Employee retention, CO2 offsetting & VR MGallery

Week 25 - Several different hospitality businesses are making it in the industry, from Hostels to CO2 offsetting platforms. This week all of them made the news!

TLDR: To Long Didn’t Read

In the UK, a significant number of pubs have closed due to rising costs, with 200 filing for bankruptcy in Q1 2023, a 68% increase YoY. Habitas plans to create a hotel circuit in Saudi Arabia with $400m, while IHA is lobbying for government support for the food and hotel sector in Germany and the EU. A study shows that fair compensation, well-defined roles, and a healthy workplace increase employee motivation and retention. Accor has released a version of their MGallery in Facebook's metaverse. AI is being adopted most by tech firms, with hospitality not even listed.

0. News snippets

Not important enough to expand on, but worth hearing about

CEO turnover in the S&P 500 records high due to complexities never experienced before, but exceptions exist; While Germany closed all of its nuclear power plants, the US is quietly investing record money to reinvigorate the industry.

1. Main Hospitality News

Core news related to the industry

Visit MGallery in virtual reality

Perhaps the first hotel built in virtual reality (at least by an actual hotel brand) is now live. Accor is one of the first to jump on the VR/AR headset trend and has now released a version of their MGallery in facebook’s metaverse. See before you buy the concept + an actual 3d visit possible through a headset. The most important question here is if it increases conversion or even creates an entirely new guest pipeline. Since ROI on VR implementations is at the moment (at least for hospitality) is none existent.

High number of Pubs go bankrupt

According to an analysis, a significant number of pubs in the UK have closed within a quarter due to the pressure of rising costs, marking the highest closure rate in a decade. In the first quarter, 200 pubs filed for bankruptcy, representing a 68% increase compared to the same period last year. Within a year, a total of 620 pubs in England, Wales, and Scotland have shut down.

Hotel Circuits in Saudi Arabia

• Habitas plans to create a hotel circuit in Saudi Arabia with $400 million.

• The initiative aims to boost tourism and diversify Saudi Arabia's economy.

• The project aligns with Saudi Arabia's Vision 2030 and offers unique experiences and promotes sustainable practices, incorporating elements of local culture and heritage.

“Eco” hospitality startup gets funding

What actual sustainability start-ups exist in our sector and what do they do? Easy, just look at squake. A platform that provides an API integration for flights, hotel stays etc., calculates your CO2 emissions and allows you to compensate for those through a variety of carbon emission offsets. Recently they have raised 3.5 million and are on the road to success. A great way to provide the rest of us with a guilt-free way to travel and save the planet! Interestingly enough squeak came out of the Lufthansa incubator “innovation hub”.

A hotel association is asking for government help (in Germany & EU)

IHA is asking for government support for the food & hotel sector in the form of fewer taxes, more developed destination strategies and finally standardising eco-friendly hotels and providing an EU-wide certification. If you didn’t know what lobbying in the industry looks like, this is it. We will keep you updated on the results if any.

Hospitality to grow to western world levels in India

India is forecasted to hire 1.5 million more tourism workers this year, making every 17th person work for the hospitality sector by EOY. The 10-year forecast puts hospitality workers at 1 in every 10 or 7% of the GDP of the entire India. Let's hope with internal demand comes an external need to travel too ;).

2. Externalities

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

How the world reacted to Russia’s attempted putsch

Russia has an attempted putsch. It didn’t work however the stock markets reacted interestingly. While oil prices have gone up, forecasting a lack of supply due to a civil war (that did not happen), the rest did not move much. Or at least the bonds & stocks that did, did so due to a concern that interest rates will go up yet again. Overall, nobody was too worried about Russia, the concerns come from within. What it means for Russia however is a whole different story. In a nutshell, Putin no longer has absolute power over his people and that only means chaos in the future. How? Time will tell.

Who is adopting AI the quickest?

How is AI being adopted by the 500 most successful companies in the US (at least publicly traded)? Or how much? At the forefront are Tech firms and after coming, car makers, health care & banks. Nonetheless, Tech is far ahead by a pretty big margin. Mostly since, the implementation is most useful in coding itself, while other sectors are still looking at what can be done. Hospitality by the way is not even listed, except for one patent registered by a food company. Interestingly enough the highest increase in stock prices comes from 4 major tech firms, precisely connected to AI.

3. Academia

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

What does academia say about motivation & the needs of employees? A study released this week shows a few straightforward conclusions. Fair compensation (at average or above) increases motivation & performance, engagement is highly driven by well defined roles. Finally the hygiene of a workplace (or the health of being there related to mental state) if controlled well will all cause higher employee retention. The study is based on actual employee data from hotels. Hence, more often than not one shouldn’t reinvent the wheel, just cover the basics!

4. Readables

Books, podcasts & the big stuff.

Ever wonder why huge businesses fail? Lights out by Thomas Gryta & Ted Mann gives a pretty good case on why GE has fallen from the top S&P500 list and is currently no longer the big dog. Summary available here.

5. Tips & Tricks Tools & SaaS

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

Leadership strategy for modern hospitality

Another day another new recommendation on how to reinvent leadership & management in hospitality. A recent take on the modern issues of a leader in our industry comes from the modern-day demands of employees (truly like the meme). More meaning and engagement is the goal. How? More cross-functionality from the teams, allowing to work and collaboration between departments, and more ownership of execution in return would also require more training. Finally, you have a 21st-century team that performs more efficiently and is also happy. More details in the article with an additional case study as well!

One way to grow your hotel portfolio

Through hostels of course! An interesting case of 2 investors has recently been brought to light. Through taking over independent hotels, as well as chains, the investor group is now figuring out how to create the ultimate playbook for opening up new properties, to not have to reinvent the wheel each time. Finally discovered capsule hotels in Japan and made their Boutique version of a hostel. This path represents a very common way for independent hotel investors to find their way into the sector. Making it even more interesting for the rest of us.