Le Portee - Hospitality News
Le Portee - Weekly Hospitality News
#16 - WeWork in trouble, Hotel Design Trends & more

#16 - WeWork in trouble, Hotel Design Trends & more

Week 31 - Many topics from past months repeat themselves, yet new perspective is added to old facts!
Created with the help of Midjourney

TLDR: Too Long Didn’t Read

Lobbying in the German hospitality industry includes inviting the Chancellor for VAT reduction discussions. WeWork's financial woes continue with losses and board resignations. Business travel costs rise amid a demand paradox. Hotel interior design trends focus on organic, multifunctional spaces, comfort, and clarity. China restarts cruises and lifts group tour bans. kununu's Best Employers 2023 for Germany includes hospitality. A loyalty program study shows travelers prioritize cost over rewards. Air India rebrands as its fleet expands. Real estate prices vary globally. Stock market predictions for 2024 are uncertain. Latin America's resource demand could lead to growth. An academic study forecasts hotel prices using game theory. "The Big Con" book questions consulting firms. Sonder's innovative guest journey breakdown. Hotels consider removing TVs from rooms.

0. News snippets

Not important enough to expand on, but worth hearing about

A new brand from Marriot StudioRes to provide midterm stays at 80$ ADR, Occupancy & ADR forecasts 2023 vs 2024 are about 1% by STR, bear attacks are being politicized in Slovakia, and African coups might be stopped by an African version of EU.

1. Main Hospitality News

Core news related to the industry

Lobbying in the German Hospitality industry

What does lobbying look like in the hospitality industry? Easy, you invite the Chancellor of Germany for a meeting with industry professionals in a hotel garden (Game of Thrones style), talk about the importance of entrepreneurship in the industry and finally ask to keep the 7% VAT reduction of F&B (initially a temporary measure during corona). Special interests at its finest!

Is WeWork bankrupt?

WeWork's financial struggles continue, its stock already plumbed by 90% last year from a peak valuation of $47 billion (today´s market cap is 431M). The Q2 report indicated a $397 million loss, a slight improvement from last year. The resignation of three board members causes a 27% dip in WeWork's New York stock. The company acknowledged doubts about its future and plans to restructure, seeking cheaper rents, cost reduction, and fresh capital in the coming year. Read more in Capital.

Business travel paradox

Business travel costs have risen, while demand for in-person meetings has risen as well. A sort of paradox between a likely recession looming, rising costs due to inflation, yet still recovering demand for B2B travel. A recent report is forecasting continues high prices, hence the question rises if Business travel will remain as is now. On the other hand, a recent report by MasterCard surveying over 500 business travel professionals (the people who manage travel for their companies), shows unique optimism in their own profession. 90% are expecting a rise in travel due to hybrid work locations (contradictory in itself). 85% even go as far as to say that a Chief Travel Officer, will likely be needed soon. Given that people are unlikely to be unsure of their own profession, this report comes as no surprise. The only thing missing is a 100% affirmation rate in survey responses (North Korean style).

4 Hotel Interior Design Trends

Here are the key interior design trends in the hospitality industry:

  1. Delicate and Organic: Designs are detailed and organic, with wood, pastels, and accent lighting creating a warm ambiance.

  2. Multifunctional Lobbies: Lobbies serve as bars, cafes, and more. Green plants and self-service options are prevalent.

  3. Emotional Individuality: Rooms offer comfort and advanced technology. Sustainability is a priority, with eco-friendly materials.

  4. Cozy Clarity: Designs prioritize guest needs, combining comfort and clarity. Warm tones, clear accents, and sustainability play key roles.

China, the big restart!

The big restart in China is on its way. Cruises are restarting again, in fact, the first boat since 2019 has set sail. In fact, a ban on group tours for over 70 countries has been lifted. For relative comparison, the Chinese have spent 777 billion USD prior to the pandemic on tourism, 255 of which was spent internationally. Germany, 2nd on the list of top spenders, for comparison spent half of that in 2019. Hence, while we have very mixed news on this tourism source, this week around is mostly positive. Economically speaking, the paradox of high travel, and low economic performance is also present. In fact The Economist, this week released a very insightful caricature of how China is doing economically, over here.

Best Employers 2023 (in Germany)

Best Employers of the Year was released for Germany by Kununu. A platform that allows to rate and compare employers. Hospitality is not overly present with top winners being in the industry starting around the top 100 and spreading down to 500. In case you are interested full results are here & for hospitality specifically here. Next week will post a summary by industry in our notes, over at substack.com.

Loyalty programs study

The state of loyalty in travel has been explored in a study by Barclays & Wakefield Travel. The wording of the results is for us the most interesting. “Nearly half of the travelers in such programs prioritize earning rewards over lower costs”. Or how we would put it the majority care more about lower costs than rewards. In the end 44% care more about rewards. Millennials are apparently the most impressionable, since 74% care more about rewards compared to the average. If you are wondering how much of an actual discount do I get from collecting miles, then the calculation is as follows. To collect one 1 mile you have to spend around 31 cents. 1 mile is worth between 1-1.5 cents in various forms of redeeming programs. Hence the actual discount you get from using loyalty programs is around 3%. Truly magnificent.

Air India is rebranding

One of the leading airlines from India has decided to rebrand and modernize. It will be “bold, confident & vibrant”. A lot of powerful words that get thrown around a lot at every rebranding party. Nonetheless, these words stand behind an order of 470 Airbus & Boeing aircraft. Very bold indeed. For comparison, the number one customer of Airbus (Indigo, another Indian airline) has ordered 830 planes in total. Lufthansa stands at 521 historically. A very quiet growth that not many are noticing.

2. Externalities

Econimics, finance, geopolitics. All have an impact on the hospitality sector.

Real Estate prices or what it is like to ride the waves

Real estate prices are going down. Yet in what ways? In the US rental prices have risen significantly, which is currently leading to a rising number of vacant apartments and in turn is likely to impact purchase prices. On the other hand, a study of real estate prices across Germany shows a likely increase by 2035 in AAA cities and a much slower growth or even a decrease in prices in less populated regions. Combined with news reported last week on an Airbnb bubble, the Real Estate market is surely too complicated to expect to behave uniformly across all regions.

Stock market news at it again

Stock market professionals are raising alarms again. At least some are. Various influencers, credit agencies, and consulting firms are all forecasting different economic outcomes in 2024. Whether it is a full-blown recession or continuous growth with rainbows. Like in early 2023, the media landscape is uncertain of the economic future.

Latin America, the future success continent

Latin America is in the news again. What big trends are impacting the world and pushing some continents ahead of others? For starters resources and their forecasted demand across the globe. In this regards Latin America is at least second if not 1st. Due to the increase in green economy demands worldwide, materials like Lithium & Copper are rising in demand. Which puts this wonderful continent at an advantage above most others. If all things go well and Latin America manages to deliver on metals & even food export, it might get a pretty good base for development in the coming decades. The world economy grows and with it travel. Hence, if not for the Chinese at least Chileans might stay over at your hotel in 2040.

3. Academia

Scientific papers related to the topics above. For those who want to know for sure ;)

In the spirit of forecasting the future of hospitality, why not look into the most basic KPI that every single hotel company tries to forecast? The ADR. A recent study was released exploring game theory and with it predicting the prices of hotels during the covid period. Spoiler accuracy was above other more common historic models. Full study here with the PDF.

4. Readables

Books, podcasts & the big stuff.

Consulting firms are great, aren’t they? Everybody wants to work for them! Yet is there perhaps another side to the whole thing? Indeed there is, at least according to “The Big Con” by Mariana Mazzucato & Rosie Collington. Check it out here or read the 10-minute summary here.

5. Tips & Tricks Tools & SaaS

Any new software you can use? Industry tricks you missed?

Guest journey of an innovative hotel chain (How to)

We talked a lot about a few new hotel chains that are doing things “differently” from the conventional chains. This week, an interview with the co-founder of Sonder, and a breakdown of their “innovative” approach to the guest journey is available here. Take the whole thing with a grain of salt, since their stock price is still at 48 cents.

No TV in hotels anymore?

It might be time to get rid of TVs in your hotel room. An interesting take on removing TVs among hoteliers is apparently happening all over. Whether it is with the idea of maintaining an 18th-century vibe of a chateau or a move to simply save money. Given the current growth of individual devices, those who did remove them report little or no complaints. “As long as you provide excellent wifi of course”. An interesting take that might go against other findings, is that over 42% of people are looking for smart TVs in their rooms.

Le Portee - Hospitality News
Le Portee - Weekly Hospitality News
A weekly podcast summarizing the relevant news from the service sector. Everything from industry drama to geopolitics. Backed up with academic research for those times when big statements are questionable. Listen once a week and be fully updated on the industry!