Week 50 - Miniature World of Choices: A Tourist's Dilemma in the Mall of Dreams
Over a 1000 hotel brands to choose from, Seychelles go sustainable, Airbnb settles a 576 million tax dispute!
TLDR: Too Long Didn’t Read
Germany raises VAT for restaurants from 7% to 19%, causing concern in the industry 🇩🇪🍽️💰. The hotel industry faces brand bloat with over 1,000 brands globally 🏨🌍, and ground and sea transportation struggles with limited digitization 🚗🚢💻. Airbnb settles Italian tax dispute with a €576 million payment 🏡🇮🇹💶. Airlines in the US see a surge in complaints due to staff shortages 🇺🇸✈️😓. Winter travel trends favor Berlin and Barcelona ❄️🌆. Seychelles prioritizes sustainable tourism through partnerships with local hotels and major chains 🏝️🌱. Argentina's new president, Javier Milei, promises economic shock therapy and spending cuts 🇦🇷💼💸. Germany reduces natural gas imports for diversification 🇩🇪🛢️. An academic paper examines social relationships' impact on hotel service quality 📚🏨👥. A two-hour podcast interview with Jeff Bezos offers insights into his life and perspectives 🎙️📈.
0.5 Follow up
Where we follow up on news from previous weeks
VAT increast for restaurants (in Germany)
Germany as many other countries lowered its VAT during the pandemic to especially support F&B and Hotels. The time of reckoning has unfortunetly come. Even though we saw several attempts from the industry to lobby a permanent 7% VAT on restaurants, the government still has to cover its budge deficit. In the recent survey by Germanies leading Hotel & Gastronomie Association DEHOGA, 62% of owners said that a hile to 19% VAT will hit them hard. This is added on top of general trends for restaurants still being worse than in 2019.
1. Main Hospitality News
Core news related to the industry
Hotel Brand Bloat Predicted
Over 1,000 hotel brands exist now globally in 2023, including major players like Marriott, IHG, Hilton, and Hyatt. Brands often designed with a focus on appealing to hotel owners, leading to a surge in the number of brands worldwide. It is easier to create a new brand, than fixing an existing one. The pandemic exacerbated brand bloat as standards were relaxed, prompting predictions of a shakeout as brands evaluate survival post-travel boom. More on Skift.
Ground and Sea Transportation in Need of Digital Transformation
We talked about it in the past, ground and sea transportation, a $157 billion sector, often overlooked in the travel industry, faces challenges in the booking process due to limited digitization, language barriers, and lack of live updates. Modern travelers seek convenient and connected itineraries, requiring seamless transportation options within regions. The sector, critical for authentic, off-the-beaten-path experiences, is currently fragmented and operates offline, hindering sales and fulfillment. The industry is undergoing a digital transformation, with efforts to educate transportation providers, bridge technology gaps, and raise awareness among consumers. More here.
Airbnb Settles Italian Tax Dispute, Agrees to Pay €576 Million
Airbnb has agreed to pay 576 million euros ($621 million) to settle income tax obligations with the Italian Revenue Agency for the years 2017-2021. In this settlement, Airbnb does not admit liability. The payment addresses the tax responsibilities of hosts in Italy using Airbnb, as the platform withholds income from hosts and takes on their tax liabilities. Notably, Airbnb does not intend to recover the sum from its hosts. This resolution follows a recent court order mandating the seizure of 779.5 million euros from Airbnb's Irish headquarters, linked to allegations of tax evasion in Italy. The case is centered on Airbnb's failure to withhold 21% of landlords' rental income, as mandated by a 2017 law. More on Reuters.
Decoding Travel Trends: Generational Shifts in Hospitality
Silent Travelers' Influence: Mobile tech-driven "silent travelers" reshape hospitality with digital services, influencing the industry for a decade.
Social Media Driven: Gen Z's social media dominance shapes hotel strategies, emphasizing engaging content and collaborations for visibility.
Sustainability and Inclusivity: Gen Z's commitment to sustainability challenges loyalty programs. Multigenerational travel rises, requiring inclusive facilities. Boomers impact hospitality, emphasizing unique experiences and amenities. More on EHL Insights.
Alternative jet fuel
The aviation industry is getting a sustainability makeover with United, JetBlue, and Microsoft playing fairy godmothers! They're injecting a cool $36 million into three jet fuel startups, because let's face it, green is the new black. Forget fairy dust, we're talking biofuels and synthetic paraffin here. Read more. Bassically by extracting CO2 from the atomsphere biofuel can be created, which in turn gets used by Airlines. The problem is however that the costs of CO2 capture alone far outweigh the costs of gazoline production (at least for now).
US Consumers: Airline Complaints Skyrocket
It seems like passengers have had it up to the overhead bins with airlines. Complaints are pouring in like never before. Missed flights, lost baggage, or just plain old terrible service? Whatever it is, travelers are not holding back their frustrations. Read More. One of the major reasons cited as the cause for the spike is still staff shortages (due to layoffs during corona)
Berlin and Barcelona, Europe's Winter Hotspots
Germans are cozying up in Berlin, while Brits are painting Barcelona red this winter. Europe's got its holiday favorites, and it's not just about the mulled wine. The travel trend's hotter than a summer in Ibiza! Read more.
Seychelles' Sustainable Sojourn
Over in the Seychelles, it's not just about sun, sea, and sand anymore. They're leading the charge in sustainable tourism. Think eco-friendly without sacrificing luxury. It's like having your cake and eating it too, but the cake's organic and locally sourced. Read More. Mostly by partnering with local hotel businesses. Club Med is suppoed to rebuild reefs. Hilton will be investing in local talent, training them and even offering Hilton jobs worldwide. Who know, one day we might see a Hilton CEO from Seychelles.
2. Externalities
Econimics, finance, geopolitics. All have an impact on the hospitality sector.
Javier Milei's Economic Shock Therapy in Argentina
Javier Milei, a political outsider and economist, has been sworn in as Argentina's president amidst the country's severe economic crisis. He promises "shock" therapy and deep spending cuts to tackle issues like 150% inflation and 40% poverty rates. His administration aims to restructure the economy, including plans to limit central bank powers, remove tariff subsidies, and freeze public spending. However, Milei's coalition holds only a small bloc in Congress, necessitating alliances with center-right conservatives and moderates, particularly in key economic roles
Germany's LNG Imports and Energy Diversification
Germany has reduced its natural gas imports by 12% in 2022 and is rapidly advancing floating storage and LNG regasification units to diversify its energy sources. This shift is part of Germany's effort to reduce reliance on Russian pipeline gas following the invasion of Ukraine. Three LNG cargoes have been reliably supplied to SEFE in Germany during a critical period of the country's gas crisis. And if not fixed soon, Germany and with it several other European countries will have no gas to heat their houses. But most importantly run their heavy industry, backbone of the economy.
3. Academia
Scientific papers related to the topics above. For those who want to know for sure ;)
What impacts service quality in hotels?
Imagine a typical hotel with its intense work culture and the thrive to hopefully deliver the best service quality. But what impacts that quality most? Well a new paper was released studying the social relationships between employees and their colleagues, as well as between their manager and how that in turn impacts the quality of the service. Turns out the better the social relationships the better the service quality. At first sight an obvious result, yet often very much ignored by several hotel proffesionals out there, giving excuses like stressful environments or “that is just the way it is”.
4. Readables
Books, podcasts & the big stuff.
Long-form interview with Jeff Bezos
One of a first kind interview with Jeff Bezos is out. A 2 hour podcast from Lex Friedman is interview the founder of Amazon on a variety of topics, including his childhood. If you are interested in the mind of one of the reachest man alive.