Expert opinion is coming together: many now point to mid-2017 as the end of the current boom cycle in the hotel and resort business and, no, few experts anticipate anything like a crash or the mayhem of the recent Great Recession. But the good times, and the forever upwards urge of RevPAR, probably is indeed coming to a halt within nine or ten months.
You will never have an extraordinary hotel, restaurant, bar, or any other type of business if your employees are complacent. You must strive for excellence and truly care about all facets of a business in order to be best in class. It doesn't come from formal on boarding, standard operating procedures, or client analytics. True excellence comes from a passion and an enthusiasm for every task within a business. Passion comes from within each of us. We can't look to anyone else to motivating us into being exemplary. If you want to be amazing, it's up to you. Only you can motivate, inspire, or pump yourself up. While you can research or study how to implement optimism into the way you serve others, only you can make the decision to implement techniques into your life to be better.
It may seem overly simple to say that successfully opening a hotel requires a clear strategy, but a surprising number of properties are developed and opened each year with less than a fully-developed strategy in place. A few of them struggle through and manage to make it, while a large number of them fail.
This article is designed to include the keys to business planning and development success but there are changes occurring in our industry that require monitoring. These include disruption (is it really disruption or is it innovation?) and changes that have transformed our industry from an art to a science. Before we complete our business plans for 2017, a review of macroeconomic data is in order. China's growth is slowing, Europe remains suspect due to the Brexit and limited growth signs but we do not anticipate a recession in the U.S. economy in 2017. Despite the economic uncertainty and global terror threats, we believe a soft landing will keep the U.S. slowing to about a 1.5 percent GDP growth rate in 2017.
Right now, the hotel industry is experiencing a virtual gusher of new brands. There are so many new faces on the logo tree that even as a keen observer of our niche in the world, I am having difficulty placing what brand goes with what house. I imagine that launching a new brand registers some excitement in the corporate head office, adding a somewhat pleasant diversion for the c-suite executives from the real work of fighting the real issues such as the encroachment of alternate lodging providers, elusive millennial travel desires, waning loyalty or the market domination of the OTAs.
Whether your business is product or service-based, having the necessary equipment is vital to keeping your venture operating smoothly. Replacing, upgrading or purchasing equipment for the first time can put a serious pinch on your cash flow but with the right financing, you can get the things your business needs without making a substantial dent in the bottom line.
Now that you know how to build your own hotel chain, let's talk about how to run it right. It is critical to understand that getting there and staying there are two vastly different things. You've developed a good product with clear brand positioning, and as CEO, you now need to develop and articulate the growth strategy. According to my good friend and sales consigliere Frank Cespedes of Harvard Business School, in his landmark book "Aligning Strategy and Sales", it goes like this:
A well-executed building equipment project can save energy, reduce maintenance costs, and significantly improve the guest experience. However, a poorly managed project can be disastrous for a hotel in terms of the resultant cost overruns, guest complaints, and long-term dissatisfaction with the installed equipment.
In early June, we all watched the news as a titan of professional sports passed away. Muhammed Ali was one of the most colorful athletes that ever lived – as entertaining in the ring as he was in the press box, and not without his own dose of controversy. Whether it was a Thrilla in Manila or a Rumble in the Jungle, he was always more than just a boxer, striving to win the hearts and minds of his audience well before facing his opponent.
Airbnb is a game changer for the hotel industry with many citing it as having dire effects on a property's long-term revenues and overall asset value. While government agencies have been slow to react to the appeals of hospitality lobbyist groups, they have acted far less sluggish with regard to the impact of these alternate lodging providers on the housing market. As a legislative body's primary mandate is to get re- elected, the last thing any regulatory agency would want to do is (excuse the expression) piss-off its constituents – that is, the voters who might be negatively affected by unregulated Airbnb lodging usage.
Investor interest in fixed-income hotel real estate is at unprecedented levels. Fund managers increasingly see leased hotel assets as an attractive portfolio option amid the current low interest rate environment. The scale of investor appetite was underlined by CBRE Hotels' inaugural Fixed-Income Breakfast, where attendees representing leading UK and European investor groups debated the key challenges and opportunities within the European hotel sector.
Reaching its zenith in the mid-1990s following the proliferation of the personal computer, I have many fond memories of the hotel business center. Such facilities were a high priority for road warriors who needed to refine presentations, print materials, prepare travel itineraries or work on just about everything else, all while hotel staffers stood at the ready to assist wherever they could.
The Internal Revenue Code (aka the "IRS Code") requires that the cost of commercial property be expensed over its designated recovery period. This annual expense, known as depreciation, is a benefit to the owners of commercial properties in that it reduces their taxable income. Generally, commercial real estate is depreciated over 39 years on a straight-line basis. Land is not depreciable and must be shown as a separate non-depreciable asset.
A frequently asked question of us at CBRE Hotels' Americas Research is, "When will the current up- cycle end?" Some inquisitive types go so far as to ask, "How will it end?" At the "end" of the past two up-cycle phases, the peak rapidly dropped into a deep trough precipitated by tragic and disruptive shocks (i.e., 9/11, financial crisis) that made people hesitant to travel. In the absence of catastrophic events, hotel demand usually falls victim to the natural death of the up-cycle. After all, as I have heard some exclaim, this current expansion phase has lasted more than 27 quarters (i.e., Q3 2009 – Q2 2016), so it is likely that a recession is near given that certain past up-cycles were either shorter (i.e., Q1 1975 - Q1 1980) or slightly longer than this recovery (i.e., Q4 1982 - Q3 1990).
The rising trend of Chinese investment in the U.S. real estate market dates back to 2010, just as the nation's economy was pulling out of the recession. The impact of Chinese investment in U.S. residential and commercial properties— including hotels—has become increasingly pronounced every year since.[1]
The roaring rate of unemployment in Africa, with South Africa alone recording a stubborn increase from 24.5% to 26.7% in the first quarter of 2016, is raising an alarm over the future of the influx of graduates entering the job market every year. Companies are increasingly laying off employees due to seasonal economic fluctuations, a factor experts highly attribute to the unemployment menace in the continent.
Arizona recently passed a bill that outlaws cities and municipalities from prohibiting short-term rentals, such as Airbnb rentals. The Airbnb platform allows anyone to rent out a room or an entire home to travelers as a way to make additional income.
As Americans continue to "rediscover" urban areas, they not only seek-out these areas as places to live but also as places to stay when they travel. These walkable neighborhoods offer residents and visitors ready access to civic, economic, and social nodes, to which local hotels can provide access for guests. This results in demand from more segments of hotel guests than if the hotel were located near a single demand driver.
There may be no better way for hospitality firms to learn and gain inspiration for successfully transforming their businesses by leveraging technology than by looking at some of the "unicorns" that have successfully tapped into the hospitality sector.
For big hotel chains, loyalty programs are a popular strategy to successfully drive bookings and to improve customer relations. However, size doesn't mean small and medium hotels can't implement loyalty programs to complement their business strategy.
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