As the year closes and we say goodbye to 2022, now is the ideal time to reflect on the opinions, sentiments, and desires of travelers. The hotel industry has borne witness to varied performance across the last 12 months and achieved an impressive bounce back from COVID-19. However, the economic challenges faced by many nations across the globe have tempered some of the positivity regarding recovery.

In STR’s previous round of research regarding accommodation preferences, a number of key trends were identified when examining the wants of travelers. Findings highlighted a seasonal drop in the popularity of hotels, the vital role that city breaks play for hotel demand and growing interest in full-service properties.

Now using a survey conducted in November 2022, we add to the insights the role of macroeconomic factors in the propensity of travel.

In this piece we explore how shifting consumer preferences, partly driven by cost-of-living concerns and economic uncertainty, are influencing hotel demand and perceptions.

Hotels remain consistently popular with short-term rentals taking a hit

Consumers were asked which types of accommodation they had used or booked in recent months. The findings painted a strong picture for hoteliers, with hotels being the leading choice among those questioned, as well as popularity for short-term rentals.

  • Interest in hotels rose from 51% in July to 56% in November.
  • Interest in short-term rentals declined to 12%, the lowest recorded response during the pandemic.

The uplift in hotel usage is partly due to seasonal changes as consumers are more interested in urban destinations—where hotels are more commonly located—during shoulder and off-season months in the Northern hemisphere. Additionally, this positive outlook may continue to be attributed to pent-up demand as consumers are still making up for missed trip opportunities during early stages of the pandemic.

As hotels have strengthened their market share in interest and usage during much of 2022, the opposite is true for short-term rentals. The decline in engagement could be linked to reduced COVID-19 concerns, an aspect that benefited these accommodations during much of the pandemic. Additionally, growing demand for city breaks may also have shifted the balance for short-term rentals as consumers tend to utilize hotels more overall in urban destinations.

The driving forces behind accommodation selection

When selecting lodging, there are many considerations to be taken into account that influence a final decision. Location and value for money consistently stand out from the rest as the most influential factors. This is to be expected as consumers prioritize choice based on financial and practical factors. As economies potentially begin sliding into recession across the globe, it will be interesting to monitor how value for money shifts in importance in the future.

COVID-19 factors have showed the starkest declines. Perceptions of cleanliness, importance of cancellation policies and specific COVID-19 considerations when choosing accommodation, such as the ability to social distance, are all much less important now than earlier in the year.

These findings suggest that consumers expectations have shifted significantly during 2022.

Mid-range hotels are in high demand

Keen to gauge if consumer spending habits may shift as economic challenges potentially mount, we asked consumers if they are likely to change their accommodation booking habits in the next 12 months. Our findings suggest that accommodation preferences are likely to change. Nearly 70% said they plan to choose different forms of accommodation in the future.  Mid-range hotels appear to benefit the most from shifting behavior in the next 12 months. Lower spending travelers may opt more for mid-range hotels as they seek increased comfort to compensate for traveling less. At the same time, other consumers more likely to frequent luxury properties in the past are now looking to save on stays and, hence, see mid-range hotels as an attractive downgrade option.

As previously mentioned, interest in short-term rentals has declined in the last year or so. Yet findings indicate that this may be soon change as the next accommodation type to potentially experience a shift in demand is short-term rental/self-catering.

Hotels sit in a position of strength as the world navigates challenging times ahead

This round of research conducted by STR undoubtedly highlights a number of positives for the hotel industry. As we move through the winter months in the Northern hemisphere, hoteliers can expect to gain from increased appetites for city breaks. With fewer considerations now being given toward COVID-19, properties can focus on enhancing the guest experience in other ways, including better tailored services and facilities to suit their target segments. Yet, it is critical that the sector remains agile as 2022 has shown us that consumers can change loyalties at speed.