2016 Hotels in India: Trends & Opportunities
The season's first rainfall. A child's first words. Your very first pay check. Beginnings are a cherished feeling! Why should it be any different in the world of hotels?
By Achin Khanna and Diksha Chopra
Reports
Indonesia is the Next China for the Hospitality Industry
Right now, we are all still talking about the rapid growth of China and to a lesser extend India, Russia and Brazil under the collective banner of BRIC. Their evolution into capitalistic territories has presented countless lucrative prospects for hospitality organizations both big and small. But there should be a fifth name in this acronym which is often overshadowed despite what's happening on the ground and despite it being the fourth most populous country in the world.
By Larry Mogelonsky, Partner, Hotel Mogel Consulting Limited
Freitag’s 5: July occupancy drops, demand sets record | hotelnewsnow.com
July's occupancy decline was the sharpest of 2016 so far, but July was also the highest room demand month ever. Here are five things you need to know about how the U.S. hotel industry performed in July, courtesy of STR, HNN's parent company.
U.S. Lodging Industry Fees and Surcharges Forecast to Increase to a New Record Level in 2016 – $2.55 Billion
Following the 2015 record of $2.45 billion, total fees and surcharges collected by U.S. hotels are forecast to increase to another record level of $2.55 billion in 2016. Although the amount will establish a record level of fees and surcharges, the percent increase will be the lowest since 2009.The increase for 2016 reflects a combination of approximately 2.0 percent more occupied hotel rooms than in 2015, more categories of fees and surcharges, and higher amounts charged, but lower fees and surcharges for high speed Internet access, for a total increase of approximately 4.0 percent.Fees and surcharges emerged as a common industry practice around 1997, and a notable event in the history of fees and surcharges was when energy surcharges were introduced for a large number of hotels in 2000. Since then there have been numerous categories of fees and surcharges introduced.Examples of fees and surcharges include: resort or amenity fees, early departure fees, reservation cancellation fees related to timing of cancellation, Internet fees, telephone call surcharges, some business center fees (including charges for receiving faxes and sending/receiving overnight packages), room service delivery surcharges, mini-bar restocking fees, charges for in-room safes, automatic gratuities and surcharges for other than all-inclusive resorts, baggage holding fees for guests leaving luggage with bell staff after checking out of a hotel but before departure, and charges for unattended parking. For groups there have been increased charges for bartenders and other staff at events, special charges for set-up and breakdown of meeting rooms, and administrative fees for master folio billing.Among the newest of fees and surcharges relate to a "guarantee" of a specific room type such as a room with a King bed or two Queen beds, or a room on a high floor, typically subject to availability.An increasingly common relatively new fee or surcharge is for early check-in, primarily for resorts, more common in Las Vegas (typically check-in time might be 3:00 pm, but if a guest arrives earlier and a guest room is available, traditionally there was not a charge for early check-in). Other of the more recently introduced fees and surcharges include charging for unattended surface parking in suburban locations and holding checked luggage.U.S. lodging industry fees and surcharges have increased every year except for brief periods following 2001 and 2008 when lodging demand declined.Fees and surcharges are highly profitable; many have incremental profitability of 80 to 90 percent or more of the amounts collected.Some fees and surcharges are sometimes unfairly called "hidden" or "surprise," but disclosure on websites, confirmation emails, "tent" cards in guest rooms, room service menus, and guest service binders continues to increase in the nature of the disclosure. One of the reasons for the sense that some of these fees and surcharges are "hidden" or "surprise" is because the categories are often established and the amounts are set hotel-by-hotel rather than by brand, and both can change frequently.In 2012, the Federal Trade Commission (FTC) Division of Advertising Practices issued 22 warning letters to the hotel industry about disclosure of resort fees. The FTC is currently focused on resort fees.Senator Claire McCaskill announced in February 2016 that she is introducing legislation targeting what she refers to as "deceptive hotel fees" that are "bait and switch" practices that resort guests are "slapped with", based on hearing from "hundreds of Missourians".There are occasional statements that it would be better to include resort and other fees and surcharges in room rates, but there are several reasons this is not the general practice, including that the higher room rate would subject the fee amount to municipal occupancy taxes; room rates change frequently and are closely monitored by many travelers but resort and other fees and surcharges change less frequently; and the focus of many travelers is on the room rate.The estimated amounts of fees and surcharges collected are summarized below:
By Bjorn Hanson, Ph.D., Clinical Professor, NYU
Global tourism GDP resilient this year, but woes for France, Turkey | reuters.com
Travel and tourism will contribute less than previously forecast to the economies of France, Turkey and Brazil this year, hit by attacks, political and economic turmoil, though globally the sector is resilient, the World Travel and Tourism Council said.
Brazil is hosting the Olympic Games this year but its travel and tourism sector has suffered under a political crisis, its worst recession since the 1930s, and the Zika virus.
The sector's contribution to Brazil's gross domestic product (GDP) is expected to shrink by 1.6 percent this year, against a previous forecast for a drop of 0.9 percent, the WTTC said.
Terrorism fears up stakes for tourism as Europe travel falls ‘off a cliff’ | cnbc.com
Paris. Nice. Brussels. Orlando. Istanbul. Venezuela. Brazil. Baton Rouge. Dallas.
The list of places around the world touched by terrorism, violence, rising crime rates and health alerts continues to grow, along with the impact on the travel and tourism industry. In 2015, the sector contributed an estimated $7.2 trillion to the world's economic output and supported more than 284 million jobs worldwide, according the World Travel & Tourism Council.
Hotel Profit Implications from Rising Wages and Inflation in the U.S.
Macroeconomic models based on the Phillips Curve predict that as the unemployment rate declines toward the long- run, natural rate, the pace of wage and price growth accelerates and inflation rises.1 In this paper I analyze the profitability prospects for the U.S. hotel industry in today's relatively volatile economic environment, keeping in mind the Phillips Curve's general principle that inflation and employment have an inverse, but relatively stable short-term relationship. Although employment and economic growth in the U.S. have been uneven in recent months, the unemployment rate has declined to less than 5 percent, which many economists believe is close to the natural rate. Growth in wages and salaries, as measured by the Employment Cost Index, has concurrently been moving upward between 2.5 and 3.0 percent during the past 12 months. At the same time, general inflation remains below levels that might typically be expected this late in the cycle, although core inflation is bumping up against the Federal Reserve's 2- percent target. If the inflation rate continues to move upward as predicted by Phillips Curve models (and encouraged by the Federal Reserve), rising labor costs and other expenses will exert downward pressure on U.S. business profits. Backward movement up the Phillips Curve (with greater inflation) coincides with an expanding economy. In that scenario, prices of goods and services also will rise in real terms if their supply cannot keep up with demand, and producers have the ability to raise prices (absent fixed-price contracts such as leases).
By Jack Corgel, Managing Director, CBRE Hotels’ Americas Research, CBRE Hotels
Overview of tourism and the hotel industry in Mauritius [Infographic]
Discover our infography about tourism and the hotel industry in Mauritius, an extract from our report "Mauritius: the rising star of the Indian Ocean keeps shining".
Travel and Hospitality Industry Outlook - Interview with Deloitte's Guy Langford
Fresh off the back of a robust and dynamic 2015, many travel and hospitality (T&H) companies are heading into 2016 with strong momentum for continued success. But this success is not a given: T&H organizations will need to proactively and effectively respond to a set of evolving challenges around customer and market expectations, data use and integration, recruitment and retention, competitive dynamics, and risk management. In the following interview, Guy Langford, vice chairman and US Travel, Hospitality & Leisure leader, Deloitte & Touche LLP, shares his thoughts on growth opportunities and industry trends T&H companies should be mindful of in 2016.
Three Million Rooms Highlights Banner 2015 | hotel-online.com
2015 was a banner year for the US lodging industry. Sector fundamentals have never been stronger, and at this juncture hotel property values have generally exceeded prior peak levels in most markets across the country. Mergers and acquisitions of individual hotels, portfolios, and corporate consolidations occurred at a blistering pace reaching a crescendo with the late year announcements of Marriott International’s blockbuster acquisition of Starwood Hotels & Resorts Worldwide, Inc., Accor SA’s purchase of FRHI Holdings Ltd which includes Fairmont, Raffles and Swissôtel, and Hilton Worldwide Holdings’ plan to separate its real estate assets into a publicly traded entity.
2015 results in US strongest on record: STR | hotelsmag.com
Compared with 2014, the U.S. hotel industry’s 2015 occupancy was up 1.7% to 65.6%; its average daily rate rose 4.4% to US$120.01; and its revenue per available room increased 6.3% to US$78.67, according to STR Inc. The absolute values in the three key performance metrics were each the highest STR has ever benchmarked.
Australia: Business confidence lifts despite tough conditions in hospitality sector | hospitalitymagazine.com.au
According to a recent quarterly report from marketing services company Sensis, business confidence in Australia has jumped to its highest level in almost five years, registering a net balance of +39. According to the Sensis Business Index (SBI) survey, more than three times as many small businesses are now confident (57 percent) as opposed to those that are worried (18 percent) about the current economic climate, representing a 12 point rise in confidence among SMEs in the December quarter.
Positve Operating Leverage Results in Another Year of Hotel Value Gains; Cap Rates Start to Rise
Five years of steady cap rates and rising NOI have resulted in significant U.S. hotel asset appreciation. The current economic landscape is likely to cause hotel cap rates to rise in 2016, moderating future value gains.
By Suzanne Mellen, Senior Managing Director - Practice Leader, San Francisco, HVS
Forecast: U.S. Business Travel to Grow at 'Stable and Steady' Rates in 2016, 2017 | successfulmeetings.com
Despite global economic uncertainty, business travel in the United States will grow at "stable and steady" rates over the next two years, according to the latest forecast from the GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA).
Luxury Market Surges In Los Cabos | Travelmarketreport.com
Hoteliers are betting on Los Cabos’ reputation as a top destination for luxury travelers, as they continue to bring upscale brands to the area. The good news: it seems to be paying off. The hot spot saw a 14.7% tourism increase in 2015 compared to 2014, welcoming more than 1.5 million tourists a year. Delta Vacations and Aeromexico Vacations bookings to the destination have seen “healthy double-digit increases,” said Delta Vacations senior vice president of marketing and product development Tina Iglio. Iglio predicts Los Cabos will “represent a huge opportunity for travel agents in 2016.”
Remarkable Boom In The South Florida Hotel Market
During the September 2015 HVS South Florida Hotel Market Connections (SFHMC) event, one message stood out loud and clear: just when we thought South Florida couldn't get any hotter, it is. Miami-Dade, Broward and Palm Beach hotels are all celebrating record-breaking years in ADR, occupancy and RevPar.
By Kathy Conroy, MAI, Senior Managing Director of HVS Miami and Practice Leader of Shared Ownership Consulting, HVS
Hoteliers Improve Average Daily Rate Performance Despite Weakening Reservation Pace
As hoteliers prepare for the holiday season and head into the new year, hotels in major North American markets are experiencing a strong, improved ADR (average daily rate) performance, according to new data from TravelClick's October 2015 North American Hospitality Review (NAHR).
HVS Annual Hotel Market Connections Conference Series Highlights Improvements in Hotel Performance, Demand
The annual HVS Hotel Market Connections conference series produced by HVS’s Hotel Consulting & Valuation division revealed overall positive trends in supply, demand, performance, and transaction dynamics in top North American hotel markets. Nationwide, occupancy hit a new high in July 2015, surpassing the prior peak set two decades earlier. As demand continues to outpace new supply across the U.S., the upward trend is expected to continue through 2018. As of September, more than 3,500 hotels—approximately 430,000 rooms—were in the planning or construction stages of development in the U.S. For major hotel transactions (representing a price of $10 million or higher), 993 properties totaling 155,275 rooms were sold through the trailing-twelve-month period ending in June 2015. At approximately $250,000, the average price per room has reached an all-time high for these major transactions.
2015 Manhattan Lodging Overview - 2Q
The 2015 HVS Manhattan Lodging Overview examines the effects of up and down economic cycles on Manhattan hotels, reviewing trends in hotel performance, supply, and demand over the past 25 years. The report also provides the most current information available on today's market, as well as forecasts for supply growth and hotel performance.
By Roland deMilleret and Erin Bagley
Indonesia Hotel Watch 2015
2015 has been a year of change and opportunities for Indonesia's hospitality industry, with various political and economic factors affecting the country, which have in turn had varying levels of impact across its different markets. Policies anticipated to make a lasting impression on the industry's performance include the controversial ban on government meetings in hotels and the ban on foreign currencies in domestic transactions. The effects have been felt heavily in some markets, and in others the full impact of these policies remains to be seen.
By Bhoomija Vadehra, Consulting and Valuation, HVS SIngapore, HVS