Business leaders can be forgiven for having ‘change fatigue’, but many realise they are going to have to do something different in 2023. Hotels that invested in digital stay vouchers in 2022 have found they are a reliable new way of generating cashflow and it can be expected more hotels will follow suit in 2023.
Finding new ways to improve cashflow is going to be a focus for hotel owners heading into an uncertain economic climate in 2023.
The OECD prediction for New Zealand is for real GDP growth to slow to 1.0 percent in 2023 and 1.2 percent in 2024. Tighter credit conditions and weakening demand will weigh on business investment.
BNZ’s chief economist Mike Jones told publication Newsroom, the handling of inflation and the engineered recession are two key factors in how the New Zealand economy weathers 2023.
“It’s hard to remember a time when uncertainty was more pronounced, there are so many different balls in the air.”
In Australia, business sentiment is cautiously optimistic, with JP Morgan Chase & Co saying 59% of business leaders surveyed have a positive outlook about the national economy and 94% expect the revenue their company generates to increase or be the same in 2023.
Business leaders in both Australia and New Zealand are bracing for some type of global recession, and in this climate it may be difficult to stump up optimism for investing in digital technology for your hotel.
It is hard to ignore research from London Business School that shows consumers with a gift voucher spend on average 40 percent more than its face value. In 2022, hotel owners in Australia and New Zealand that invested in digital voucher accommodation system and are now advertising and processing gift vouchers across all areas of their hotels (accommodation, food and beverage, and day spa).
There is a world of difference between digital voucher accommodation and the original type of gift vouchers. For starters, digital gift vouchers allow a hotel to put together any conceivable package, for instance the digital gift certificate could give a credit or be for an experience that combines the hotel highlights e.g. perhaps a stay voucher for a weekend accommodation with dinner, a couples spa treatment experience, or dinner for two in the restaurant. The possibilities are endless.
Late last year Cosmopolitan magazine found the top thing readers like to buy gift vouchers for are fun getaways to make memories with people they love. This can be interpreted as a night or two in a hotel combined with a local activity, or an activity such as going to the hotel spa or eating at the hotel restaurant. The second favourite type of gift vouchers bought were treats that were exclusively for the receiver, such as clothing, flowers, or wine.
There are two other factors that are peculiar to gift vouchers. The first is that they earn revenue in advance of the actual sale. Secondly, around 32% of the value is never redeemed because people let their gift cards expire. Of the 68% who don’t let their voucher expire, consumer behaviour shows they will return to the restaurant if they have an unused balance on the card.
The increased spend, in conjunction with the timing of the sale before the service is performed, and the effective 32% tariff all combine to increase hotel cashflow. Hotels that use digital stay vouchers find that corporate customers are a purchasing force because the digital platform vastly reduces their clients’ workload in terms of keeping track of what’s happening, because the digital platform does all the work for them. In fact, some corporates now use the digital stay vouchers as a matter of course and for this reason will only use hotels that offer a digital purchasing system.
Corporate clients take the digital voucher system one step further, by incorporating their client or employee reward system and effectively offload another administrative task to the platform.
For everyone else who might like to stay in your hotel, digital stay vouchers are appealing for two reasons. Firstly, they give the bearer something to look forward to. Secondly, the pandemic has trained guests to look for security when booking a hotel room, they may not be able to use and there is comfort in purchasing gift vouchers, which can be redeemed later.
Digital voucher accommodation is relatively new, but success breeds success and the hotels who have adapted this technology are reaping the rewards. Going forward into 2023, we predict many hotels will be talking about this type of investment at their AGM. The question is, will you be the forward thinker promoting it or will it be someone else?