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Week 44 - Hospitality in Space & underwater
Tours 2.0, Housing Homeless in hotels, Mediation helps with turnover in hotels and more!
TLDR: Too Long Didn’t Read
In the follow-up, Amsterdam Airport faces political constraints and raised flight fees, causing tensions 🏢🛫🤝. Booking reports record-high revenues despite stock price drops 💼📈, while real estate funds risk net outflows in 2024 🏢💰📉. Los Angeles City Council reached a compromise on housing homeless individuals in hotels 🏨🏘️. Google enhances its vacation rental feature 🏠📲, and South Africa reinvents tours 🇿🇦🌍. Night trains in the EU make a comeback 🚆🌙. In the externalities section, Russia's military budget increases to finance the war in Ukraine 🇷🇺💰🇺🇦. Academia discusses using mindfulness to combat absenteeism and burnout 🧘♂️🧘♀️. In the readables section, Nassim Taleb's new book 📚📖 and tech adoption challenges in the hospitality industry 🏨🤖 are highlighted. Finally, Superhog offers Airbnb host insurance 🏠🔒.
0. News snippets
Not important enough to expand on, but worth hearing about
Will the Israel and Hamas conflict escalate into a bigger war? “Risk of unrest” has been increased in most neighbouring countries and can indeed spill over. | Wage growth and hiring is slowing down (a sign of decreasing inflation), which is good news for the Fed to potentially decrease the interest rates
0.5 Follow up
Where we follow up on news from previous weeks
How politics is crippling the Amsterdam Airport
We have reported on Amsterdam fighting tourism viciously for a while now. On top of that, it is now increasing its flight fees by 14.8% (or 2.8% higher than expected). Reportedly due to lost revenue from COVID times. Finally, the government has capped flights to 2018 levels and is doing that as a political move in favour of “local” concerns. The most affected company is the native KLM, as we have reported before, but now a mini-international conflict is brewing. JetBlue, a US airline, is calling for a boycott of KLM services in New York and for the US Department of Transportation to be involved, due to “illegal” measures being taken. Meanwhile, airlines are adapting to the changes, by simply offering bigger capacity planes (the law only limits factual flights, not passenger count). Meanwhile, KLM itself is strongly against the cut and is pushing back, as seen in our previous weeklies.
1. Main Hospitality News
Core news related to the industry
Booking revenue record high, stock price falls
Booking was blocked from acquiring another OTA by the EU, etraveli. Yet they still reached their record-high quarter ever. Q3 was 24% more than last year. All of this happened while Booking predicted their revenues to fall due to the conflict in Israel. Their stock price fell. Mostly since Booking is much more integrated with the EU than other OTAs. A contradiction, yet one does not cancel the other out.
Real estate funds risk net outflows
As of August, the net capital inflows for all examined funds were only 1.3 billion euros, a significant drop from 4.7 billion and 6.6 billion euros in 2022 and 2021.
Open real estate funds face the risk of net outflows starting from 2024 causing a decrease in capital inflows and increasing pressure on the valuation of fund properties.
While the current liquidity levels in these funds still exceed the legally required 5%, some fund managers are contemplating selling assets to generate additional liquidity to meet potential investor redemption demands. Read the original article in German.
Housing program instead of housing homeless people
Los Angeles City Council has reached a political compromise with the hotel workers' union (Unite Here Local 11) to drop a controversial ballot measure requiring hotels to temporarily house homeless individuals. The compromise includes new regulations on hotel development and a commitment to link hotel creation with the creation of residential housing, addressing concerns about housing, living wages, and community services. Unite Here Local 11 considers this a victory. Details in the L.A. Times.
Google Hotel feature also for vacation homes
Google is enhancing its vacation rental feature by adding booking links and nightly rates from multiple companies for each listing, allowing it to compare prices conveniently. This new feature is being launched, with a broader rollout expected by the end of November 2023. Unlike Google's hotel search results, the vacation rental feature currently displays only free links and does not monetize these listings, focusing on improving the user experience. However, it is anticipated that Google will eventually introduce advertising to these vacation rental listings in the future. More on Skift.
We all know tours that advertise experiencing the local culture. You are forced into a full bus, with a bunch of
losers fellow tourists. You go through 3-4 locations. You get to see some “authentic” dancers, try their “local” food, and buy some souvenirs at every square meter of the space you have visited. Perhaps you even get a headset to listen to some scripted text about the local architecture. Well, tours 2.0 is being tried over in South Africa, with varying success (currently 38% from 2019 levels). Instead of creating infrastructure to facilitate tours, you utilize the existing setup and only provide minor improvements (i.e. internet connection). An example would be bringing tourists to a local village, and providing a walking tour by a local artist/author/musician. Offer food from a local family. A unique way to provide actual “authentic” tours. Yet on the other hand this product is mostly booked (85%) privately or via custom tours. Indeed higher traffic means systems are needed and this is where authenticity is lost.
Night trains in the EU are back, but not really…
If you have lived in Europe, you might have noticed how difficult it is to get a night train connection. A seemingly logical offer, that fits well with travelling thousands of kilometres across the beautiful countryside. Yet the supply was falling together with the demand for several decades. This is changing now, yet in a very challenging way. Due to the same reasons it has lost popularity in the first place. Low-cost flights are no longer as omni present and people still want to get from A to B. Several start-ups are offering new night train connections now, yet even more presently several government-sponsored train companies and bringing back night train offerings (i.e. OBB in Austria). Still, nobody is expecting to generate huge profits, due to the high costs of operation of such networks. Norway even abandoned a project, since a connection between Oslo and Copenhagen would still have to be subsidized annually (4 million on top).
First Space Hotel Set to open 2025
Imagine checking into a space hotel by 2025 - that's the plan by Orbital Assembly, a company focused on crafting space stations. They're gearing up to launch not just one, but two incredible stations: Pioneer Station in 2025 for 28 people and Voyager Station in 2027 for 400 guests. These stations are designed with artificial gravity, promising comfortable rooms, elegant bars, and a central docking hub for ships. Orbital Assembly envisions these stations as more than just tourist spots - they aim to create a space "business park," housing both offices and visitors.
W-Sense raised 9M for the Internet Under the Water Project
WSense, an Italian IoT startup, has developed underwater Wi-Fi for environmental monitoring, critical marine infrastructure and environmental safeguarding. W-Sense plans to expand internationally with a €9 million funding boost. This innovation allows for various uses like environmental monitoring, aquaculture, and cultural heritage; but it also opens a space for AI-led scuba diving tours and promises significant opportunities for hotels through a platform-based economy. Hotels can offer underwater experiences, making activities like diving or dolphin swims easily accessible and profitable through AI-led bookings.
Saudi Arabia - New to travel destination. Is the future of hospitality there?
The future of hospitality in Saudi Arabia appears promising and dynamic. With its Vision 2030 initiative, the country is actively investing in its tourism sector, aiming to diversify its economy and expand its appeal to international travellers. Key points include the opening of the Riyadh School of Tourism; Becoming a Yachting Destination and partnering with Monaco Marina Management; the opening of a luxury cluster of Islands “Red Sea” led by Ritz Carlton “Nujuma”; building a highly sustainable project NEOM which includes city in the Desert so-called "Line", followed by Oxagon - shaped port city, Trojena Ski Resort and Sindalah - island resort in the Red Sea.
Economics, finance, geopolitics. All have an impact on the hospitality sector.
How Russia finances the war
While Ukraine is receiving military and financial help from the rest of the world, how is Russia doing? Do they have a secret benefactor who keeps financing the war effort? Yes, they do. It is called the annual fiscal budget of the entire country. A recent take by the economist shows how effectively all other aspects of government spending have been cut and the military budget is now 30% of the entire country’s spending. Funny enough, such high spending has boosted the economy slightly, as well as record-high crude oil prices. Nonetheless, drastic cuts to education and social policies, tend to cause long-term effects. Crude oil can also drop without any prior warnings.
Scientific papers related to the topics above. For those who want to know for sure ;)
Mindfulness in hospitality
How to fight absenteeism, turnover & burnout in the industry? Through mindfulness, according to this paper. A meta-analysis of existing research showed that mindfulness practices (i.e. meditation) have helped to decrease the negative KPIs mentioned above, yet the study is still asking for additional research. Nonetheless, a good new way to try to improve company culture.
Books, podcasts & the big stuff.
Thinking like Nassim Talib
If you have heard of the “Black Swan” or “Anti-Fragile” by Nassim Talib and his concept of our world being less than predictable, you might be excited about his new book: “Statistical Consequences of Fat Tails”. A take on how to deal with statistics and make it slightly more applicable given the universe throws black swans our way at random rates.
5. Tips & Tricks Tools & SaaS
Any new software you can use? Industry tricks you missed?
Tech vs hospitality industry
If you ever wondered what is holding the hospitality industry from being more tech-oriented, several experts were asked that question and the answers can be found here. In short, no money, willingness, or skillset to implement any meaningful tech change. We in the hospitality industry must be truly miserable.
Is my Airbnb insured?
If you have an Airbnb, insuring it with more conventional insurance might be a little complicated or simply not possible. No problem, Superhog might help out. They just got another round of investment and will surely offer some good deals to attract new clients. An insurance company specifically tuned towards Airbnbs and their wonderful guests.