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Opinion Articles

Opinion Article Sustainability

Embedding Sustainability into a Hotel Starts with Leadership

Organizational structures and job titles grow and evolve the same as every other facet of running a business and adapting to the times. Two decades ago, we may have written about the dawn of online room sales and how hotels would be wise to carve out a ‘social media manager’ role which was quite novel at the time. Today it’s all but anathema to not have a team member solely devoted to this area or specific responsibilities assigned to the marketing director, depending on the size of the company.

Larry MogelonskyAdam Mogelonsky
By Larry Mogelonsky and Adam Mogelonsky
Las Vegas, Nevada, United States
Opinion Article General Management

The House passes HR 6543 and enters the ring to regulate Junk Fees for hotels and short-term lodging

On June 11, 2024, the United States House of Representatives passed HR 6543, the so-called “No Hidden FEES Act of 2023” which introduces federal regulations aimed at enhancing transparency and fairness in the advertising of hotel room and short-term lodging prices. A critical component of this Act is its preemption clause, found in Section 4(a), which establishes a national standard prohibiting states from enforcing any laws that conflict with the federal mandate. This provision has significant implications for state regulations, such as California’s SB 478, which also aims to protect consumers from hidden fees in various transactions. The scope and application of this preemption clause are essential for assessing how state laws will be affected and ensuring compliance with the new federal standards.

Mark Adams
By Mark Adams, Partner at Blank Rome LLP, Blank Rome
United States
Opinion Article Markets & Performance

Unique Factors Shaping the Buffalo Lodging Market

As a border town, Buffalo has historically been heavily reliant on Canadian visitors and U.S. travelers stopping over en route to/from Canada for lodging demand. Based on a recent hotel market study and many hotel appraisals in the greater Buffalo-Niagara area I have performed, it is clear that traffic volume at the land crossings has an impact on these border markets. Below is a brief timeline of the changing restrictions for border crossings from 2020 until 2023.

Christian Cross
By Christian Cross, Vice President, HVS Buffalo, HVS
Buffalo, New York, United States
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Opinion Article Markets & Performance

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.

Robert MandelbaumTim Dick
By Robert Mandelbaum and Tim Dick
United States
Opinion Article Markets & Performance

May 2024 Hotel Industry Outlook: Bright Spots and Challenges

Mixed messages abound these days, comprising some bright spots, some not so bright spots, and some challenges. With no coherent theme, the greatest challenge may be developing a forecast for the industry as a whole. But we are undaunted and herewith present our current expectations for the U.S. lodging industry.

Anne Lloyd-Jones
By Anne Lloyd-Jones, MAI, CRE, Director of Consulting & Valuation Services, National Practice Leader, at HVS New York, HVS
United States
Opinion Article Finance

A Closer Look at Hotel Interest Rates: Past and Future May 30, 2024

Over the past couple of months, it has become increasingly clear that interest rates for hotel financing, and just about everything else, may stay higher for longer. As markets adjust to this expectation, many investors are realizing that they may not be able to delay deals until rates drop back down to so-called “normal” levels. There is mounting pressure for financing decisions that will need to be made in the coming months. In this article, we have compiled and analyzed historical hotel interest rate data, as well as indications from the Federal Open Markets Committee (FOMC or “Fed”) on the anticipated direction of future interest rates, to help provide some context for the past, present, and future of the hotel financing market.

Daniel McCoy
By Daniel McCoy, Managing Director, HVS
United States
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Opinion Article Sales & Marketing

Checking in at Fairmont Banff Springs and the Luxury Trend for More Intimate Guestrooms

For Canadians, Fairmont is not just a hotel brand but a fixture of our nation’s history. In the decades following the country’s confederation in 1867, towns that connected the Eastern hubs of Montreal, Toronto, Quebec and Ottawa with the still-budding Western ports of Vancouver and Victoria were few and far between. It fell up Canadian Pacific – the company that would eventually sell its hotel division to Fairmont Raffles Hotels International then to Accor in 2016 – to not only build a transcontinental railway but to erect a series of what we now deem iconic hotels along the route.

Larry MogelonskyAdam Mogelonsky
By Larry Mogelonsky and Adam Mogelonsky
Banff, Alberta, Canada
Opinion Article Design & Architecture

The Funkiest Southwest Hotel with Lessons for Every Hotelier Worldwide

The concept of a contemporary, boutique motel, either as a new build or retrofit, that commands sizably higher-than-market rates started to become a trend in the 2010s but has grown since the pandemic. Spurred on by a core psychographic of drive-to-vacation culture amongst Gen X and millennials, in the United States we are seeing multi-property brands like Bluebird and Urban Cowboy achieve success by opening exquisitely decorated lodges in sought-after rural areas near major cities. Then there are a host of independents gracing the covers of travel magazines such as The Vagabond Hotel in Miami, The Dive Motel in Nashville, Skyview Los Alamos in California and Thunderbird in Marfa, Texas.

Larry MogelonskyAdam Mogelonsky
By Larry Mogelonsky and Adam Mogelonsky
Albuquerque, New Mexico, United States
Opinion Article General Management

Junk Fees are banned in California as of July 1, 2024! What does the California Junk Fee Law (SB 478) mean?

California businesses brace for Senate Bill 478‘s impact. SB 478 was signed by Governor Newsom in October 2023 and became effective July 1, 2024. It cracks down on hidden fees, often referred to as “junk fees” and “drip pricing” (because the full cost is only disclosed drip by drip). It will likely change how businesses approach pricing strategies. Many say it is part of a nationwide response to President Joe Biden’s call to eliminate Junk Fees.

Mark Adams
By Mark Adams, Partner at Blank Rome LLP, Blank Rome
California, United States
Opinion Article Markets & Performance

Cornell Hotel Indices First Quarter 2024: Large Hotels Reach a New Statistical Low

Only the Midwest, South Atlantic, and West South-Central regions posted moderate single-digit hotel-price gains in the first quarter 2024 (Midwest, 3.2%; South Atlantic, 3.8%; and West South-Central, 1.6%). Hotels in gateway cities experienced a reversal, exhibiting better performance than hotels in non-gateway cities this quarter. Transaction volume fell year over year and quarter over quarter for both large and small hotels in gateway and non-gateway cities. Standardized prices of large hotels continue to soften while those of smaller hotels remain relatively stationary. The cost of hotel debt financing and the delinquency rate for hotels rose in the recent quarter, even though credit spreads continued to tighten and relative risk narrowed. As in prior periods, borrowing costs still exceed the return on hotels. Expect to see a rise in the price of large hotels and a decline in prices for small hotels next quarter based on our leading indicators of hotel price performance.

Crocker LiuAdam D. NowakRobert M. White
By Crocker Liu, Adam D. Nowak, and Robert M. White
United States
Opinion Article Operations & Strategy

Checking the Changes to Hawaiian Luxury with the Halekulani

For those who are unfamiliar, the Halekulani is (pardon the alliteration) a hallmark of Hawaiian hospitality, with the property acting as the keystone for the densely populated beach tourism area of Waikiki in Honolulu. At 453 rooms and suites, the luxury hotel has a time-honored history, first established in 1917 and now comprising five buildings and three signature restaurants, all with an unparalleled onsite experience. Further to this article, the property closed completely for an 18-month renovation at the outset of the pandemic in 2020.

Larry MogelonskyAdam Mogelonsky
By Larry Mogelonsky and Adam Mogelonsky
Honolulu, Hawaii, United States