Trend #1: Human Trafficking and Corporate Liability

• The hospitality industry is a big part of the human trafficking problem worldwide. Traffickers using hotels as prostitution venues and forcing people to work in the hotel's supply chain is a well-known dark side of the industry. However, it recently came back to the spotlight, with victims and organizations calling for corporate responsibility, while governments are amending laws and adopting new guidelines.
• It is estimated that 80% of all human trafficking arrests worldwide happen "in or around hotels." Some chains are taking action to mitigate the issue. For instance, Marriott is making company-wide efforts since 2017. However, some critics point out that these actions are not effective.
• In the past, human trafficking prevention was viewed as a corporate responsibility activity. It is now becoming an operational concern similar to "fire insurance training staff on food prep," claims Damien Brosnan, a program manager at The Code, an organization focused on fighting human trafficking, which counts with members such as AccorHotels, Hilton Worldwide, Hyatt Hotels Corporation, among many others.

The United States Opened the Door for Lawsuits Against Corporations

• A recent study determined that 81.5% of all sex trafficking cases in 2018, in which a location was identified, happened at a hotel. In 2019, the Trafficking Victims Protection Act was amended and reactivated. It includes a provision that allows plaintiffs to bring legal action against “anyone who knowingly benefits—financially or otherwise—as a result of the trafficking,” which opens the door for lawsuits against corporate entities, including hotel chains.
• There are also signs that corporate liability may be the new trend in other areas as well. While not specific to the hospitality industry, in 2018, the government expanded the "Allow States and Victims to Fight Online Sex Trafficking Act" to allow online websites to be held liable for user-generated content, such as sex trafficking.
• The media attention is increasing awareness and civil claims. One lawsuit is seeking $100 million in damages against 22 hotels in Florida. Meanwhile, a lawsuit filed in New York is suing Choice Hotels Corporation, which operates Wyndham Hotels & Resorts.
• Skift, a publication specialized in the hospitality industry, states that these lawsuits “are a particularly hot issue of late.” As of March 2020, several lawsuits nationwide are accusing hotel chains, such as Marriott, Hilton, and Wyndham, of ignoring and profiting from sex trafficking. The suits are seeking damages and policies to prevent it from happening again. Some estimate that it may be just the beginning.

Asian countries are approving new guidelines

• In June 2019, parliamentarians from the Association of Southeast Asian Nations agreed to a “24-point “check-list,” which will guide future legal interventions to protect children in their home countries. This is a significant development for the region, which has seen an increase in child sexual exploitation in recent years — in tandem with the massive growth of the travel industry.”

European countries are behind but the media is paying attention

• In 2018, The Commission on Security and Cooperation in Europe, in a joint briefing with the US Congressional Caucus on Human Trafficking, stated that hospitality and travel companies have been "slow in joining the fight" against human trafficking.
• Hotels in the UK are teaching staff to identify signs of trafficking and scrutinizing suppliers. However, they do not pay attention to the background of their employees, and experts believe these hotels may be hiring slaves. There is an ongoing review of the 2015 Modern Slavery Act, which could address some of these issues.
• Others expect that Airbnb's IPO will shine light into its relation to human trafficking and escalate legal gray areas. Either way, the media attention and public debate are likely to have the same effect it had in the US, forcing authorities to pay close attention to hotels and how they are handling modern slavery.

Trend #2: Cybersecurity and Privacy Issues

• The hotel industry is focused on advancing technology and personalization for its clients. However, technology makes the industry vulnerable to attacks, and collecting data to provide personalized services creates compliance issues in a world where data privacy is a “hot-button issue worldwide.”
• Regulatory bodies are turning their attention to cybersecurity and privacy concerns after high-profile breaches, such as Marriot reporting that data from 500 million clients were exposed in a cyberattack. The EU's General Data Protection Regulation took effect in 2018, and it is expected that the US will enact a federal data privacy legislation soon, and the hospitality industry is likely to face compliance challenges.
• The industry is considered one of the top three most vulnerable industries to cyberattacks. As such, the allocation of "potential liability among hotel owners, operators and brands for disclosure of private information" is facing increased scrutiny.

California enacts the CCPA

•  The California Consumer Privacy Act (the “CCPA”), enacted in 2020, applies for business entities that collect and process personal information from consumers and do business in California. Although there are standards businesses have to meet to become a subject of the CCPA, several hotels and chains will likely have to comply.
• Robert Cole, the founder of RockCheetah, a hotel marketing strategy and travel technology consulting firm, explains that data privacy is going to be a significant issue for hotels. He further adds that many hotels are not even able to accept direct deposits because they are not compliant with the Payment Card Industry Data Security Standards (PCI).

The UK fined Marriot International

• Marriot International was fined $123 million by The United Kingdom’s Information Commissioner’s Office (ICO), which enforces the General Data Protection Regulation in the UK in 2019, due to the data breach that occurred in 2018.
• Elizabeth Denham, Commissioner of the ICO, stated: “The GDPR makes it clear that organizations must be accountable for the personal data they hold. This can include carrying out proper due diligence when making a corporate acquisition, and putting in place proper accountability measures to assess not only what personal data has been acquired, but also how it is protected.”
• Jim Butler, a top hotel lawyer, explains that hotels need to “take this action seriously and consider its ramifications,” given the amount of personal information they collect from clients.

Trend #3: Home-sharing Companies are Under Legal Scrutiny

• Peer-to-peer players are facing increasing legal scrutiny and are starting to be subjected to the same rules and taxes imposed on traditional hotels. Some governments are requiring licenses or register before listing a short-term rental, which also typically includes the payment of transient occupancy taxes, while others are limiting the number of days people can rent their property per year.
• According to Todd Soloway, head of Pryor Cashman LLP's hotel and hospitality group and real estate litigation practice, hotels will be more active in “lobbying governments to regulate home-sharing platforms,” due to their success.

Cities in the United States are forcing platforms to remove listings

• Cities in the US are imposing monitoring obligations on home-sharing and peer-to-peer rental platforms. Airbnb was recently forced to comply with a Boston ordinance that was passed in 2019, which placed restrictions and fines on home-share companies if they did not monitor and removed listings that are not registered and, therefore, illegal. The company also agreed to share data with the city.
• The company also agreed to settle a lawsuit with Miami Beach over an ordinance requiring it (and other platforms) to “police illegal rentals or face fines from the city.” The company is now forced to require owners to provide their business tax receipts and resort tax numbers before listing on the site.

Europeans are debating the classification of peer-to-peer platforms

• The European Commission signed a data-sharing agreement with Airbnb, Booking, Expedia, and Tripadvisor, enabling Eurostat to publish data about short-term stay accommodations sold on the platforms.
• Barcelona fined Airbnb over permit issues and forced it to remove illegal properties from the platform, while Sadiq Khan, London’s mayor, is asking for a new registration system for short-term rentals to help “protect the capital’s housing for long-term residents.”
• In April 2019, ten European cities published an open letter asking the EU to help them regulate Airbnb, as they believe the platform is a barrier to affordable housing for full-time residents.
• In December 2019, Europe’s top court ruled that Airbnb cannot be treated as a real estate agency by regulators. The complaint was lodged by the Association for Professional Accommodation and Tourism (a hotel lobby). It claimed that the platform should face the same regulations as real estate providers.
• The ruling was an important win for Airbnb, especially since it is facing “increased regulation from lawmakers around the world who say short-term renters disrupt the local economy by driving up rent and pricing out longtime residents.”

Asian countries are also demanding registration

• In 2018, Airbnb was forced to remove 80% of its listing in because owners were not properly registered. In 2019, the platform started to recover, but is still being regulated.
• The Urban Redevelopment Authority in Singapore prohibits any short-term rentals of less than three months.

COVID-19

• The pandemic is profoundly affecting the hospitality industry, changing how contracts are negotiated, repurposing hotels, creating compliance issues, and modifying hotel management agreements. However, it is still too soon to determine if any of these trends have lasting power or impact beyond the pandemic, which is why they were excluded from the report.
• That being said, DLA Piper, a global law firm with offices in more than 40 countries, explains that “over the last few years, we have found that trends that started as a result of the financial crisis of the last decade have continued to develop. In many markets, the advent of recession made operators more risk-averse.”

Using Sustainability to Attract Consumers

• Many consumers have become concerned about a variety of issues related to social responsibility, including environmental concerns. They desire to understand that companies are developing and enacting ethical sustainability measures. As a result, sustainability has turned into one the hospitality industry's most prominent trends.
• Increasingly, companies within the industry have actively promoted how eco-friendly they are to customers. Companies are taking advantage of renewable energy sources, while hotels are utilizing solar panels and improving their systems to enable lights and air conditioners to turn off automatically when visitors leave a room. Furthermore, hospitality companies are finding ways to source responsibly, limit their carbon footprint, and decrease waste.
• Also, hotels are using smart heating and light bulbs in an effort to save energy. Meanwhile, restaurants are adding and promoting different vegan and vegetarian offerings.
• Up to 63% of guests desire to see additional plants in their hotel rooms, and as a response, some hotels have renovated their rooms to entice these individuals. Additionally, they have engaged in biophilic design, which utilizes a link with the earth to improve individuals' wellness, to help attract guests.
• Additional actions taking by the hospitality industry related to sustainability include reducing food waste, going paperless, eliminating plastic, decreasing water usage outside of the hotel room, etc. 

Culturally Immersive Experiences

• Up to 67% of travelers that fall within the high-income bracket prefer activities as opposed to an extravagant hotel room, and most consumers favor experiences compared to amenities and commodities. In fact, 50% of all travelers wish to gain knowledge about the culture and history of the surrounding areas.
• As a result, there has been a rise in the volume of niche properties that provide unique guest experiences. These establishments are able to craft unique local and personalized experiences to respond to consumers' growing demand for more enriching experiences.
• Companies in the hospitality industry are developing niche itineraries by creating custom itineraries according to guests' interests or even by neighborhood. With food, they create menus that present engrossing and authentic local dishes, including using fresh and local produce to make traditional recipes, to offer insight into an area's culture and heritage.
• Moreover, hotels are installing regional material, elements, and artworks in their rooms and common areas. Luxury hotels are implementing cultural programming into their accommodations.

Greener Training

• Around 40% of members of the Millennial generation select a position due to the company's sustainability plan. Also, about 70% of them say that their decision to remain with an employer long term partly depends on their sustainability plan.
• Many Millennial workers in the hospitality industry receive sustainably-led training and coaching, and companies are beginning to arrange sustainability practices in an effort to recruit and retain a young workforce, offering them a sustainable learning environment. Hospitality companies are offering employees useful learning materials they can access through their mobile phones to bypass the use of printed documents.
• Also, some of these companies are distributing centralized information that workers can observe as opposed to requiring them to physically travel to meetings and training centers.
• Conversely, some hospitality companies, such as 1 Hotels, are providing their workers with paid time off so that they can participate in public education and advocacy activities related to sustainability and the environment.

Growing demand for sustainability

• The modern workforce is dominated by millennials who are increasingly demanding hotels to go green and provide sustainable travel options.
• Millennials are more likely to support the brands that effectively manage environmental and social issues and can communicate it efficiently.
• Over half (55%) of global travelers are reportedly more determined to make sustainable travel choices than they were a year ago. In comparison, about 87% of millennials think that the measure of success for business shall be its impact on the world.
• The millennial desire for sustainable travel is significantly driving the economics of the hospitality industry. According to a Travelzoo survey, over 90% of travelers from America preferred to stay in an eco-friendly hotel compared to the same price alternative hotel, which hasn't adopted the eco-friendly lifestyle.
• The CMIGreen Traveler Study Report indicated that the customer with a sustainability mindset is a more frequent traveler, as about 75.6% of eco-aware travelers traveled at least twice. In comparison, 22% of these travelers traveled 5 to 8 times.
• Since the number of travelers with a sustainable mindset are multiplying rapidly, their choices are significantly influencing the economics of the hospitality industry. The hospitality industry must thus invest in sustainability to ensure future growth. 

Sharing economy

• An alternative source for the services that were conventionally provided by established industries has emerged in the form of peer-to-peer markets, which is known as sharing economy.
• A prominent example of this sharing economy model in the hospitality industry would be Airbnb, which is a platform known for offering short-term accommodations.
• As the properties listed on Airbnb need not comply with the rules and regulations like the traditional hotels, Airbnb has proved to be a significant disruption in the hotel industry.
• Airbnb, which boasts over four million guest accommodation options, is also coming up with a partnership deal with Century 21 that will introduce Airbnb to the real estate market.
• As Airbnb looks to expand into the hotel industry aggressively, the hotels, on the other hand, seem to be interested in experimenting with Airbnb's model of home-sharing, this shall lead to higher opportunities for profitability.

Use of Robots

• Emergence of robots is an exciting technological trend occurring in the hospitality industry. Players in the industry such as hotels are already leveraging the trend. Robots are a popular tech trend because companies in the industry are embracing automation and self-service with an aim of improving customer experience.
• Use of robots in the hospitality industry can lead to improved accuracy, speed, and cost-effectiveness. Some hotels are using robots to deliver items ordered by customers to their rooms. Other hotels are also using robots as front desk staff and luggage porters.
• One of the drivers of this trend is the need to improve customer experience by offering a forward-facing digital experience to guests. Moreover, the desire to cut down on costs and offer services 24/7 is spurring this trend.
• One of the companies leaning into this trend is Hilton Hotels. The hotel uses a robot named Connie to interact with guests and answer their questions. The robot uses artificial intelligence and speech recognition to execute its functions.
• Another company leaning into this trend is Henn-na Hotel in Japan. The hotel is the first in the globe to be fully staffed by robots.
• The robots execute most of the functions, including providing information to guests, storage services, as well as check-in and check-out services. They also have facial and voice recognition capabilities.

Application of Recognition Technology

•  Recognition technology is another interesting emerging technological trend in the hospitality industry. An advanced level of check-in identity confirmation using biometrics is helping players in the industry to offer a seamless customer service.
• For instance, some hotels and hostels are using face scanners to verify guests’ identity at check-in, and facilitate their access to the dining room for meals. Recognition technology also provides guests with instant access to their rooms without the need to use a key.
• Recognition technology is offering several benefits such as enhanced privacy and security levels and controlled access to specific areas. Biometric authentication can also facilitate payments without smartphones or wallets, thus shortening the check-in process.
• One of the drivers of this trend is the desire to improve efficiency and accuracy in service delivery. Recognition technology is simplifying the check-in and check-out processes as well as accelerating the billing process. Another driver is the need to improve security and surveillance in the hospitality industry.
• One of the companies leaning into this trend is Intercontinental Shanghai Wonderland. The hotel uses face scanners to verify guests’ identity during check-in.
•  Two different Marriott Hotels in China are also using facial recognition that allows guests to skip the customary check-in desk and head to a designated kiosk for face scanning. Once identified, they are given a key card in a process that takes approximately one minute.

Drivers of Change in the Hospitality Industry

• Automation: Hotels are increasingly offering automated services that decrease the need for human interaction. An example is the rise of self-serve kiosks, which enable guests to check in and check out with a receptionist. Some hotels are becoming entirely automated, such as Comfort Xpress Hotel in Oslo, Norway.
• Personalization of experience through AI: Hotels are focusing on the ability to offer personalized experiences to their customers as the rise of automation continues. One way this is happening is through AI-powered property management solutions software, which enables hospitality workers to anticipate their guests' needs in advance. RGuest Analyze is one such piece of software.
• Emphasis on customization: An increasing importance is being placed on hotels' ability to customize the experience of each guest. At some hotels, guests are now able to select what amenities their room comes with. At the Four Seasons, guests are able to select the firmness and temperature of their mattress.
• Smart tech: More and more hotels are incorporating smart tech into their designs to enable guests to control their lighting and air conditioning through voice using Amazon Echo and Alexa. When rooms are unoccupied, smart technology can automatically adjust settings to save power.
• Mobile bookings continue to increase: Between 2011-2015, the number of mobile bookings rose 1,700 percent, prompting hoteliers to focus on improving their mobile interface on their websites and producing their own apps. This trend is expected to continue through 2020 with more mobile bookings anticipated and more hotels making apps.
• Water conservation efforts: When polled, the largest number of hoteliers responded that water shortages due to drought and climate change are leading concerns in the next few years. Hotels are embracing and exploring options that will enable them to be 100 percent water independent. An example is Hilton, which implemented a gray water reuse program and rainwater recapture systems in its hotels.
• Luxury hostels: Hostels are no longer limited to budget stays in grungy accommodations. Luxury hostels are becoming increasingly popular, particularly with Millennials. The hostels offer a boutique-like experience framed by the social nature of hostels. Generator is one such luxury hostel brand, operating in 14 locations in Europe.

Hotel Market Changes

• Airbnb and the sharing accommodation economy itself have caused many leading global hotel chains to recognize the fact that customers are looking for more than just room and board when they purchase, now expecting more of an experience. Catering to this requires capabilities that are unique to the hotel sector that the sharing economy usually lacks, such as personalized human touch.

• Major leaders in the high end of the global accommodations market are making significant investments in technologies enabling high levels of personalization by employees, and also directly into human resources. For example, some companies are focused on communication and problem-solving skills, or improving employee empathy, while others are involving new analytics and technologies that "empower employees to focus on the customer."

Focus on Human Connection and Personalization

• Leading brands are investing in the human connection by empowering employees to resolve complaints and customer problems at the first interaction, and helping them to use empathy and better communication to "make special connections with their customers." This has allowed consistently high personalization and customization for customers.
• Rather than trying to be everything to all guests like the focus of the past, hotels are now taking a much "more segmented approach" when it comes to attracting and serving clients. Companies now focus on specific demographics such as millennials or boomers in particular, or on helping their guests achieve their own "journey’s mission," whether personal or business.

• The global accommodations market, with its well-known historical focus on customer service, has allowed the leading brands to be able to better understand customer insights, now partnering with the sharing economy in order to weave together "an emotionally connected online and offline experience" making customers feel valued and special. Accommodation companies are balancing technology and customer expectations alongside personal service, the key to customer satisfaction and retention.

Increase of Hostel Concept

• With the ever rise in popularity of Hostels, Accor HQ of Europe is planning to continue replicating the hostel concept into their business model with a plan to launch 300 of new Greet brand properties throughout Europe by 2030.

• Some company rooms will now be able to accommodate between four and six people, and while not officially known as dorms, Accor has the intention to target the group market, similar to hostels.

• Accor is also marketing sustainability in an attempt to attract environmentally conscious travelers, and have partnered with a recycling company known as Valdelia to source second-hand furniture.
• Big hotel chains have not allowed this hostel trend to go unnoticed, as some hotel groups are now hurrying for their share of the market with “hostel-like” accommodations, such as the Marriott’s Moxy properties.

Decreased Trust in Travel Market

• Travelers are becoming more frustrated with online booking, while also becoming increasingly less trustworthy of brands according to a recent study by TravelPort.

• Travelport’s Global Digital Traveler study found that half of travelers surveyed are frustrated at not knowing who to trust when online, up 6% from the 2018 study. 43% are frustrated at the time it takes to find what they need.

• The study surveyed 23,000 travelers from 20 countries, and also asked about technology, finding that 58% of those surveyed stated the importance of having a positive digital experience when booking accommodations.
•  77% of travelers stated that they reviewed videos and images on social media in order to research accommodations, demonstrating the importance of a strong digital presence. It is now critical for hostels to have a strong presence on social media along with a great website in order to not miss out on bookings from the growing groups of young travelers.

Hostel Market Transformation

• Simple dormitory-style hostels that are bare and without amenities are now becoming extinct as the hostel market has transformed with designer hostels and private rooms becoming common. Phocuswright has found that nine out of 10 hostels now offer private rooms.

• Properties such as FieldHouse Jones attract guests with amenity filled fun environments, including a coffee bar, a gymnasium lounge, lanes for swimming, themed speakeasies, and both public and private event areas with a gourmet kitchen restaurant and custom slot car racing. Lub d in Phuket, another hostel, offers Thai boxing classes with a full-size boxing ring in their lobby.

• As customers’ expectations grow, most hostels are now expected to offer services such as free Wi-Fi, a daily cleaning service, food and beverage options, social events, design-focused interiors, bicycle rentals, media centers, and libraries. Apps such as Hostellers integrate with Property Management Systems (PMS), allowing guests to interact and socialize with each other. Guests can see who else is staying at the hostel, along with creating group chats and events, all with the intentions of improving guest experience and engagement.

• High-class, boutique hostels have been increasing around the world for the past several years, varying in design "from extravagantly urban chic to Art Deco masterpieces." After initially being slow to join the trend of multiple bunks in one room (traditionally most popular in Europe), there is slow but growing number of these models appearing in the USA. Some 360 hostels were operating in the States in 2017, with an increasing number of those "of the hip boutique variety."

How COVID-19 is Changing the Industry

• Fitch Ratings recently revised its North American commercial mortgage-backed securities hotel asset performance outlook due to COVID-19 to negative from stable/negative.
• The revision for the sector was due to several factors, including weakening economic conditions. Expectations are that revenue-per-available-room growth will flatten in 2020, with a decrease by a low single-digit percent in 2021. The virus impact will "exacerbate hotel cash flow declines," and with both rising expenses from wages and real estate taxes, costs may exceed revenue growth.
• Fitch states that hotels will be the first property type affected due to reduced travel and tourism, and economic slowdown. Hotel properties located in gateway cities, and "especially those with a large convention business or cruise line business," will be affected most from growing cancellations and reductions in bookings. Those hotels having a high percentage of revenue from food and beverage, and those with a great reliance on foreign tourism will experience a greater loss in property-level cash flow, while hotels with revenue from casinos will also likely see performance losses.
• RevPAR, or revenue per available room, has gone down sharply worldwide, much more than the industry experienced after September 11 and the financial crisis of ‘08/’09.