The halls of the JW Marriott Desert Ridge were buzzing this week as thousands descended upon the Phoenix resort for this week’s Lodging Conference. If you couldn’t make it to the event, here’s a quick recap of what you missed.
India’s initial public offerings (IPO) market has been thriving for the past few years, and 2021 ended up being a record year with over 60 IPOs, as the country’s stock market reached new highs, putting the COVID fears to rest. This positive trend has continued in 2022, with 19 companies launching their IPOs so far. However, hotel industry IPOs have been few and far between, with Lemon Tree Hotels and Chalet Hotels being the noteworthy ones, but even those were before the pandemic.
One of the obligations of moving from a home to a condominium is to take your turn on the board of directors. Don’t let anyone fool you into believing that this is a simple, 10-hours-a-month task. The time investment is significantly higher, and even though there is no financial remuneration, your fellow unit owners will treat you as if you’re a paid servant. Perhaps this situation strikes closer to home for many of you already.
I used to think of the budgeting process as a necessary evil, but speaking with David Lund, who has 30+ years of operational and financial leadership experience working with companies such as Hilton, Best Western, and Fairmont Hotels and Resorts, changed my view on this.
In Part 1 of this series, I highlighted that hotel property investors transact to acquire both real estate and the operating businesses with their varying sets of revenues and expenses. This institutional arrangement is unlike those for most other commercial real estate investments in which the business owners make fixed rental payments to property owners while expenses are mostly variable. Hotel investments therefore come with counteracting exposures to inflation of operating revenues and expenses that may neutralize inflation impacts on profits (i.e., net operating cash flows). The statistical results reported in Part 1 suggest that hotel profits do not adjust to inflation. Over the period of 1946-2020 inflation positively influenced both total revenues and total operating expenses to the extent that they offset one another.
Here’s the scenario. You have finally got a full-blown accounting policy manual in place. It has taken several months and a lot of work, but it’s done. Something to be proud of indeed! But wait a minute, it seems like no one knows about these policies and whenever you speak about such and such internal control not being followed, you get the deer in the headlights look. This all too familiar stare means one thing, these people have no idea what you’re talking about.
Bonus Depreciation is fading away over the next 5 years. With the help of the IRS Section 179 Deduction and still powerful Bonus Depreciation, lodging Owners can save thousands of dollars in federal income tax savings in 2022 and beyond.
According to a recent GlobalData report, 573 deals (including mergers & acquisitions, private equity, and venture financing) were announced in the global travel and tourism (T&T) industry in the first half of 2022, reflecting a 3.1% increase over the same period last year. However, before these deals are concluded, the asset needs to be valued. So, how do we determine a hotel's market value and what exactly is valued under the category of hotels? The main valuation techniques are briefly covered in this article.
What brands don’t know is, they can create great financial bench strength in their hotels and their owners will pay 100% of the cost. Brands also don’t know that they can create this bench strength with resources that are readily available. Lastly, brands don’t know that their non-financial managers are literally dying to get these financial skills and abilities now and they want to apply them.
Having a financial system that produces regularly scheduled information about your hotel and the direction it is going is paramount to your survival. Without this regular reporting, you are really flying by the seat of your pants. But what exactly do you need to be looking at and who produces it and when?
The recent price surge for many goods and services in the U.S. raises the prospect for an extended period of persistent high inflation. Conventional measures of inflation track either specific sets of prices that consumers pay, notably the Consumer Price Index (CPI), or for economywide spending - Personal Consumption Expenditures (PCE).
In 2020, the average hotel in CBRE’s annual Trends® in the Hotel Industry survey experienced a 108 percent decline in earnings before interest, taxes, depreciation and amortization (EBITDA), resulting in an EBITDA margin of -5.5 percent. For hotels, EBITDA represents the cash flows from operations that are used to fund debt service and provide returns to investors. This is by far the greatest decline in EBITDA since CBRE began tracking the performance of the U.S. lodging industry in the 1930s.
Take a second and think back to 2019. After everything, it feels more like 30 years ago, never mind three years ago. Some studies even go so far as to say that foggy memories are an expected byproduct of the pandemic, thanks to monotonous days, surroundings, and even conversations.
I have recently read more than one article on breakeven analysis and they all miss the mark in my books because they focus on what occupancy is needed. Occupancy is only half of the final recipe. You also need rate and really in the end you come up with your real break-even point using REVPAR.
Mail-related check fraud has been rising since last August, according to the Evidence-Based Cybersecurity Research Group at Georgia State University, which has been tracking the trend. It warns that criminals have a pretty easy time when it comes to getting their hands on your checks. In KPMG's survey of senior risk executives, 67% say their companies have experienced external fraud in the past 12 months, and 38% expect the risk of fraud committed by external perpetrators to somewhat increase in the next year.
On-the-go reporting is important for businesses to stay up to date on their data and influence growth. This technology can revolutionize the way you view and understand your business. In the hospitality industry, companies need to stay updated on analytics, trends, and data being tracked within its properties. Not only do you want your data to be easily accessible, but with on-the-go reporting, you can constantly be updated throughout the day and use the information provided through on-the go reporting to help scale your hotel operations.
An assessment of the accuracy of traditional approaches to valuing the economic contribution of convention, sports, and entertainment venues reveals significant limitations of economic impact models that tend to produce noisy and sometimes biased estimates. Improved methodologies and the effective use of available data sources that address some of these limitations can provide more reliable estimates. Venue owners and destination market organizations need improved methodologies to estimate the return on public sector investment in capital improvements, marketing and sales, and venue operations.
I recently watched a documentary on fraud and why the auditors were unable to detect anything even when they were right on top of what was so obvious to the person featured in the interview. The narrator also explained very clearly that the audit function is set up to fail.
Over the years, I’ve had the pleasure of meeting and sharing ideas with some of the brightest minds in hospitality. Many of these tenured professionals have found themselves at the precipice of change, able to envision a future driven by innovation and digital connectivity at a time when much of the industry remained stuck in the past. Without these forward-thinking minds, many of hospitality’s core processes and offerings would be confined to legacy systems and unable to meet the modern guest's ever-evolving, and ever-heightened expectations.
Inflation is soaring in many countries due to a combination of factors such as rising fuel prices, ongoing supply disruptions, strong demand, and the Russia-Ukraine war. While the central banks around the world are raising benchmark interest rates to try to control the situation, inflation is likely to remain high in the near term. For instance, the US recorded four-decade-high inflation in May 2022, prompting the Federal Reserve to raise interest rates by 75 basis points (bps), the largest rate increase since 1994. A similar pattern can be seen in the UK and several other countries. India, also, recently reported eight-year high inflation, resulting in rate hikes by the RBI.