging this technology to enhance operational efficiency, devise new marketing campaigns and customer segmentation, improve employee performance, and provide guests with superior experiences.

Minwoo Lee, Associate Professor at the University of Houston's Conrad N. Hilton College of Global Hospitality Leadership and Director of Hospitality Analytics and Innovation, noted that generative AI will permeate strategic management, hotel operations, marketing, human resources and talent management, revenue management, supply and demand management, finance and accounting, as well as customer relationship and loyalty programs.

"There is no sign of slowing demand for AI, and businesses across all industries must adapt accordingly. ... Guests and consumers crave interactive experiences, and as they have more resources at their disposal than ever before, their expectations continue to rise." — Eddie Schneider, Global Brand Director for Renaissance Hotels and Le Méridien, Marriott

Lee emphasized that the key drivers for hotels adopting generative AI in 2024 are innovation, performance growth, and creating value for all industry stakeholders. The growing demand from travelers for this technology will also further compel hotels to embrace change. According to data from DemandSage cited by Lee, ChatGPT has over 180 million monthly active users and 100 million weekly active users. These figures "clearly indicate a huge demand for generative AI among potential hotel guests."

In terms of specific applications, hotels can use generative AI to monitor consumer online search behavior, thereby optimizing room rates based on factors such as demand, supply, seasonality, events, demographic characteristics, and search queries, ultimately maximizing revenue. Lee also stated that hotels can use generative AI's advanced automated data analysis capabilities to parse online reviews, social media posts, and customer feedback, thereby discovering new consumption patterns, customer segments, and market trends.

Furthermore, generative AI will also be used to provide guests with personalized recommendations for activities, dining, amenities, and transportation. Currently, several major online travel agencies have already used this technology to simplify the travel planning process. Some hotels have also taken the lead—for example, Marriott's Renaissance brand recently launched an AI-driven virtual concierge service to connect guests with local experiences.

"There is no sign of slowing demand for AI, and all industries must adapt accordingly," said Eddie Schneider, Global Brand Director for Renaissance Hotels and Le Méridien. "One of the biggest evolutions is the growing interest in personalized experiences. Guests and consumers crave interactive experiences, and as they have more resources at their disposal than ever before, expectations will only rise." Schneider revealed that the Renaissance brand is currently piloting virtual concierge services at three hotels and plans to roll out the technology to more than 20 properties in the first quarter of this year.

Trend 2: Catering to the growing experiential and luxury travel segment

According to travel technology provider HBX Group, luxury and experiential travel will lead travel trends in 2024. An HBX Group spokesperson said: "We expect this trend to accelerate in the coming years—this is a huge opportunity for the entire travel industry. ... People are shifting towards seeking unique, memorable experiences, and the travel industry is precisely able to provide those once-in-a-lifetime journeys that cannot be replicated elsewhere."

According to data from Coherent Market Insights, the global luxury travel market is expected to reach $440.4 billion by 2030. But luxury travelers in 2024 are different from those in the past. A report released by Morning Consult in October 2023 points out that today's luxury travelers place superior service above lavish amenities. The report also found that hotel marketing tends to be more effective when it abandons outdated rhetoric and instead adopts vocabulary more aligned with the essence of experiential travel—such as "unique," "personalized," and "authentic."

It is this emphasis on experience that increasingly places luxury hotels and lifestyle hotels in the same camp. Jenna Hackett, Brand Leader for Hilton's Curio Collection, stated that Curio and Hilton's broader portfolio of lifestyle brands are committed to "creating truly high-end experiences while making the experience itself the destination." "People still want those Instagram-worthy moments," she added.

The surge in interest in luxury and lifestyle hotels has driven hotel companies to increase development efforts in this area. For example, Hilton's lifestyle brand pipeline is expected to more than double between 2022 and 2032. Marriott International is in the midst of a broader luxury expansion process.

Trend 3: Prioritizing conversions over new builds

Amid tighter credit conditions, hotel conversions, as a cost-effective and fast-paced path to scale expansion, will continue to hold strong appeal in 2024. In 2023, several industry giants had already made strides in this area: IHG Hotels & Resorts launched Garner, a conversion-focused midscale brand; both Marriott International and Hilton reported that a significant portion of their third-quarter signings and openings were conversions.

According to Lodging Econometrics, conversion projects dominated the U.S. hotel construction pipeline in the second half of 2023, with the number of conversion projects in the third quarter reaching an all-time high. Bruce Ford, Senior Vice President at the firm, stated that this momentum will further accelerate in 2024. Although fourth-quarter pipeline data for 2023 has not yet been fully compiled, Ford expects the conversion pipeline to "definitely continue to grow in that quarter" and extend into 2024.

Ford pointed out that, at least until hotel construction financing conditions ease (which he predicts may occur in the second half of 2024), conversions will remain one of the fastest ways to expand portfolio scale, and hotels can be expected to continue signing new conversion projects. He also stated that he would not be surprised to see more conversion-focused brand launches in 2024.

Marriott International is one of the companies continuing to focus on conversion signings this year. Noah Silverman, Chief Global Development Officer for the U.S. and Canada at the company, said: "Conversions are a high priority and will continue to be a successful part of Marriott's room growth strategy." Ford specifically mentioned that Marriott is advancing a major conversion project in Las Vegas—bringing approximately 31,000 rooms from MGM Resorts into Marriott's booking system. As part of the partnership, Aria Resort & Casino will join Marriott's Autograph Collection, Bellagio Resort & Casino will join The Luxury Collection, and Park MGM will become part of the Tribute Portfolio. The remaining MGM properties will transition to the white-label brand "MGM Collection with Marriott Bonvoy." Ford noted that this conversion process is expected to begin this month.

Trend 4: Keeping employees satisfied—and staying

2023 was a year of significant escalation in union activity within the hotel industry. Strikes erupted in Southern California and Detroit, Las Vegas faced the threat of strikes, and workers in other areas demanded higher wages and reduced workloads. Additionally, the National Labor Relations Board's joint employer rule means that responsibility for managing employees will no longer rest solely with individual franchise operators.

If this rule takes effect (expected in February 2024), it would treat two employers using the same group of employees—such as a franchisor and franchisee—as jointly responsible for employee management issues. Scott Greenberg, author of "Stop the Shift Show: Turn Your Struggling Hourly Workers Into a Top-Performing Team," said: "If the NLRB's joint employer ruling stands, large hotel chains will have to become more deeply involved in all employee-related matters at the property level."

"Managers need to lead their employees better, not just run the hotel." — Scott Greenberg, author of "Stop the Shift Show"

Of course, employee satisfaction is one of the best ways to avoid labor disputes. In 2024, managers responsible for hotel operations will work harder to ensure employees are satisfied with their roles. "Government policy is far less effective than organizational culture," Greenberg added. "Brands that genuinely strive to make the employee experience as excellent as the guest experience will gain a competitive advantage in recruiting and retaining team members. This means managers need to lead their employees better, not just run the hotel."

In 2023, hotel companies launched several talent attraction and retention initiatives that will continue into 2024. Hilton launched its "Every Job Makes the Stay" employer brand campaign in May 2023, and Hilton's Chief Marketing Officer Mark Weinstein previously told Hotel Dive that the campaign would continue for the foreseeable future. Meanwhile, Marriott's talent brand "Be," launched in 2023, is helping the company empower employees to achieve their career goals.

However, the nature of the multi-hotel strikes in Southern California means that while some hotel stoppages have ended, others are just beginning. Although MGM Resorts International, Wynn Resorts, and Caesars Entertainment avoided strikes on the Las Vegas Strip in November 2023, the Culinary Union has recently set a February 2024 strike deadline for 21 additional properties on the Strip and downtown.

Trend 5: Boosting the recovery of business travel

The pandemic and remote work did not end business travel; rather, they changed its form. Although hybrid work models mean fewer trips for a single purpose, according to hotel technology and intelligence provider Knowland, 2024 could be a bumper year for the meetings industry.

Corporate meetings, in particular, are making a strong comeback. In 2023, Knowland observed a 10% increase in U.S. corporate meeting volume, with growth of 12.3% in the nation's top 25 markets. Knowland CEO Jeff Bzdawka said: "Corporate meetings are a stabilizer for hotel revenue, significantly outperforming other segments, including business travel."

"Corporate meetings are a stabilizer for hotel revenue, significantly outperforming other segments, including business travel." — Jeff Bzdawka, CEO of Knowland

Bzdawka warned that high average daily rates (ADR) could hinder the full recovery of business travel in 2024. However, high ADRs also contributed to a strong third quarter in 2023—according to Knowland and Amadeus' Hospitality Group & Business Performance Index, business travel has recovered to 86% of pre-pandemic levels. Bzdawka said: "In 2024, the challenge for hoteliers will be balancing the appeal of high rates with new business objectives. Sales intelligence will become an important tool for accelerating customer acquisition and conversion of business travel revenue."

Trend 6: Driving hotel fee transparency

Building on the momentum accumulated in 2023, actions around anti-"junk fee" legislation will be more active this year. Although there is still debate over which fees qualify as "junk fees"—or whether the term "resort fee" is fair—hotel laws and regulations are moving towards requiring businesses to disclose room rates more transparently, and this is beyond doubt.

In July 2024, California Senate Bill 478 will take effect, requiring businesses, including hotels, to advertise total prices upfront, inclusive of all fees. State officials stated that this will become the strictest anti-junk fee law in the nation. But the law's impact will extend beyond California hotels. Bryan Mohler, a partner in the Real Estate, Hotels & Hospitality, and Litigation practices at law firm Pryor Cashman, noted that the regulation will "apply to any business that touches consumers in California." This means that even a hotel located at the other end of the United States could face penalties if its room rate advertising does not comply with California law, "because hotel companies have extensive leasing operations."

More legislation is in the pipeline. An anti-junk fee bill is currently under consideration in the Pennsylvania legislature, while the federal Hotel Fees Transparency Act is also advancing.