News

Management Company Compensation Slows in 2023

Prior research conducted by CBRE Hotels Research revealed that hotel management companies were rewarded handsomely as the U.S. lodging industry recovered from the COVID-19 pandemic. An analysis performed by CBRE in April 2023 found that total hotel revenue increased by 153% from 2020 to 2022, while Gross Operating Profits (GOP) grew by 437%. This resulted in a 68% increase in the fees paid to management companies and brought management fees back to pre-pandemic levels. The increases in fees were largely due to the improved performance of U.S. lodging properties, which in turn triggered the payment of incentive management fees.

HFTP and Hospitality Net Partner on Investment Sentiment Survey, Ahead of the Inaugural HITEC Technology IC

Hospitality Net and Hospitality Financial and Technology Professionals (HFTP®) are collaborating on a brand-new survey which aims to gather and analyze data on current investment trends, funding needs, future investment priorities, technology adoption rates, and the overall market dynamics within the hotel technology ecosystem. The objective is to identify areas of growth, potential investment opportunities, challenges facing the sector, and how technological innovations are shaping the future of the hotel industry.

A New Approach to Hotel Management Fees

In the ever-evolving hospitality industry, the question of how to effectively compensate hotel operators remains crucial. While the basic premise of paying managers for their management skills holds true, the prevalent incentive fee structures may no longer adequately align with market realities, particularly for owners.

Economic Watch: Fed Holds Rates Steady; Still Expects Three Cuts This Year

The prospect of higher inflation in coming months will likely cause volatility in financial markets. However, CBRE expects inflation will ease toward the Fed’s 2% target as the year progresses. While it’s too early for the Fed to declare victory on inflation, forward indicators point toward softening in the labor market. This should give the Fed confidence to make its first rate cut in June. With two additional rate cuts expected this year, CBRE forecasts that the federal funds rate will end the year at a range of 4.50% to 4.75%, while the 10-year Treasury yield is expected to fall to 3.7% from about 4.3% currently.