Through our blog co-sponsor, the Cornell Center for Hospitality Research (CHR), we had the opportunity to interact with some of the research faculty at the Cornell School of Hotel Administration at the end of 2013 to find out what they’ve been working on, and how they see things shaping up for the hospitality industry in 2014 and beyond. If you are interested in learning more about these individuals, I’ve provided a link to their bios through a hyperlink on their names.
Since the economy has been such a huge factor in industry predictions recently, I asked for another lesson in economics and finance from Pamela Moulton (see my blog on her research into “post earnings announcement drift” from earlier in 2013), who described the conditions in 2013 that will lead to continued confidence (and economic growth) in 2014. Pamela told me that 2013 was a record year for issuance of corporate bonds (debt, for those of us unfamiliar with this instrument), and this is projected to continue into 2014. The reason for this record breaking performance is twofold. Corporations are taking advantage of the relatively low interest rates to raise capital through issuing debt. Investors like corporate bonds because they tend to have a higher yield than treasury bonds, and they are willing to invest in corporate bonds because signs are pointing to an improving economy, so corporations are not likely to default on these obligations. The Federal Reserve may raise interest rates slightly in 2014, but not by much, so this condition is likely to continue through 2014, (although Pamela doesn’t think that 2014 will break 2013’s records). These same signals that the economy is strengthening are making the market more attractive for companies to raise capital by issuing stocks (equity) as well. 2013 was the busiest year for IPOs since the downturn (including several major hotel IPOs, with more on the way). With all this activity continuing into 2014, hospitality companies are well positioned to raise capital for new projects, so we can expect to see some continued activity in this area through 2014.
By all accounts the recovering global economy in 2013 has prompted a return to optimism, and also accelerated trends that will impact the industry well into 2014. The faculty identified three areas to watch in 2014: technology, guest experience, and human resource management.
Read the full article at SAS Institute Inc.