— Cheap hotels and resort hotels are the next frontier in the rapidly expanding “tourism economy.”
In fact, the new hotel industry is so lucrative, according to a new report by consulting firm McKinsey & Co., that hoteliers are going to need to be prepared to pay their employees more to stay at the same location as them.
“We see the hotels and resorts being very much in demand and that’s something that’s really driven the growth of the industry in the last year,” said Ryan Moseley, an executive vice president at McKinsey and Co. The company’s report, “Hotel Resorts and Resorts: A Quick Look at the Future of Resorts, Hotels, and Resale Properties,” says that hotelier spending will more than double by 2023 and that resort operators will be able to raise prices on vacation rooms to as much as 10% per night.
Moseley said that hotels have already begun moving away from paying employees more for rooms than they do for hotel stays.
For example, the number of reservations per night at five of the top hotel brands increased from 30% in 2015 to 45% in 2019.
In fact it’s expected that the average price of a room will increase by about 10% this year, from $11,700 to $15,700, according the report.
And Mosely said that hotel managers and the hotel industry are “on the lookout for ways to bring their prices down.”
McKinsey’s research also found that the number and size of resort hotels is expected to double by 2024.
While some of the major resorts may have stayed away from resort hotels entirely for now, the company says the industry will continue to grow in the coming years.
In addition, the research said that many of the largest resort hotels in the U.S. are now “on a trajectory to exceed their peak occupancy rates for the foreseeable future.”
And as resort operators seek to keep the resorts open longer, Mosey said that they will have to pay more for their rooms to attract and retain employees.
In a new update to the McKinsey study, the consulting firm said that the demand for vacation and hotel rooms will grow significantly in the next few years as more and more people are opting for “personal travel,” which is not a traditional vacation, but rather a “social occasion.”
According to McKinsey, people will use social media to seek out events and get information about destinations they’re interested in.
They will also spend time “socializing and exchanging ideas, learning about the business environment, and engaging in face-to-face activities.”
But the study notes that this social aspect of travel will become less valuable as vacation and resort occupancy rates decline.
“The demand for hotels will decrease as people use fewer leisure and social activities,” the study says.
“This will reduce demand for resort hotels and therefore reduce their occupancy rates.”
While McKinsey’s report warns that resort and hotel occupancy rates will continue declining, it also says that demand for the services and accommodations will increase as vacation demand increases.
And as more people “opt for social media, and other forms of socializing,” the company said that resort occupancy and hotel rates will increase.
The McKinsey report also predicts that “hotel occupancy and occupancy rates [will] increase and will account for approximately one-fifth of the overall hotel and resort industry growth by 2026.”
The report warns of a lot of pressure on the industry as hotels and other lodging operators face increasing competition from other vacation and tourism companies, including Airbnb and Lyft, which has also begun offering “shared service” rentals, in which people pay for rooms and services in exchange for a share of the revenue generated.