Hotel Industry Projections

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Hotel Industry Projections

The implementation of mobile keys has been steadily increasing throughout the last years, with major chains such as Hyatt as well as smaller brands and independent hotels adopting this technology. The COVID-19 pandemic is predicted to fuel the faster adoption of this technology. Similarly, the pandemic will also have an impact on occupancy rates, which could last until 2025. Finally, hotel mobile apps should be used holistically, providing guests with different features, which go from discounts and booking services to a more efficient check-in process and access to hotel amenities.

RFID and Mobile Phone Hotel Keys — Insights

Hotels Implementing this Model

  • While hotel chains such as Marriott and Hilton might have been among the chains with the largest use of mobile or digital keys, this technology has also been adopted by smaller and independent hotels.
  • Experts in the field estimate that approximately 95% of hotels are now considering implementing this technology, be it in new construction or by adding it to existing infrastructure.
  • The adoption of mobile and digital keys among smaller brands and independent hotels increased considerably between 2018 and 2019. This has led to approximately 20% of these hotels converting to the mobile key model.
  • Adoption across larger chains continues as well. Hundreds of Hyatt Hotels now have mobile key technology. By April 2019, it was estimated that around 20% of hotels from this chain had adopted this technology, a percentage that has likely grown during the past year.
  • Similarly, Best Western is another large chain that is implementing keyless room entry, which is another term used for mobile keys.
  • According to a report, any Best Western hotel under construction or renovation is now required to include this technology.

Millennials Are Attracted to Keyless Entry Features

  • Millennials have a purchasing power estimated at approximately $1.4 trillion, making them one of the main demographics to target in any market.
  • The interest in keyless entry has been partially driven by this group. To this sense, a survey reported that 70% of Millennials state that hotels with tech-oriented amenities, which include keyless entry, would be among their first options to book.
  • Smartphones are instrumental for the implementation of keyless entry, and this survey found that a third of Millennials spend at least four hours a day on their phone during a trip.
  • Millennials might be the generation more attracted to these features, but a survey of people of all ages found that 44% of those polled would be interested in hotels offering smart features, among which keyless entry stands out.
  • Interestingly, according to this survey, 22% of travelers have already encountered keyless entry technology during their trips, showing how quickly it is being adopted.
  • Something to be considered is that 52% of participants of these last survey showed concern about the safety of using keyless entry.

Sustainability and Health Concerns Are Big Selling Points

  • Estimates show that a hotel with 200 rooms disposes of at least 12,000 plastic keycards a year, which is a considerable amount of plastic waste.
  • The use of mobile keys to enter hotel rooms reduces the need for issuing plastic cards as well as the envelope they come in. This is an exciting prospect for hotel managers, who see sustainability as an added benefit of this technology.
  • Going one step further, it has been pointed out that using keyless entry as part of a more digital check-in process could reduce overstaffing, minimizing carbon emissions even further.
  • In addition, the use of mobile keys minimizes contact between travelers and hotel staff, which in the post-COVID-19 traveling era could be an important factor to consider.
  • It has been reported that the adoption of keyless entry is expected to increase in response to health concerns caused by the COVID-19 pandemic.
  • Thanks to this technology, travelers can communicate via message with the front desk, who directly sends them the digital key to their phone.


Number of Guests in 2025

  • In 2019, occupancy rates by region were reported at 69.3% in Asia Pacific, 65.6% in the Americas, 72.2% in Europe, and 64.3% in the Middle East/Africa region. The average occupation rate in 2019 worldwide is calculated at approximately 67.85%.
  • When making an estimate for 2025, it is necessary to consider the impact of the COVID-19 pandemic. Just as the Great Recession had an impact on occupancy rate in 2008, this current crisis is projected to have considerable impact as well.
  • The Fitch Ratings consultancy expects that occupancy rates in Europe will not reach 2019 levels until 2023, and they present a worst-case scenario in which recovery would not be achieved until 2025.
  • Industry experts seem to agree with this assessment. The Senior Vice-President of hotel consulting and analytics at STR, Carter Wilson, expects occupancy to reach 66% by 2025. This is a number very close to the 67.85% average seen in 2019.
  • Similarly, the senior managing director at CBRE Hotels Americas estimates occupancy will have reached 68% by 2025.
  • In addition, a CBRE report focused on the United States anticipates occupancy rates will go back to 2019 levels by 2022. However, like Fitch Ratings, a worst-case scenario also predicts occupancy rates will only normalize by 2025.
  • According to STR, by 2018 there were 16,966,280 hotel rooms worldwide. This represents a growth of 17.7% in the last 10 years.
  • On average, this would represent a growth of approximately 1.7% per year, meaning that by 2019, it could be estimated that there were 17,254,706 hotel rooms worldwide. At an occupancy rate of 67.85%, an estimated 11,707,318 rooms were occupied in 2019 on any given night.
  • Assuming this growth in the total number of hotel rooms continues at 1.7% per year through 2025, there would be a total of approximately 19,091,203 hotel rooms worldwide. If average occupancy rates fully recover by 2025 and reach 2019 levels as anticipated by industry reports and experts, approximately 12,953,381 rooms will be occupied on any given night in 2025.


Hotel Apps — Insights

Seamless Check-In and Arrival

  • One of the uses of hotel mobile apps is improving the check-in process, which goes beyond the use of a mobile room key.
  • Not only do guests get their keys on their phone, but they can also enter all the information necessary to check-in, which allows for a more efficient process.
  • Supporting this, a survey found that 73% would be interested in using a mobile app to check-in and skip the front desk.
  • In addition, the app can allow guests to have access to elevators as well as the hotel parking lot, making it easier for guests to get settled from the moment they arrive.
  • Another use related to the arrival process is providing the guest with information pertaining to the WiFi password, check-out hours, and hotel policies.

Booking of Hotel Services

  • Mobile hotel apps can also be used to offer a wide variety of hotel services, which go from booking a room to selecting a spa treatment.
  • By 2017, 20% of bookings in Hilton hotel rooms were performed through their app, Hilton Honors, showing how important these apps have become for hotels.
  • In addition, the aforementioned survey showed that 80% of guests would like it if the app offered by a hotel showed them information about the amenities of the hotel and the hours in which these can be accessed.
  • Hotels now use these apps to offer additional services such as laundry, room service, spa treatments, and more, which in turn results in increased revenue for the company.
  • In addition, mobile apps can also be used as a way to gather information about the guest, in order to offer a more customized experience.

Overall Guest Satisfaction

  • It has been observed that the use of mobile apps offered by hotels can lead to greater customer satisfaction.
  • A study with over 60,000 participants found that guests who book through the app of the hotel are more satisfied. In contrast, guests who book through online travel agencies (OTA) tend to present more issues, decreasing their degree of satisfaction.
  • Despite this, the number of reservations made through these OTAs continues to increase.
  • Interestingly, 75% of loyalty program members booked through the app, whereas only 47% of those who are not part of these programs did the same.
  • It has been reported that this could be caused by the fact that rewards or loyalty program members have more access to information about the hotel app.
  • This is an important issue to consider, as a survey found that 86% of Millennials are not part of hotel loyalty programs.
  • Therefore, although Millennials are more tech-savvy than older generations, they might not be using hotel apps simply because they do not know these exist.
  • A way to encourage guests to download the mobile app is by offering discounts and bonus free nights, as Hyatt does.
  • Similarly, Marriott highlights the fact that booking through its app allows guests to find the best prices in any of their brands.

Research Strategy

We searched for industry reports as well as statistics provided by countries regarding the average number of guests staying in hotel rooms as well as the average number of stays per each guest. While some information could be found in European databases, it was insufficient to perform a reliable triangulation. We also searched through industry census reports as well as industry articles from reputable news outlets, but once again the information was insufficient to perform a full triangulation. However, we found sufficient information about occupancy rates and how these have grown throughout the years as well as forecasts that are adjusted according to the current COVID-19 pandemic. In addition, we were also able to identify information regarding the number of rooms worldwide as well as how these numbers have increased over the years. Assuming this growth will continue unchanged, we have been able to estimate the number of hotel rooms that will be available in 2025, as well as how many of these will be occupied on any given night. However, it must be considered that the development and growth of hotel rooms might also be impacted by the COVID-19 pandemic. Therefore, our calculation might show an overestimation of total rooms occupied.
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