Four key points to consider for the 2024 hospitality budgeting season

The 2024 hotel budgeting season is here, and the travel industry faces a crossroads. Travel demand has surged back to pre-pandemic levels, but staffing shortages and inflation have challenged even the most prepared hoteliers to provide attractive lodging options. Some hotels are doing better than others at proactively upgrading their infrastructure and improving operations to manage this welcome travel surge. However, they can’t rest on their laurels, as their competitors are certainly continuing to invest in technology. 

The questions become clear: How can hoteliers best address these staffing and inflation challenges, and what should they be focusing on to drive success and meet their objectives as they prepare their 2024 budgets? What follows are four key points hoteliers should take into consideration as they prepare their budgets for 2024. 

1.) Future growth requires technology investments today: Hoteliers are spending more on technology these days, and the average hotel chain will increase tech spending by 78% in the next few years. And that investment is paying off —according to Forbes, “One recent research survey found that 73% of consumers were more likely to stay at a hotel that offers self-service technology to minimize contact with the staff and other guests. Meanwhile, 65% of hoteliers said incorporating new technologies best describes their strategy to weather labor shortages and attract new talent.”  Artificial Intelligence (AI) and contactless technology are leading the increases in technology investment. Gensler recently pointed out that innovative uses of these advancements are proving to be winners for hoteliers, noting in an anecdotal fashion that some examples include:

Trip Planning: One hotel chain has implemented a virtual assistant that can book rooms, keep track of flight schedules, and process amenity and service requests.

Digital Concierge: A chatbot in a Las Vegas hotel can deliver personalized recommendations, make reservations and answer guest questions. 

Luggage Storage: Robotic bellhops in New York manage luggage, providing an efficient and memorable encounter for guests.

HotelTechReports opines that AI improves operations by automating repetitive tasks, freeing up human staff to focus on guests. AI also upgrades housekeeping and maintenance by using sensors and cameras to control temperature, lighting, and security in guest rooms. AI systems can also help to optimize pricing through data analysis and predictive modeling while driving energy efficiency by using smart building systems.

2.) Migrate tech funding from CapEx to OpEX models: Rising capital costs, recession fears and increasing interest rates to combine to put a greater deal of emphasis on the desire to make IT more efficient. There is a universal desire to reduce total cost of ownership for applications and solutions, and the underlying network infrastructure that powers them. More hoteliers are reevaluating their mix of managed services, cloud spending, and owned on-premises equipment to make the best use of limited resources. OpEx funding requires far less up-front capital needed for large tech deployments, and this approach offers hoteliers more flexibility to scale up as business needs change. Capital expenditures are traditionally meant to fund static costs, and as Mitel states, “If operating expenses are intended for fluctuating costs, it only makes sense that rapidly changing technology should be considered for OpEx ... instead of purchasing technology based on long-term projections decided years ago, the company pays only for the IT services it needs, when it needs them, and can scale them as needed.” Network as a service (NaaS) solutions can provide technology solutions for one monthly cost, with seamless hardware (end of life) and software updates/upgrades included, and fit nicely within OpEx budgets.

3.) Deploy revenue-generating technology solutions: Hoteliers have found that they need to provide fast and reliable connectivity, as good WiFi has become a non-negotiable guest need. Connectivity has become ubiquitous in our everyday lives and is considered essential when traveling. However, hoteliers may be missing an important revenue source by providing that technology for free. In a recent survey conducted jointly by Spectrum Enterprise and Hotel Management, “slow, unreliable WiFi” was the leading guest complaint, reported by over half (51.6%) of hotel managers. Free WiFi is a misplaced priority; respondents now say guests prefer paying for WiFi as long as it meets their expectations. Hence, the way has become clear for hotels to upsell and offer “premium” WiFi experiences as upgrades, simply by offering a standard level of Wi-Fi service for free, and faster WiFi as a premium. Some hoteliers are offering tiers of technology experiences tied to guest loyalty status. Hoteliers can also leverage their WiFi and in-room entertainment options investments as a means to drive traffic to hotel properties or partners to aid in cross-selling efforts. 

4.) Choosing the right technology partners is a crucial step: Hoteliers increasingly need high-capacity bandwidth of up to 100 Gbps to reliably meet the needs of their users. Technology partners that deliver this level of performance can be essential to hotel IT leaders planning for their next steps. They should look for a service provider that can support the next generation of high-performance networking with the capability to reliably deliver this level of connectivity. Further, hospitality leaders should seek technology partners that offer hospitality-specific solutions that cover the depth and breadth of solutions and network architecture needed to deliver ROI for their OpEx expenditures. The proper technology partner should be able to assess a hotel brand’s digital infrastructure to design a solution that meets hospitality’s growing connectivity needs today and well into the future. With network, voice and TV solutions from one vendor, hoteliers have just one number to call. Most importantly, the right technology partner should be able to easily expand services without costly infrastructure changes. 

Spectrum Enterprise can help. As Darren DeSilva, Head of Technology, Arlo Hotels, says “It’s an exciting time for us, with all that technology is making possible. In order for all those things we do to happen, we need a reliable partner like Spectrum Enterprise who makes sure all our systems are doing what they are supposed to.”

Find out more about why Spectrum Enterprise provides technology solutions to over 95% of the top hotel brands in the US.