Luxury hospitality is booming once again. In the UK, luxury hotels are seeing a steep rise in room rates, with occupancy rising to 69% in 2023 compared to 62% the previous year as demand stays strong and travel increases.

From free gifts provided by leading fashion brands to getting a seat at the chef’s table, luxury guests are enjoying exclusive, personalised experiences they can remember in years to come.

But while growth is predicted to remain as inflation eases and travel increases, there will be challenges in 2024 - from diminishing loyalty and staff shortages to how they use social media - that threaten to burst the luxury hospitality industry’s bubble.

1. Loyalty, smoyalty

Loyalty is decreasing. Not just within certain demographics or generations, either - a cost of living crisis has seen all kinds of people in the luxury market shop around for better offers. But whereas most loyalty schemes are purely transactional, there is an opportunity for hotel groups to reimagine their rewards programmes and build relationships as well as revenues.

Indeed, rather than loyalty, luxury groups should be steering towards recognition. By proving guest knowledge based on customer data from previous stays - such as if a guest likes a particular brand of toiletry or beverage in the minibar - hotels can provide a highly personal touch which elevates guest experience and keeps them coming back for more.

Loyalty in luxury is created through emotional connections and unique experiences, not discount codes. It starts from the moment you’re greeted, having your favourite products in your room, the air-con set just how you like it, or even your name stitched onto the pillowcases. Loyalty is driven by the service and the experience. To improve return rates, luxury hotels will need to show they can go above and beyond and provide truly tailored experiences.

2. Where are all the staff?

These recognition programmes will rely on a unique combination of technology, data, and human touchpoints. Even the most memorable of experiences can be undone by one bad interaction with a staff member. People make luxury - in fact, having the right people has never been more important, even with the rise in human-like interfaces and AI.

But one of the biggest challenges luxury hotels have at the moment is in staffing, with some offering huge signing-on bonuses just to entice people in. AI can help here in the short-term - not replacing jobs but easing the strain on them right now so that staff can focus on face-to-face interactions and delivering the best guest experience. Simply put, AI can supplement the IQ and EQ of staff, making it easier to provide more personalised service.

AI can also allow high-end hospitality providers to better know their customers. For example, by being able to offer tailored packages based on their customer data or offer services based on their individual preferences.

3. Unsociable hospitality

While luxury goods brands have successfully used social media to build their audiences and inspire consumers, this hasn’t been replicated in the luxury hospitality business. Compare for example the 300k followers of The Ritz London on Instagram with the 20m followers of Burberry.

Considering modern social media is dominated by moving imagery, the hospitality sector - with its grand architecture, stylish decor and high-end locations - naturally lends itself to mesmerising content. More brands need to take advantage of this particular form, especially if they’re looking to engage with younger audiences and build long-term relationships.

But it’s not just about being on platforms like Instagram and TikTok, and luxury brands mustn’t fall into the trap of posting content just for the sake of it. There is a huge amount of content in this area, and luxury hospitality groups need to make sure they’re not adding to the already sky-high levels of “blandification” while maintaining what makes them unique in the first place.

When building a social presence, luxury groups can take a leaf out of the fashion world. From partnering with influencers and celebrities to simple yet stylish posts of the latest ranges, fashion houses have mastered the art of using social media to reach new audiences while maintaining that luxury feel.

People are rightfully cautious about what they put online, but a bland strategy is as ineffective as no strategy at all. In the competitive space of social media, it’s who dares wins.

Stay another day

Audiences remain highly attracted to unique experiences, personalisation, and services tailored around them, which means no one strategy for hospitality will cover the entirety of the luxury hospitality market.

But if they can be braver and embrace changes in technology, customer relationships and how they interact with potential guests, luxury hotel brands can be on the front foot for years to come.

Getting there will take a mixture of technology and human-led approaches. From using AI to take the robot out of the human, to building a social presence to create new relationships, luxury hospitality needs to be brave and start dipping their toes in the water.