Chinese are not coming to save us.

Week 11 - Chinese tourist uptake is not that big, people are getting used to smart homes, the war in Ukraine is not ending anytime soon.

TLDR: Too Long Didn’t Read

Investments in the hospitality sector are happening on all fronts, yet the Chinese market is not going to save us. Banks are collapsing, this time because they played too safe. The war is ongoing and refugees are going nowhere. Putin is not doing too bad, but they might arrest trump (nobody knows why, yet). But at least you can upgrade your hotel to smart home standards and standout. So that is good.

1. Main Hospitality News

Core news related to the industry

A relatively new chain citizenM has secured €480m loan directly connected with their sustainability goals. It is actually a refinancing of their exisiting debt in EU. What happens if they fail? Not clear! Maybe a publicity stunt? Given current high interest rates, it is hard to speculate. Nonetheless, the company is putting money into what they say and that has got to be something.

Airbnbs are offering better tech experience than regular hotels. A topic that apparently can win over guests. Why? It is easy to say that airbnbs are just more adapt to things, nonetheless the simple truth is that most hotels are older than 10 years (a time before IoT). While airbnbs are a relatively new thing. Should one quickly refurbish and make their hotel smarter? More on that in “academia”.

Melia is now testing a hotel within a hotel. Bassically refurbishing a floor of its building in Thailand and offering a more high end product. An interesting diversification withing technically the same product. A similar concept to that of the Sheraton Club. With slightly bigger rooms, its own lounge area etc. Hostels offer private rooms, hotel sell different room categories (yet still relatively the same product). So will it actually generate surplus cash for the business?

Remember in the our latest editions how the chinese are about to come flooding EU & US markets, making us all reach? Well that apparently isn’t happening (at least not yet). The chinese consumers are saving record high amounts and are showing very low spending. Mostly worried about the looming crisis and the fear of loosing job. The category of low spending is also travel. Apparently economic crisis has also reached China. Who knew…

Morocco is planning to invest $580m to grow its tourism sector further. Seems like every week another destination plans to invest money and capture all those confused tourists. Where will the money go? Hotels, infrastructure and marketing. Forecast is to create 200t indirect jobs from this. (That is $2.9t per person). Not a bad investement considering this jobs will last longer than just a year. As always of course the question is if this money will actually create the added value.

2. Externalities

Econimics, finance, geopolitics. All have impact on the hospitality sector. This part summarizes those.

A colleague of yours might have nervously mentioned over in the coffee room that a few banks are collapsing. You grew concerned and thought to your self, could this be something bigger than just a few banks? Lucky for you (and your colleague) the economist has answered that question for you. The short is yes. Except it isn’t bad debt this time. In fact, technically banks are being too safe. A major part of banks reserve were put into 5 year gov. bonds. Locking money in at interest rates attractive at the time. Except the federal reserve has increased that rate, meaning that 5 year locking in became out of date. Result? Public finds out, panics that banks cannot cover payments. Bank run happens and 40 hours later 128 billion USD bank is wiped out. Something like the chicken and the egg problem. Apparently a lot of banks are in a very similar situation, hence stay tuned for more. How to fix it? (Read up here).

Refugees are useless they say. Refugees won’t learn the language they say. Well in Czech Republic it seems to work out with the ukrainians. The language is being learned, people are finding jobs (unfortunetly mostly low skilled ones atm). Children are going to school. Many however would really want to go back home.

And here is where the question of war ending comes in. Putin has visited his newly acquired lands and was very excited. Some say it is rather personal for him and therefore this war has only just began. You say, but what about sactions? We stopped buying Russian oil! True but, while Russia still could sell oil it did that at record high prices. Or somewhere between 131 and 210 billion USD of revenue last year. The economy has only shrunk by 4% and the government carries no democratic responsibility in front of its people. In fact one can argue Putin’s power has now only been reinforced. While, the west is quitely forgetting about the war and worriyng about more urgent matters, like swiss banks. So dear refugees, you might stay a little longer.

In other news, Trump might be arrested. At least according to him. Why do I care you ask? We don’t know.

3. Academia

Scientific papers are being published everyday. Including the hosptility sector.

Tech impact on guest experience? Does it matter? A scientific study on that very topic has come up with following results. For people to be positively surprised, tech in hotels needs to be smarter than at home (aka not just a chromecast). Additionally it will have most impact on guest satisfaction in mid-scale and budget hotels, not upper-class establishements. Hence, next time you are worried about airbnbs stealing your business, make sure you know what category you fall in and if its needed at all to differentiate with tech.

Diversification of room offerings. One thing is Melia’s upper class hotel-in-hotel another actual room categories with different offerings. It is at this point obvious that topics like room views are valued differently by guests and therefore should be priced differently. Another is how the dynamic of an entirely different floor impacts the overall revenue & review scores. On that, unfortunetly, there are rather limited studies.

4. Readables

Books, podcasts & the big stuff.

What is it like walking 2000 kilometers across an entire country? We are after all the travel industry and such endevours are the ultimate travel experience. Interested to find out? Ready the “A walk in the Woods” by Bill Bryson. While this book won’t give the insight needed to run a team better or increase your RevPar 16.93% it will help you get into the head of people who genuinely travel.

5. Tips & Tricks Tools & SaaS

Any new software you can use? Industry tricks you missed? All of that summarized below once a week.

Want to see what the future generation of travel professionals care about? Us too, very much! Lucky for us, the “Young Hospitality Summit” was happening and all online recordings will be available here. Hopefully giving us some helpful industry insights from industry pros.

Tripadvisor is looking to not fall out of fashin and attract more users with more social media like features. Causing more participation and perhaps even paid memberships. The CMO of tripadvisor has given an interview explaining how. For us humble receivers of motivated guest reviews, this should present an interesting opportunity to perhaps interact with guests even more.