By Oliver Hoare, General Manager Lodging, Avalara
Over the past year, hotels have been forced to make significant changes to stay afloat. The necessity of evolution does not end when the masks are removed. If the front-end improvements allow them to stay relevant and maintain their loyalty to guests, then their continued evolution, coupled with the back-end efficiency, could be the right formula for handling the wave of recurring business.
Change of location
Due to the travel shortage in 2020, the definitions of “traditional” and “alternative” accommodations are far from what we saw in 2019, up to 20 percent compared to pre-pandemic levels, according to an industry report from AirDNA, an analysis platform for short-term rentals . Since the summer increase tourist flows and real estate be booked, these effects are only more pronounced.
To generate revenue from recurring tourist crowds, some cities have started offering temporary hotel tax breaks – a trend that could spread through the summer and beyond. Supported by these breaks and the increasing trend in short-term rental costs, hotels have developed into an attractive, inexpensive accommodation option.
However, the occupancy tax perks that give hotels a competitive advantage also place tax compliance burdens on those businesses and potential risks in the event of a tax audit. For hotel operators who introduced new technology and processes during the pandemic downtime, these improved systems will pay off and set them apart from their less advanced competitors.
Innovation through necessity
At the height of the pandemic, hotels had to prove how accommodating they could be just to get part of the severely limited pool of potential guests. This meant meeting the needs and requirements for socially distant, non-contact solutions with a variety of technology and compliance upgrades, including:
• Digital room keys and check-ins, often done via the hotel’s smartphone apps, to remove unnecessary contacts while making access to your room easier than ever.
• Removing carpets in favor of solid flooring, creating a cleaner appearance so guests are more comfortable.
• Standardization of TV broadcasting from smartphones in rooms, offering a simple entertainment option while eliminating a general weak point of cleanliness: the remote control.
• Installation of new outdoor spaces, which – although originally built taking social distancing into account – are enjoying lasting popularity with guests.
• Digital all-in-one room control systems that allow guests to control the lighting, regulate the air conditioning or order room service – all from a tablet.
• Integration of “smart room” technology such as Alexa for Hospitality, which offers guests comprehensive control and convenience through simple voice commands.
In addition to these standard practices, some hotel chains have gone further and introduced more dramatic additions, such as robotic butlers who roam the halls, offering cleaning services, and even delivering refreshments and linens to guests on request.
These changes, which arose out of necessity, have had a positive effect on the quality of stay and the overall experience of the guests. Some of these ideas were pursued for years before the pandemic and only implemented after the restrictions forced the hand of management.
The dam for technological adoption is now broken and hotels are likely to just continue the pace of adoption of new tech tools.
Back-end opportunities
Smartphone apps and robotic butlers may be getting all the attention now, but going forward, behind-the-scenes activity could be the real savior for the hospitality industry. In areas such as compliance, opportunities arise that will further set early technological adopters apart. Rapid innovation is required as the regulatory landscape itself changes daily. Join the new trend of tax breaks for hotels, as income-hungry jurisdictions count on incoming taxes elsewhere. It sounds counter-intuitive for a jurisdiction to cut taxes in order to increase tax revenue, but these are the calculations that are made in major markets, including New York City. The theory is that the more people who come to the Big Apple to shop and eat so much that they exceed the savings from the hotel tax exemption. In addition, the measure supports the local hospitality industry, which is itself an important economic factor. It’s easy to see that this strategy is catching on in other hotel-heavy destinations across the country.
While these incentives provide a competitive advantage, they also bring increased scrutiny that will encourage hotels to continue adopting technologies that can increase efficiency and streamline and automate back-end compliance. If they haven’t already, hotel owners want to incorporate technology and compliance upgrades into back office systems, especially given the wide range and pace of changes in hospitality taxes and fees.
Last year has been a difficult year for the hospitality industry, but those companies that learn from recent difficulties and apply what they have learned will thrive in the months and years to come.
For more information on this new hotel landscape, see Avalara’s 2021 Half-Year Sales Tax Report, which analyzes occupancy tax breaks among myriad other key hotel shifts.
Oliver Hoare has over 20 years of experience in the hotel industry. He joined Avalara in 2021 as General Manager of Lodging after previously serving as an executive at Expedia for the past decade. At Expedia, Oliver and his team have grown bookings to over $ 1 billion a year, and his experience in Expedia’s partner solutions department working with flight and travel sites that power other travel sites through APIs gives him an input unique, holistic understanding of the travel industry. Oliver has extensive hospitality and accommodation expertise, including stints with one of the largest global hotel chains, Accor, followed by British Airways.
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