Consumer Trends 2024

Introduction

In the dynamic hospitality landscape of 2024, key trends reshape the industry, focusing on food costs, market dynamics, recruitment strategies, and regulatory changes. Examining specific sectors, the Online Food Delivery Market anticipates significant expansion, projected to reach $1.79 trillion by 2028 with an 11.47% CAGR. Bleisure tourism, combining business trips and leisure, is expected to hit $731.4 billion by 2032, boasting an 8.9% CAGR. The global health and wellness market aims for nearly seven trillion U.S. dollars by 2025.

Performance among industry players varies; Airbnb's market value surged to $92.11 billion in 2023, a notable increase. However, in a competitive landscape, Booking.com leads as the most valuable travel brand with a $9 billion market cap, and Hilton tops the hotel brands at $11.7 billion. These diverse performances underscore the dynamic nature of the hospitality sector, shaped by evolving consumer trends and market dynamics in 2024. Join us as we delve into these transformative shifts, revealing the intricate dance of success and challenge within this ever-evolving industry.

Section 1

Food Costs

One of the pivotal changes in 2024 is the stabilisation of food costs and trends, providing establishments with a rare luxury—setting menus and pricing for extended periods, spanning 3 to 6 months. Prices of food and non-alcoholic beverages rose by 8.0% in the year to December 2023. This was the ninth consecutive month of falls in food inflation, down from 9.2% in November and a recent high of 19.2% in March 2023, which was the highest annual rate seen for over 45 years. The latest food and non-alcoholic beverage inflation rate is the lowest since April 2022.

Nevertheless, in a recent survey it revealed that around a third (36%) of adults said they were buying less food when shopping. Rising food costs was the most commonly reported reason among the 49% of adults who said their cost of living had risen.

The industry is witnessing a paradigm shift towards sustainability, with an emphasis on utilising every part of ingredients. This includes the adoption of a holistic whole-animal and whole-plant approach, not just as a nod to environmental consciousness but also as a strategic move to minimise costs.

Recruitment Shifts & Productivity

Effective April 2024, the minimum wage for individuals over 21 is set at £11.44 per hour. Businesses are urged to budget for this wage increase, prompting a review of team hours and contracts, exploration of technology to reduce manual labour, and potential adjustments to opening hours.

With a move away from relying on temporary workers towards recruiting full-time positions, this strategic adjustment is prompted by the escalating minimum wages, rendering hourly rates for temporary workers comparatively high.

Staff shortages continued to cause problems for the hospitality industry in 2023. This ongoing problem is resulting in a substantial effect on service standards and is forcing businesses to embrace alternative strategies to help them adjust. Accommodation providers are increasingly turning to self check-in and digital front desks as a way of managing the issue and to free up the staff they have to improve guest experience.

Companies are also reimagining their operational models by adopting a 5-day trading week instead of the conventional 7 days. Alongside this, some establishments are reducing operating hours, providing more breaks for their workforce, and integrating technology into food ordering systems to enhance overall productivity.

Allocation of Tips Act 2023

The Employment Allocation of Tips Act 2023, coming into effect in 2024, marks a turning point by making it illegal for companies to withhold portions of service charge or tips from staff on PAYE. This legislation aims to ensure transparency in tipping policies, inform customers about business practices, and empower employees to challenge any unfair decisions. Notably, tips will no longer be utilised to make up the minimum wage, providing a direct benefit to low-wage employees in the hospitality industry.

Section 2

Vegetarian, Vegan and Sustainable Diets

We anticipate a shift in the restaurant landscape towards offering a diverse range of vegetarian, vegan, and flexitarian choices crafted from ingredients such as legumes, nuts, vegetables, and whole grains.

In light of food inflation, providing more plant-based alternatives not only resonates with sustainability-conscious consumers but also assists restaurants in maintaining a favourable Cost of Goods Sold (COGS) percentage. Plant-based proteins tend to be more cost-effective compared to their animal counterparts.

Consumers nowadays place a high value on sustainability and ethical business practices, as mentioned in our “Christmas Goes Green” blog, 17 million Brits are leaning towards choosing environmentally friendly bars and restaurants. This includes sustainable sourcing of ingredients, eco-friendly packaging, energy-efficient lighting and the adoption of comprehensive waste reduction strategies.

Food Trends

According to Booking.com, a significant 46% of travellers express a preference for destinations offering eccentric eating. This signifies a shift where culinary experiences are taking centre stage, captivating the palates of today's discerning travellers.

There is a surging momentum in the farm-to-table movement, with venues embracing the concept of locally sourced ingredients. From on-site herb gardens to partnering with local farmers, hotels are not only delivering fresher and more sustainable portions but also fostering a meaningful connection between guests and the surrounding community.

Section 3

Digital Transformation

We're witnessing a digital revolution in travel bookings. In today's tech-savvy era, a forecasted 67% of travellers are gearing up to make their reservations online in 2024. A post-pandemic shift spotlights the younger demographic, particularly Millennials (aged 30-44), who take the lead as Wellness Worshippers, Leisure Seekers, Luxury Seekers, and Digital Travellers.

The global pandemic accelerated the adoption of contactless technology. Consumers have adjusted to the new normal and are adamant about retaining the convenience of digital and contactless technology. In our “Future of Dining” blog, it mentions how 70% of the UK population are introverted and this trend is growing. These guests value technology-led dining experiences and convenience and will switch brands if their needs are unmet. From QR code ordering to contactless payments, the emphasis on cashless transactions streamlines operations, reduce wait times, and enhance the overall customer experience.

In our recent observations, we've found that a seamless guest experience during a hotel stay involves the convenience of flexible payment methods at check-out. A recent report indicates that 56% of guests prefer having multiple payment options when settling their bills.

Virtual Reality & Metaverse

Immersive technologies like virtual reality (VR) and augmented reality (AR) are becoming game-changers in guest engagement. Hotels and restaurants are utilising VR for virtual tours, allowing potential guests to explore accommodations and amenities remotely.

Venues are exploring metaverse experiences, from companies like space trace that provide virtual tours, to virtual concierge services. This evolving landscape hints at a future where guests can seamlessly transition between physical and virtual realms, offering exciting possibilities for innovative and boundary-pushing hospitality experiences.

Special Experiences

The appeal of maximalist ventures, defined by unique and special atmospheres, continues to captivate diners who seek more than just a meal. Recognizing that dining out is becoming less affordable in today's era, the experience itself has become paramount.

In navigating this landscape, the power of data-driven strategies to craft a consumer-centric marketing and operational plan has become a necessity. This is the only way forward to create a personalised and magical dining experience. We challenge you to consider: How well do you really know your consumer?

We've observed a surge in the popularity of alternative lodgings as consumers shift their focus from acquiring physical goods to investing in experiences. The demand for unconventional accommodations has spurred the emergence of numerous start-up providers in the industry. We predict that by 2030, half of the world's top 10 hotel companies will be less than a decade old.

Conclusion

The dynamic hospitality landscape of 2024 presents a tapestry of transformative trends. From stabilising food costs and embracing sustainability to navigating recruitment shifts and digital transformations, the industry is evolving rapidly.

The shift towards vegetarian and sustainable diets reflects consumer values, while digital advancements, including contactless technology and virtual experiences, are reshaping guest interactions. Success in this ever-changing landscape hinges on adaptability and embracing technology.

Sources:

Demand Calendar | The Drinks Business | LGC Associates | HT & E Recruitment | FHA Horeca