Week 48 - Amsterdam "Stay Away"campaign vs Charleston Preservation, Saudi Arabia ROE in minus
While some destinations push away tourists, others preserve the destination through zoning.
TLDR: Too Long Didn’t Read
In recent updates, Amsterdam's "Stay Away" ad campaign to deter party tourists reportedly failed, prompting a potential shift in strategy 🏰📣❌. President Biden proposes a ban on misleading hotel resort fees to address hidden charges 🏨💼💰. Meta's Menlo Park Campus inaugurates a citizenM hotel designed by Frank Gehry, offering sustainability and functionality 🏨🌱🔧. The NUMA Group acquires YAYS, a Dutch serviced apartment platform 🤝🏢, and AHLA President William Rogers discusses workforce challenges 💼🗣️. Visa's 2023 industry trends report highlights insights 📊🌐, and the impact of the AI boom on stock prices, especially for companies like Nvidia, is explored 🤖💹. A financial analysis of hotels in Saudi Arabia reveals unique market dynamics 🏨🇸🇦💹, and an interview with Hopper's CEO provides insights into the innovative OTA 🎙️🌐. The 2023 Smart Decision Guide underscores the importance of choosing a next-generation Property Management System for efficient hotel operations 📚💻🏨.
0. News snippets
Not important enough to expand on, but worth hearing about
What happens when a hotel company goes bust? 500 Employees get government support, 2 properties out of a huge portfolio get taken over by the landlords, and the rest is going to be adjusted to be profitable again (if not, closed or sold) | Four Seasons now offers a type of flight cruise around the world, book with them, get flown around by a custom in-air experience, full itinerary of activities would be set up for you. Cost 205 thousand USD.
0.5 Follow up
Where we follow up on news from previous weeks
Amsterdam ad designed to push away party tourists failed.
We had several follow-ups on a variety of news coming from Amsterdam. This time it is their “Stay Away” ad campaign designed to demotivate party tourists from coming to Amsterdam. A collection of small ads was produced showing a man getting too drunk, arrested, fined, and getting a criminal record. Well, the ad did not work. The amount of party trips has not decreased. Perhaps the target group has an AdBlock installed or the wrong people were addressed. Either way, if YouTube has shown you the ad, that means you are classified as a party beast. Congratulations! Attempt number 2 is to make a more user-friendly ad, showcasing all the different benefits of traveling around Amsterdam.
1. Main Hospitality News
Core news related to the industry
Federal Officials Propose Ban on Misleading Hotel Resort Fees
President Biden unveils a new initiative to combat hidden "junk fees," alleged to inflate costs by up to 20%. These fees, exemplified by "destination" or "amenity" fees in hotels, are mandatory per-room, per-night charges covering services like gym access and Wi-Fi. With an average nightly fee of $42.41, the hotel industry annually earns nearly $3 billion from these charges. The Federal Trade Commission aims to enact a ban, mandating transparent upfront pricing and imposing penalties for non-compliance. Find details here.
How is the number 1 tourist destination in the US doing?
Well splendid! Charleston has been elected the number 1 tourist destination by a few publications 11th time in a raw. It has surpassed 2019 levels by 2022 (a period when most were just recovering from COVID). Currently, there are preservation practices in place limiting hotel growth and zoning, designed to protect the historic city center. A practice, European cities are all too familiar with. Perhaps we will see an ad campaign coming out of Charleston next year, beating up party tourists with a sign saying “not welcome” or maybe that is just reserved for Amsterdam. Overall a great read coming from HVS!
Meta's Menlo Park Campus Now Features a citizenM
The new citizenM hotel at Meta's campus, designed by Frank Gehry, officially opened on November 27, marking its 32nd global property. Initiated in 2016, Meta (formerly Facebook) selected CitizenM as the hotel developer after competing against 18 brands. This sustainable hotel, employing modular construction, presents 240 guestrooms in a 79,400 square feet space. Situated in Menlo Park, a prominent tech hub, the hotel is tailored for remote and in-person work, offering private areas and SocietyM meeting rooms for Meta employees and guests. More here.
NUMA Group buys Dutch Serviced Apartment Platform YAYS
NUMA Group strategically acquires YAYS, a Dutch serviced apartment platform, aligning with its focus on central European hotel and commercial properties. YAYS presently oversees 489 units in the Netherlands, Belgium, and France, with expansion plans in Madrid, Frankfurt, and The Hague, contributing approximately 20% new units to NUMA's over 5,200 units live property portfolio. The integration of NUMA's digital platform with YAYS' appealing property portfolio marks a substantial move towards establishing dominance in pivotal markets, including Amsterdam and Paris. More here.
What does the industry association (AHLA) president have to say about the status quo?
Almost every country has a union or an association serving the needs of the hospitality industry. US has AHLA and this week an interview with its CEO William Rogers has come out. The state of the industry was discussed. Here are some key topics: Workforce challenges (i.e. can not find anybody to fill the position) have improved. Key factors for employee retention are instant pay, flexibility & various forms of general employee support. All of which have to be taken care of during the first 3 weeks of working. Finally, technology can be used to take away tasks from employees that they hate (not replace employees entirely).
Visa summarizes industry trends for 2023
Another week, another industry report. This time by Visa, showcasing the industry trends of 2023. Some key findings were: that Gen Z spent 8 more days travelling than the rest. The number 1 reason to travel was relaxation (47%). Cash is the preferred method of payment (even though Visa tries to show how stressful it is). The eco-travelers (76%) said they would choose an eco option as long as it’s the same price or cheaper.
2. Externalities
Econimics, finance, geopolitics. All have an impact on the hospitality sector.
Which companies are benefiting from the AI boom?
With all the AI tech booming around the world, which companies are benefiting from this? Especially on their stock price. The companies that produce the chips and data centres that are required to process all the AI demands. 1 is Nvidia than several others like Advanced Micro Devices and Analog Devices, Inc. All this while the rest of the industry is showing less revenue & a general decrease in stock prices. The above of course can be completely flipped on its head given predicting stock markets is almost always a speculation.
3. Academia
Scientific papers related to the topics above. For those who want to know for sure ;)
Saudi Arabia’s Return on Equity is -0.29
This week we will risk recommending a very “dry”, at least for some, type of academic content. Financial analysis. A new study has come out, analyzing the financial performance of hotels in Saudi Arabia. A very peculiar market, given how cash-rich it is compared to other markets. If you like this sort of thing then this paper is definitely for you. In short, hotels in Saudi Arabia have smaller profit margins than others and present a very low return on equity, in fact none (on average). Meaning the investment in the hotels was not worth it. This of course depends highly on how high the interest rates were and various other local circumstances. The study also does not account for tax returns, jobs created, and indirect spending of tourists arriving in Saudi Arabia. Nonetheless, a great study to check that deep dives into sevearl other indicators!
4. Readables
Books, podcasts & the big stuff.
Interview with Hopper CEO
We have seen quite a lot of news about Hopper, the new OTA that is challenging the industry with its more “innovative” way of selling inventory to tourists and travelers around the world. Well, an interview with the CEO of Hopper from a recent phocuswire conference has been released (as also reported last week). While a slightly longer format content, we nonetheless highly recommend it. Detailed conversations with industry leaders, especially of the start-up kind often showcase what the industry is really like.
5. Tips & Tricks Tools & SaaS
Any new software you can use? Industry tricks you missed?
Choosing a next-gen PMS guide
The success of a hotel hinges on its operational efficiency and guest experience, with a crucial role played by the Property Management System (PMS). The 2023 Smart Decision Guide emphasizes the importance of choosing a next-generation PMS for seamless operations. It covers key features such as real-time availability, reservation management, automated room assignment, payment processing, housekeeping, group sales, and analytics. A modern PMS not only streamlines tasks but also aids decision-making and customer service, addressing labor shortages by automating processes. It contributes to a contactless guest experience, reduces friction in interactions, and enhances efficiency while cutting costs. Having used Opera or Fidelio ourselves, we highly recommend you look into different options.