Week 4 - Record high development in the US, OTAs grab market share and more!
Q4 of 2023 showed the highest amount of properties in development since 2008, all while Hilton announced a program for its property owners to get funding!
TLDR: Too Long Didnβt Read
In hospitality news, the world's largest cruise ship is setting sail with environmental concerns π’ππΏ. The US sees a record-high in hotel development πΊπΈπ¨, global hotel dealmaking is surging πΌπ, Hilton launches "Unlocking Doors" program for aspiring hoteliers π¨ππ, urban resorts are on the rise ππ¨, OTAs are taking hotel market share ππ¨, Cuba looks to Russian tourists for revival π¨πΊπ·πΊ, and Hamburg welcomes tourism π©πͺπ¨.
In external news, the Taiwan-China conflict escalates diplomatically πΉπΌπ¨π³π.
In academia, a study explores robot use in restaurants ππ€π½οΈ. A new book discusses AI in customer service ππ€π¨, and it's noted that US taxes don't apply to collected miles βοΈπ°π, while Germany may tax miles spent on bookings πΊπΈπ©πͺπ³. Mews, a major PMS, releases partner data revealing trends ππ¨π.
0. News snippets
Not important enough to expand on, but worth hearing about
VAT Tax on F&B has gone up to 19% in Germany from 7%, as a result, local chefs are now offering a βSpΓ€tzomatβ, a unique local dish in a vending machine. | In March 2024 βTech Gatekeepersβ will have to change their offering and show competitors more openly, this specifically addresses giants like Google, yet nobody is sure what that is going to look like. |
0.5 Follow up
Where we follow up on news from previous weeks
The biggest cruise ship in the world is about to set off
The biggest cruise ship in the world is going to βset sailβ this week. With a capacity of 7600 passengers, it is going to be 6 times bigger than Titanic (hopefully not as fatal). And as we have addressed in the past, there are concerns with its sustainability. The article provides CO2 emissions data of cruise ships vs flights and hotels. Turns out a 5 day holiday with the plane and staying in a regular hotel is going to release just half of the CO2 that will be released otherwise in a cruise ship. Nonetheless, the article does not provide any CO2 data on the ship, which could indeed release less. Additionally, it was designed 10 years ago and as a result is using LNG, the fuel that back then was the most viable option. Perhaps in the future Hydrogen can become a viable option.
1. Main Hospitality News
Core news related to the industry
The US reaches record-high projects in development
The US development sector for hospitality has just had a record-high number of new developments ever. The last record from 2008 was bet with 5,9 thousand new projects and 693 thousand new hotel rooms being announced. The majority of the rooms lie in the mid-scale sector, unlike for example UAE where most are upper-scale projects. The reason for the increase is a decrease in interest rates (likely). Or perhaps a delayed opening of properties that were in the pipeline since pre-COVID?
2024 Surge in Global Hotel Dealmaking
Projected Surge: Anticipated acceleration of 15% to 25% in hotel dealmaking compared to the previous year, potentially exceeding $58 billion, driven by a more favourable financing landscape.
Key Contributing Factors:
Imminent life expirations of private equity funds prompting capital deployment.
Impending loan maturities for hotel owners in slow-recovering markets.
Deferred capital expenditures during the pandemic create investment opportunities.
Cities like London, Los Angeles, Paris, New York, Sydney, and Tokyo are expected to attract investor interest. Increased dealmaking activity by major hotel groups, aiming for brand conversions and portfolio acquisitions to counter supply disruptions. Details here.
Hilton now offers wannabe hoteliers help to open their Hotel
Hilton has announced a unique program to facilitate new openings. βUnlocking Doorsβ is a first-of-its-kind hospitality program where wannabe hoteliers can get support from Hilton directly to open their own Hilton property. The program offers educational offerings, networking and perhaps most importantly an opportunity to get funding to buy and renovate a property. As a result of a partnership with βForo Fundingsβ one can find a match with over 76 banks. Unfortunately, for now, this is only available in the US, but perhaps in other regions in the future. For now, if you want to open your own Hilton move to the US and make sure your credit history is good.
Rise of Urban Resorts in Post-Pandemic Travel
Traditional leisure destinations see a shift as urban locations witness increased development of leisure and resort hotels in response to evolving traveller preferences post-pandemic. Urban settings are now perceived as more luxurious, offering new lifestyle experiences, with a focus on local influences and storytelling to attract discerning guests. More here.
βIt is remarkable that the hotel schools have convinced students it is better to sit in a windowless room looking at Excel sheets than to travel the world.β
OTAs taking market share from hotels
OTAs wanna take more market share. With a new SRH report, it has been shown that Hoteliers have lost 3% of their nights booked to OTAs. On top of that cost-per-clicks have almost doubled across channels like META or Google, as a result of marketing spending by the OTAs. The only question remains, if you offer a great product and convert your guests to direct after staying with you, does it matter how much OTAs spend on ads? One thing is for sure, do not underestimate guests, they will check your prices and book those that are most attractive.
Cuba Pins Hopes on Russian Tourists for Tourism Revival
Cuban ambassador anticipates a 35% rise in Russian tourists, aiming for 250,000 visitors in 2024, crucial for reviving the ailing tourism sector.
The introduction of new direct flights from Moscow to Cuba and the availability of MIR credit cards for transactions facilitate travel should boost visitor numbers. Russia's status as a political ally strengthens ties and supports Cuba's efforts to generate foreign currency for essential imports amidst economic challenges. Tourism revenue is vital for Cuba in terms of importing food, fuel, and medicine to address widespread shortages in the country, especially amid an ongoing economic crisis. More on Skift.
Hamburg, a city that likes tourists.
Remember those cities that βhateβ tourists? Well, there are alternatives. A recent survey from Hamburg (a major city in Germany) showed locals, the majority, find tourism beneficial to their city. 84% of participants said that outsider visitors are what made the city what it is in the first place. 61% say that current tourism has a positive impact on the city, 31% were neutral and 8% negative. Overall, it was a healthy dose of self-awareness for a port city that thrived because of trade. What about you Amsterdam?
2. Externalities
Econimics, finance, geopolitics. All have an impact on the hospitality sector.
Taiwan and China
China claims Taiwan is part of China and wants everybody else to join the party. We have seen in the past months how this conflict between the island and mainland China is ramping up. With a new leader elected (who is not pro-China), diplomacy is another area where verbal fights happen. In a nutshell, there are states like Russia, North Korea and Pakistan that recognize Taiwan as part of China and cheer China on towards unification. And then there are Western countries that are steadily increasing their relations with Taiwan and are on the side of neutrality (since officially many still havenβt recognized it as a state). Whatever the outcome, Taiwan plays a key role in chip production for the entire world and an invasion, would not help that (i.e. your iPhones might get really expensive)
Indiaβs political symbols
A little off-topic from the usual war and terror, we found a pretty unique breakdown of how political parties in India communicate with the public. At its core, with symbols. Not extensive slogans, but symbols. This initially took root in the early years of independence and was due to the low literacy rate, but it was kept. As a result, these are now major tools that impact political movements. Major leading parties evolved their symbols over the years, but have common roots in religion and tradition. Whether it is the cow or the hand and the lotus. In the Western world where words matter quite a bit more, it is interesting to see where symbols are the ruling form of basic communication, at least in politics.
3. Academia
Scientific papers related to the topics above. For those who want to know for sure ;)
Studying robots in an F&B setting
A study of robots in the service sector, specifically restaurants was recently released, trying to study how to design robots to interact with visitors that enhance the experience (using a dramaturgic performance approach). Results showed that changing specific robot movements, including refined presence, prompted actions, and engaging addresses can impact the guest experience positively. The full study is available in the article linked above, but most importantly, robots, even basic ones, can be given instructions that make them a feasible option in the F&B settings.
4. Readables
Books, podcasts & the big stuff.
What will AI bring to customer service?
A major academic publication has released a book about leveraging ChatGPT and other AI tools in customer service. A hefty price, yet perhaps searchable in other locations ;). If you wondering what this new tech can bring to the industry, it is hard to find a more extensive source to answer that question.
5. Tips & Tricks / Tools & SaaS
Any new software you can use? Industry tricks you missed?
Taxes and points collected
Do you have to pay taxes on your miles collected or credit card points? Long story short, not in the US. The IRS considers it discounts and not something that is taxable. In Germany, nonetheless, when booking tickets with your collected miles you still have to add tax on top (meaning extra miles spent).
Major PMS releases data on their partner's statistics
A major PMS Mews has released a report on data from 8000 of their partners. Data shows various trends like ADRs, online check-ins and monetization of additional spaces. But perhaps more excitingly this is data from operators who use some of the most advanced PMS out there. Hence, their data in a way shows a slight glimpse into the future, due to the difference in data between more conservative hotels and Mews users.