Week 6 - Hotels fighting turnover
Paris Olympics STR predictions, EU enforcing ESG reports, Chinese willingness to travel drops 14% and more!
TLDR: Too Long Didn’t Read
In follow-ups, the European Travel Commission highlights safety and affordability as key factors for international travelers in 2024 🌍✈️💰, while Paris prepares for the Summer Olympics with high hotel bookings but significant room vacancies 🇫🇷🏨🥇.
In industry news, Europe leads in hotel sustainability reporting 🌱🏨, Soho House considers privatization amid financial scrutiny 💼💰, and staffing shortages persist in the hospitality sector 👥🏨. China sees a shift towards adventure-based travel 🇨🇳🌄, and Naples attracts a younger demographic through sports-focused initiatives 🇮🇹🏟️.
Meanwhile, outside factors impact the industry, with U.S. states like Tennessee emerging as economic powerhouses 🇺🇸💼, and sub-Saharan Africa grappling with a housing crisis 🌍🏘️.
Academically, a study explores millennial preferences for job retention factors 📚💼, and in tips, Tin Inn-Hotels gain popularity for their sustainable container-based design 🌿🏨, and the travel industry shares lessons from early adoption of generative AI technology 🤖📊.
0. News snippets
Not important enough to expand on, but worth hearing about
Election in Pakistan causes major unrest, opposition wants to form a government, first time in decades | ING believes we should be cheerful about the economic future in 2024 | Palestinians are preparing for the Rafah assault, conflict is long not over. |
0.5 Follow up
Where we follow up on news from previous weeks
International Travelers to Europe Prioritize Safe Destinations and Affordable Prices in 2024
The European Travel Commission's latest report reveals a cautious optimism among international travelers for 2024, emphasizing the importance of safety and affordability in choosing European destinations. With varying levels of travel intention across key markets, China is the only one with a decreased intention to travel (14% less), yet Chinese have the strongest intention to go to Europe (50%) next to Brazilians with 49%. If you want to see more, the full report also provides intended budgets by country.
Paris Summer Olympics: Three Key Trends to Consider
As Paris gears up for the Summer Olympics in 2024, a century since its last hosting, STR highlights three pivotal trends: substantial pre-bookings, with over half of hotel rooms reserved, and forecasting a vibrant summer. This event promises a significant impact on hotel performance, emphasizing the importance of advanced bookings and the potential for ADR spikes, despite a modest increase in new hotel inventory. Paris's strategic preparation, including controlled supply growth, sets the stage for a successful hospitality sector during the Olympics, at least for those who are collecting the cheques! Interestingly enough, STRs forecasts a final city-wide occupancy of 72% (a 9% increase from last year), yet still almost 30% of rooms will be vacant?!
1. Main Hospitality News
Core news related to the industry
How Europe is Pioneering Hotel Sustainability Reporting
Europe is making significant strides in the realm of hotel sustainability reporting, setting a new benchmark with the Corporate Sustainability Reporting Directive (CSRD) initiated in early 2024. This directive heralds a transformative era in transparency, compelling companies to disclose comprehensive environmental and social information. Amidst this shift, BeCause, a sustainability management and data automation SaaS firm, emerges as a key player, or someone who is likely to benefit most from this directive. “Once data collection is set up, hoteliers must ensure its accuracy and be unafraid to take accountability for their company’s entire value chain”, a truly great statement that surely won’t create a bunch of fingerpointing. So make sure you hire another consultant and allign with the sustainable economy goals of the EU or else you can get fined 10 millio Euros or 5% of turnover. In case you are worried here is a detailed breakdown of which company size has to report what. If you have smaller than 20 million turnover, you are off the hook!
Soho House Contemplates Privatization
Soho House, known for its members’ clubs and hotels, forms a committee to evaluate strategic transactions, potentially leading to the company going private. Criticism from GlassHouse Research highlights concerns over Soho House's unprofitability, debt levels, and growth strategy. Soho House responds by authorizing a $50 million share repurchase, but questions remain regarding its ability to increase revenue per house and sustain profitability. More on Skift.
67% of Surveyed Hotels Report Staffing Shortages
A survey by the American Hotel & Lodging Association highlights a significant staffing crisis in the hospitality industry, with 67% of hotels reporting shortages. Efforts to attract and retain staff include wage increases and improved benefits. As a result 80% of surveyed hotels are boosting their wages. Perhaps it is all about the money after all?
China's Lunar New Year 2024: Embracing Adventure Over Tradition
More affluent Chinese tourists are opting for experience-based trips abroad, such as adventure or cultural holidays, over traditional group tours and shopping-oriented vacations. Travel agencies are adjusting their offerings to cater to the trend, with a focus on private tours and special interest holidays, seeing significant growth in demand. European luxury brands are adapting to fewer sales from Chinese tourists and a shift towards independent travelers with higher spending power, signaling changing dynamics in the travel retail sector. More here.
A Focus on Sports in Naples Attracts a Younger Demographic
Naples, Florida, yes you heard right, is gaining attention for its strategic focus on sports, particularly with the Paradise Coast Sports Complex, which has become a beacon for youth and adult sports teams. This focus is not only enhancing local tourism but also stimulating the hospitality industry, as hotels in the vicinity note a surge in bookings and average rate increases. The complex's expansion and the introduction of new attractions like Great Wolf Lodge and ECHO Suites Extended Stay by Wyndham are poised to further transform Naples into a vibrant hub for sports and family entertainment.
Mixed Signals in Hospitality Capex Market for 2024
Higher capital costs are reducing transaction-related renovations and constraining new development, but deferred PIPs from the pandemic era are providing steady business for the capex industry. Further, the staff reductions during the pandemic have led to lean resourcing, but construction costs remain high, posing challenges for project execution. To mitigate risks and maintain flexibility, clients are advised to invest early in planning and design, cast a wide net for contractors/consultants, and build exit strategies to adapt to shifting market conditions. More on hospitalitynet.
2. Externalities
Economics, finance, geopolitics. All have an impact on the hospitality sector.
California and New York are slowing down, while other cities are catching up
It is often said that big gets bigger and small, well stays that way. U.S. states beyond the traditional powerhouses of California and New York however are prooving the opposite. The spotlight shines on Tennessee's Nashville, affectionately dubbed "the Athens of the South," not just for its historical replication of the Parthenon but for its burgeoning role as a nexus of education, living, and economic expansion. According to the Milken Institute's "Best Performing Cities" ranking, Nashville's blend of high salaries, job abundance, manageable living costs, and a thriving tech sector place it in the coveted top ten. This ascendance is mirrored by Vanderbilt University's strategic embrace of innovation and partnership with tech giants, signaling a vibrant future for this metropolitan phoenix rising from the ashes of its 2010 floods. Who knew cities can also compete for attention and growth, while bad decisions of others can cause a downturn.
How to House the World’s Fastest-Growing Population
In an eye-opening exploration, The Economist dived into the profound housing crisis gripping sub-Saharan Africa, where a burgeoning population meets a stark scarcity of affordable homes. The narrative sheds light on the plight of individuals in regions like Dakar, where dreams of homeownership are quashed by financial and bureaucratic hurdles. With an estimated 230 million people living in slums, the challenge is monumental. Yet, it's posited as an unparalleled opportunity for growth, jobs, and sustainable development. 70% of buildings demand for 2040 does not exist yet. Why? Outdated building code, low wages vs costs of buying housing, only a whooping 4% of land is registered, the rest does not exist in the land registry. Innovative solutions? Embracing incremental building and exploring alternative financing models. And of course image the potential there is for hospitality to be mixed in with the rest!
3. Academia
Scientific papers related to the topics above. For those who want to know for sure ;)
How do Millennials rate pay, when it comes to turnover?
On the topic of higher salaries, due to staff shortage mentioned above, a study from 2020 showed that generation Y lists “pay” as the 3rd reason to stay in a hospitality company. The first 2 are “work environment” followed by “empowerment”. Hence, theoretically just give the Gen Y (millennials) some great office and the power to do what ever they want, and salary does not matter as much. I can personally attest, this works 😛 The aforementioned study was only a survey and not a factual follow up with employees over the years, but still!
4. Readables
Books, podcasts & the big stuff.
Make guests happy with architecture!
How to books on Hotel Design and prevalent and we ourselves have recommended a few. This time around we found the book “The Architecture of Happiness” a pretty productive read for industry professionals alike. Ever wonder what water facet to choose or room layout, this book will help out with that.
5. Tips & Tricks Tools & SaaS
Any new software you can use? Industry tricks you missed?
Sleeping in a container: Tin Inn-Hotels are growing quickly!
Check out a new concept that is implementing trends long talked about in the industry. Tin Inn-Hotels, a rapidly expanding chain utilizing upcycled shipping containers, represents a fresh approach in the hospitality industry. Launched in May 2023, these hotels are celebrated for their sustainable design and construction. With three hotels already operational and more on the way, Tin Inn's success is underscored by high occupancy rates and positive guest feedback. Their expansion strategy focuses on selecting locations with a lack of overnight accommodations, integrating into local communities to benefit both guests and residents.
Travel Early Adopters Share Lessons After Year with Generative AI
The travel industry's early engagement with generative AI, like ChatGPT, has led to innovative applications and lessons learned (for some). Companies like Trip.com and Expedia Group quickly adopted this technology, creating chatbots and plugins to enhance customer interaction. The journey has involved refining these tools for better productivity and insights, with startups finally sharing their experiences to guide future applications. The articles provides 3 specific cases from the industry, for details click here.