Are happy days here again?
Ask consultants like PricewaterhouseCoopers and they'll tell you that U.S. hotel occupancy next year will reach heights not seen since President Clinton's first term, as American and international tourists alike spend more time traveling through the U.S. and push occupancy rates to about 65%.
Which, of course, might mean that the industry is in for a slight letdown for a number of reasons. Analysts are counting on a continued surge in inbound tourists from China, but that's not a sure thing. Meanwhile, the European economy continues to move in fits and starts. As for Americans, the domestic economy appears buoyant, but a hike in either interest rates or oil prices could throw off progress there, as well.
Meanwhile, the domestic hotel-room stock is poised to show more than incremental expansion for the first time since the recession. As of October, there were almost 114,000 rooms under construction in the U.S., up a whopping 31% from a year earlier, according to STR.
Additionally, home-based accommodations services such as Airbnb and HomeAway will continue to expand their presence in the travel market, further cutting into demand for hotel rooms, especially in the lower-tiered sectors. That means that hoteliers might not want to get used to the revenue increases they've been seeing in the past few years.
Now that we've hypothesized on a few broader trends, here's what else might be in store for 2015:
• As millennials account for a progressively larger share of travelers, more hotel chains will make plans that echo those of Best Western (with Vib), Carlson Rezidor (with Radisson Red) and Red Lion (with Hotel RL), which this year all said they'd invest in microsuite, select-service, tech-heavy properties primarily in urban locations. Still, the most effective practitioners will be the overseas-based micro-suite specialists like Amsterdam-based CitizenM, which opened its first U.S. hotel in New York this past spring, and U.K.-based Yotel, which is targeting San Francisco and other destinations.
• The use of keyless-entry systems enabling guests to use smartphones as hotel keys will surge as Starwood and Hilton expand the feature through many of their U.S. properties in 2015. Marriott, Hyatt, InterContinental Hotels Group (IHG) and others will be forced to follow suit, so look for those companies to announce similar programs next year.
• More hotel companies will also tighten up same-day cancellation policies, just as Marriott and Hilton recently said they would, in order to combat a growing raft of bargain-hunting mobile apps.
• Soft-branding is here to stay as larger hoteliers look to position themselves away from the cookie-cutter variety. Hilton's Canopy and Loews Hotels' OE Collection will debut next year, while the number of hotels under Marriott International's Autograph Collection will continue to grow.
• Secondary U.S. markets like Pittsburgh; Louisville, Ky.; Santa Fe, N.M.; and Portland, Ore., will continue to gain in popularity for both business and leisure travelers as rising airfares make it increasingly cost-prohibitive for many families to fly for vacations.
• On that note, Austin, Texas, will take a giant leap towards becoming a primary hotel market after its spate of new properties opens this year, including two 1,000-plus-room hotels (JW Marriott and a Fairmont) and the city's first Kimpton property.
• Another supplier will join Four Seasons, which debuts its luxury air tours this year, and Virgin, whose first hotel will open in Chicago in January, in combining airline and hotel branding efforts to better create packaged trips for higher-end travelers.
• One state on or near the Eastern Seaboard will legalize pot, and its lodging market will see an increase in visitors from states where marijuana is still illegal. And everyone from hoteliers to tourism bureaus will deny that the increase has anything to do with the pot legalization.
• Finally, watch for consolidation, especially among the growing group of boutique hoteliers. IHG already got a head start on the year by agreeing in December to buy Kimpton Hotels for $430 million. Morgans Hotel Group, which was founded by Ian Schrager and has long been the subject of a shareholder-proxy battle, is another likely target (Starwood Hotels may be an appropriate buyer), and Viceroy Hotel Group or Ace Hotels might also be buyout fodder. On the luxury side, Jumeirah, Four Seasons, Fairmont, Auberge or even Loews may be ripe for a pairing.