Week 45 - Airbnb updates host's tool belt, GDP & travel, Innovation by adaptation
Week 45 - Airbnb updates host's tool belt, GDP & travel, Innovation by adaptation
Airbnb grows despite regulations, Travel and impact on global economy, Choice hotels still wants to buy Wyndham and more
TLDR: Too Long Didn’t Read
Airbnb defies regulatory challenges with a 19% supply growth, reaching 7 million listings 🏡🚀. Choice Hotels persists in pursuing a hostile takeover of Wyndham 💼🏨, while Latin America sees a record-high hotel development with 415 thousand new rooms 🌎🏨. The Economist and booking.com release a study on travel's positive economic impacts 📊✈️. Sortis' $85 million deal for Ace Hotels collapses 📉💔, and Hilton Grand Vacations proposes a $1.5 billion merger with Bluegreen Vacations 💼💰. Geopolitically, politicians today lack the bold economic reforms of their 90s counterparts 🌐👥. Clean-energy stocks decline 📉💹, and ING predicts a fall in US inflation to 2% 🇺🇸💹. An academic paper explores obstacles to India's tourism growth 📚🇮🇳. Additionally, the section covers construction insights on YouTube 🏗️🎥, innovative hotels in Germany/Austria 🇩🇪🇦🇹, and Airbnb's upgraded tool belt for hosts 🧰🏠.
0. News snippets
Not important enough to expand on, but worth hearing about
A major glacier in Chile has been permanently closed for tourists, due to melting and its dangerous condition. One down, more to go! | Tripadvisor beta testing AI-generated itineraries might become their cash cow since users with an Itinerary generate 3x more revenue for the platform.
0.5 Follow up
Where we follow up on news from previous weeks
Airbnb grows supply by 19%, despite regulations
After the NYC regulations, making it more challenging for people to become Airbnb hosts the total number of Airbnbs on the platform has grown by 19%. Putting the total number at around 7 million. The article does not mention what the numbers are specifically related to New York. Nonetheless, a 19% growth year on year is showing how Airbnb is becoming a top dog, even without New York. Booking.com on the other hand has 28 million listings. Quite a bit to catch up on, for a platform that seemingly has unlimited supply.
Choice Hotels Persists in Wyndham Pursuit Despite Perceived Pipeline Challenges
The company initiated a hostile takeover bid for Wyndham, prompting criticism from Wyndham executives who assert that Choice has utilized mergers and acquisitions to conceal its deficient organic growth. Hotel analysts at JP Morgan question Choice's pipeline growth, highlighting that "Choice-legacy room count has negative to modest footprint growth" in contrast to competitors such as Wyndham. Despite this, Choice Hotels maintains an optimistic outlook, underscoring its efficient speed-to-market processes and robust franchisee support. Additionally, the company reveals plans for another Wyndham takeover attempt in May of the following year, coinciding with the annual shareholder votes. Check out the numbers on Skift.
1. Main Hospitality News
Core news related to the industry
Latin America hotel pipeline record high
Contrary to other markets, Latin America has reached record-high hotel development since 2017 (a peculiar year to come back to). With 415 thousand new rooms in the pipeline. This is broken down by economic powerhouses, meaning Mexico is number 1 in the number of rooms, followed by Brazil and the Dominican Republic. EU on the other hand, had around 256 thousand rooms in the pipeline for Q2 2023 (the latest numbers we could find). Given the Western world is toning down its hospitality growth, it's a refresher to see other markets growing anyway.
Travel Impact on the GDP
The Economist & booking.com have partnered up and released a study, trying to identify the positive impacts of travel on the economy. While booking is most certainly biased when it comes to the travel industry, the study itself is seemingly unique. Some key findings we found are: Gender equality has a direct positive impact on growing travel trends (mostly due to 54% of employees in the industry being women, hence more travel more jobs for women). Travel impacts GDP mostly positively, however this changes depending on the destination (i.e. 1% increase in Travel brings 0.5% growth in Real GDP in the US, in the EU that number goes down to 0.24%). This is impacted by what services & products are being consumed and if they are being produced locally. Finally, a 1% increase in travel impacts local rental prices by 0.03% (this by the way only applies to destinations with very high tourism levels already, in other destinations this % is lower.) For more insight visit the study here.
Sortis-Ace $85M Deal Falters
In January 2023, the hospitality firm Sortis announced its acquisition of the Ace Hotel Chain for $85 million. However, challenges emerged during the acquisition process, marked by lawsuits and settlement attempts. Subsequent material changes, such as the loss of hotel management contracts and the departure of a key employee, prompted the decision to terminate the deal, exacerbated by the impact of rising interest rates. Despite these setbacks, Ace Hotel remains financially robust and independent, showcasing resilience with plans for new properties and a positive outlook on prospects. More on Skift.
Hilton Grand Vacations Bids $1.5B for Bluegreen in Strategic Timeshare Merger
Hilton Grand Vacations proposes an all-cash acquisition of Bluegreen Vacations at $75 per share, totalling around $1.5 billion, including net debt. The merger aims to enhance competitiveness in the vacation ownership and experiences sector, leveraging Bluegreen Vacations' organic growth, a customer base of over 200,000 members, and strategic partnerships. More on the deal.
2. Externalities
Econimics, finance, geopolitics. All have an impact on the hospitality sector.
Politicians today implement little change, compared to their 90s counterparts
A variety of world economies were liberalizing themselves, especially in the 80s and 90s. In some cases, neo-liberals have nonetheless become a swear word. The so-called imposed rules like removing tariffs on imports or generally easing trade have for many, according to the Economist article, become a negative. Finally, countries with politicians implementing drastic reforms have almost dropped to zero. Compared to the late 20th century when over 20+ countries were changing things tremendously. This means politicians today are perhaps “scared” to change things. Yet, the statistics for the past 30 years show that those reforms have indeed borne fruit. Countries like Lithuania & Latvia, where economic growth has been in the 200% range since 1995. So perhaps next time you vote, think about politicians who are willing to change and reform, for it might be worth it.
Sustainability trends up, clean energy down
Green energy and sustainability have obviously risen in popularity, especially in the service industry. Yet, clean-energy stocks have been failing for the past 3 months. 76/77 stocks in a popular clean energy fund have lost value, while the S&P 500 has risen by 14%. Projects like wind farms, electric car releases and the sale of plain old solar panels are down. Perhaps the general public eagerness to buy green does not seem to turn into real dollars as much.
Inflation in the US is likely to go to 2% (mostly due to housing)
Bankers, or more specifically ING are confident that inflation will fall to the golden 2% , which would allow the federal government to loosen the pressure on the economy. Why? Due to falling oil prices, a decrease of labour costs and apparently rent. All of these are the major part of the inflation basket that is then put together to calculate the overall inflation. Hence, dear readers at least in the eyes of US bankers, the covid printing machine is over. What remains are the long-term effects of these policies, that are being felt today.
3. Academia
Scientific papers related to the topics above. For those who want to know for sure ;)
Obstacles to India’s tourism sector growth.
We have talked quite a bit about India’s potential to become the next big tourist destination and a major source of tourists for the entire globe to entertain. Recently a paper came out explaining what challenges this country has to become a travel powerhouse. In short, they are lack of infrastructure, lack of talent in the field (since most talented people choose professions like engineering or finance) and inaccessibility to several locations. A pretty standard deck of issues that several other countries are fighting as well. For more details, check out the full paper.
4. Readables
Books, podcasts & the big stuff.
Construction know-how
If you are planning to build a new hotel or have to work on a renovation of a new restaurant, we found a pretty entertaining youtuber who is also a site inspector. While his videos mostly consist of describing the faults with various buildings he sees, this alone can provide tremendous learning into how things should actually be built. For all industry PMs out there, we recommend it!
5. Tips & Tricks Tools & SaaS
Any new software you can use? Industry tricks you missed?
Innovate through Inspiration
The question of innovation in any field is always there. How do you innovate? One method is to look at others and copy get inspired (at least for some). On that note, 23 hotels have been recently nominated for the most innovative in 2023 across Germany & Austria. The article provides a quick slideshow of 23 hotels and if want to jump into more detail, google the names mentioned. What we found more unique amongst the deck is the GymLodge. Event location, gym & hotel rooms in one.
Airbnb tool belt gets an upgrade
Airbnb is getting a light tech reboot. A multitude of new features are being offered, that can surely help those of you who would are currently hosts. A new AI tool that will look up your photos and automatically build a gallery for people to look at. Smart locks with pins can be integrated in the future within the Airbnb platform, an ability for hosts to compare pricing with competitors (not just see a recommended ADR), and so on. A great addition for a platform that is as big as Airbnb and yet still ready to innovate.