Industry News, Topics & Inspiration
Many of our articles are shared from leading industry news organizations.
Nov 1, 2024
Standing out in a crowded market
Good morning and welcome to the weekend. This Friday morning, we’ll be revealing some of the strategies employed by hospitality companies to carve out unique identities for their brands in a highly competitive market.
What’s happening: The need for differentiation has intensified and brands continue to seek innovative ways to captivate and retain not just guests but also owners and investors. As competition continues to build, companies like Accor and Hyatt are adopting a range of strategies to distinguish their brands. Accor says its very diverse but clearly-defined brand offering offers flexibility and helps it appeal to a wide range of people. In contrast, Hyatt's strategy emphasizes selectiveness, exclusivity, a supportive environment for its owners and a focus on luxury. However, both Accor’s Lassman and Hyatt’s Corkill agree that building strong loyalty programs remains crucial for sustaining differentiation in today’s market.
Why it matters: Differentiation isn't just about brand identity — it's about sustaining relevance and loyalty in an increasingly crowded market and is especially critical when seeking to reinforce market positioning and grow.
1 big quote: “Through the loyalty program, we know our guests better and through technology, you can get to know more about their stays and habits. It’s about making sure that when guests come to our hotels, they have an experience that’s personalised so it’s not just a hotel stay.” — Anna Corkill, regional vice president – development UK & Ireland at Hyatt Hotels
— Ife Taiwo, associate editor at Hospitality Investor
Standing out in a crowded market
Good morning and welcome to the weekend. This Friday morning, we’ll be revealing some of the strategies employed by hospitality companies to carve out unique identities for their brands in a highly competitive market.
What’s happening: The need for differentiation has intensified and brands continue to seek innovative ways to captivate and retain not just guests but also owners and investors. As competition continues to build, companies like Accor and Hyatt are adopting a range of strategies to distinguish their brands. Accor says its very diverse but clearly-defined brand offering offers flexibility and helps it appeal to a wide range of people. In contrast, Hyatt's strategy emphasizes selectiveness, exclusivity, a supportive environment for its owners and a focus on luxury. However, both Accor’s Lassman and Hyatt’s Corkill agree that building strong loyalty programs remains crucial for sustaining differentiation in today’s market.
Why it matters: Differentiation isn't just about brand identity — it's about sustaining relevance and loyalty in an increasingly crowded market and is especially critical when seeking to reinforce market positioning and grow.
1 big quote: “Through the loyalty program, we know our guests better and through technology, you can get to know more about their stays and habits. It’s about making sure that when guests come to our hotels, they have an experience that’s personalised so it’s not just a hotel stay.” — Anna Corkill, regional vice president – development UK & Ireland at Hyatt Hotels
— Ife Taiwo, associate editor at Hospitality Investor
Oct 31, 2024
Growing synergies between hotels and casinos
Good morning. Today, we’ll be discussing the evolving synergy between hotels and casinos, exploring how both parties are working together to expand their customer base and deliver unique, experience-driven offerings.
What’s happening: Partnerships between hotels and casinos are becoming more attractive as it allows brands to entice customers and enhance value. Companies are thinking more creatively about the gaming space and how to drive customers to their products through gaming experiences. Speaking at IHIF Americas 2024, experts including Hard Rock chief operating officer Jon Lucas and MGM Resorts’ president of global development Ed Bowers say the return on investment in this area is very significant, allowing companies extra funds to finance the ancillary experiences within a resort and create huge integrated resorts which can deliver experiences that normal traditional hotels can’t.
Why it matters: Forging loyalty and distribution partnerships with casino operators and exploring how to capitalise on the gaming industry is attracting a lot of attention - and will no doubt continue to - as not only are guests attracted and retained, the additional revenue realised from gaming means more money in the company’s coffers. Furthermore, a failure to explore these avenues could result in hotels being left behind.
1 big quote: “We're developing in Japan where we expect gaming revenues to be around $4 to $5 billion and it's probably going to be the largest casino in the world.” — Ed Bowers, president of global development, MGM Resorts International
— Ife Taiwo, associate editor at Hospitality Investor
Growing synergies between hotels and casinos
Good morning. Today, we’ll be discussing the evolving synergy between hotels and casinos, exploring how both parties are working together to expand their customer base and deliver unique, experience-driven offerings.
What’s happening: Partnerships between hotels and casinos are becoming more attractive as it allows brands to entice customers and enhance value. Companies are thinking more creatively about the gaming space and how to drive customers to their products through gaming experiences. Speaking at IHIF Americas 2024, experts including Hard Rock chief operating officer Jon Lucas and MGM Resorts’ president of global development Ed Bowers say the return on investment in this area is very significant, allowing companies extra funds to finance the ancillary experiences within a resort and create huge integrated resorts which can deliver experiences that normal traditional hotels can’t.
Why it matters: Forging loyalty and distribution partnerships with casino operators and exploring how to capitalise on the gaming industry is attracting a lot of attention - and will no doubt continue to - as not only are guests attracted and retained, the additional revenue realised from gaming means more money in the company’s coffers. Furthermore, a failure to explore these avenues could result in hotels being left behind.
1 big quote: “We're developing in Japan where we expect gaming revenues to be around $4 to $5 billion and it's probably going to be the largest casino in the world.” — Ed Bowers, president of global development, MGM Resorts International
— Ife Taiwo, associate editor at Hospitality Investor
Oct 30, 2024
Increase hotel guest spend
Good morning and welcome to the middle of the working week. Today, we’re taking a closer look at, and revealing opportunities for hotels to capture a larger share of UK travellers’ total spend.
What’s happening: Speaking at the Annual Hospitality Conference in Manchester, Flavio Leoni, regional director of global accounts EMEA at Booking.com shared insights into the behaviour of UK consumers, noting that knowledge of these behaviours could help hotels create targeted campaigns to increase guest spend. For example, knowing that travellers typically book their flights first, with 42 percent of Brits booking their accommodation at the same time means that hotels can take advantage and partner with airlines to offer bundled deals or discounts for booking both flights and stays together or could send incentivise guests who have only booked flights to also book accommodation. Additionally, data reveals that UK travellers are more likely to book activities, event tickets and transportation in advance, presenting more avenues for hotels to capture additional revenue.
Why it matters: Understanding UK travellers’ behaviours allows hotels to be more strategic, allowing them to not only grow guest spend but also retain loyalty and drive repeat custom in a market increasingly open to diverse accommodation options.
1 big quote: “Hotels are still the main business, even on Booking.com. B&Bs are clearly part of the culture and DNA of Britain, but little by little, we see that domestic travellers are switching more towards hotels.” — Flavio Leoni, regional director of global accounts EMEA at Booking.com
— Ife Taiwo, associate editor at Hospitality Investor
Increase hotel guest spend
Good morning and welcome to the middle of the working week. Today, we’re taking a closer look at, and revealing opportunities for hotels to capture a larger share of UK travellers’ total spend.
What’s happening: Speaking at the Annual Hospitality Conference in Manchester, Flavio Leoni, regional director of global accounts EMEA at Booking.com shared insights into the behaviour of UK consumers, noting that knowledge of these behaviours could help hotels create targeted campaigns to increase guest spend. For example, knowing that travellers typically book their flights first, with 42 percent of Brits booking their accommodation at the same time means that hotels can take advantage and partner with airlines to offer bundled deals or discounts for booking both flights and stays together or could send incentivise guests who have only booked flights to also book accommodation. Additionally, data reveals that UK travellers are more likely to book activities, event tickets and transportation in advance, presenting more avenues for hotels to capture additional revenue.
Why it matters: Understanding UK travellers’ behaviours allows hotels to be more strategic, allowing them to not only grow guest spend but also retain loyalty and drive repeat custom in a market increasingly open to diverse accommodation options.
1 big quote: “Hotels are still the main business, even on Booking.com. B&Bs are clearly part of the culture and DNA of Britain, but little by little, we see that domestic travellers are switching more towards hotels.” — Flavio Leoni, regional director of global accounts EMEA at Booking.com
— Ife Taiwo, associate editor at Hospitality Investor
Oct 28, 2024
US hotel workers still on strike as negotiations drag on
Good morning. Towards the end of the summer hotel workers throughout the US made headlines with a mass walkout across a number of locations. Although most were of limited duration, the dispute has continued in some areas. Today we’re looking at what is at stake.
What’s happening: Around 10,000 hotel workers went on strike on Labor Day weekend, most ended after two or three days. The dispute centred on pay and conditions with the UNITE HERE union pointing out that room rates were at record highs but that this hadn’t flowed through to workers pay packets. Negotiations have taken place on a location-by-location basis with some agreements already reached, however at the moment strikes are still active in Boston, Honolulu, and San Francisco.
Why it matters: The travel industry has undoubtedly enjoyed a financial boom post Covid. While hotels would argue that inflation has meant they have had to pay more in staff-related costs, unions say it is not enough.
1 big quote: “Our members believe that hotel jobs should be genuinely good, family-sustaining jobs that don’t break your body and that enable you to live with dignity. Our recent contract settlements prove that that’s possible, and strikes will continue until we all win.” — Gwen Mills, international president of UNITE HERE.
— Patrick Whyte, editor-in-chief of Hospitality Investor
US hotel workers still on strike as negotiations drag on
Good morning. Towards the end of the summer hotel workers throughout the US made headlines with a mass walkout across a number of locations. Although most were of limited duration, the dispute has continued in some areas. Today we’re looking at what is at stake.
What’s happening: Around 10,000 hotel workers went on strike on Labor Day weekend, most ended after two or three days. The dispute centred on pay and conditions with the UNITE HERE union pointing out that room rates were at record highs but that this hadn’t flowed through to workers pay packets. Negotiations have taken place on a location-by-location basis with some agreements already reached, however at the moment strikes are still active in Boston, Honolulu, and San Francisco.
Why it matters: The travel industry has undoubtedly enjoyed a financial boom post Covid. While hotels would argue that inflation has meant they have had to pay more in staff-related costs, unions say it is not enough.
1 big quote: “Our members believe that hotel jobs should be genuinely good, family-sustaining jobs that don’t break your body and that enable you to live with dignity. Our recent contract settlements prove that that’s possible, and strikes will continue until we all win.” — Gwen Mills, international president of UNITE HERE.
— Patrick Whyte, editor-in-chief of Hospitality Investor
Evolving with the luxury lifestyle guest
Good morning. Today, we’ll be stepping into the world of luxury and lifestyle hotels, a segment which is growing faster than any other industry segment.
What’s happening: Hotel brands are increasingly investing in their lifestyle and luxury segments as demand in the segment rockets, driven in part by a global rise in the number of high-net-worth individuals and a growing focus on experiential travel. As a result, many including Choice Hotels, IHG, Hilton and Barrière Group are investing heavily in their upscale and lifestyle offerings in order to appeal to a wider demographic of consumers who are now more fluid about their needs and what experiences they value.
Why it matters: Luxury is no longer just for the ultra-wealthy guests, with the luxury guests of today also increasingly including middle-class consumers willing to splurge for a special occasion. This more fluid customer demographic - and behaviour - is changing the way brands approach luxury. It’s no longer just about high price points but about delivering memorable experiences that appeal to a broad range of guests.
1 big quote: “The customer is much more fluid than we assume. (I’ve seen) somebody with a Louis Vuitton bag on a plane go all the way back in coach - it's not that they're a luxury customer or an economy customer, they're both. For brands to thrive, particularly in the lifestyle space, they must think much more fluidly about what the customer needs and know customers can morph over time.” — Indy Adenaw, SVP upscale brands at Choice Hotels International.
— Ife Taiwo, associate editor at Hospitality Investor
Good morning. Today, we’ll be stepping into the world of luxury and lifestyle hotels, a segment which is growing faster than any other industry segment.
What’s happening: Hotel brands are increasingly investing in their lifestyle and luxury segments as demand in the segment rockets, driven in part by a global rise in the number of high-net-worth individuals and a growing focus on experiential travel. As a result, many including Choice Hotels, IHG, Hilton and Barrière Group are investing heavily in their upscale and lifestyle offerings in order to appeal to a wider demographic of consumers who are now more fluid about their needs and what experiences they value.
Why it matters: Luxury is no longer just for the ultra-wealthy guests, with the luxury guests of today also increasingly including middle-class consumers willing to splurge for a special occasion. This more fluid customer demographic - and behaviour - is changing the way brands approach luxury. It’s no longer just about high price points but about delivering memorable experiences that appeal to a broad range of guests.
1 big quote: “The customer is much more fluid than we assume. (I’ve seen) somebody with a Louis Vuitton bag on a plane go all the way back in coach - it's not that they're a luxury customer or an economy customer, they're both. For brands to thrive, particularly in the lifestyle space, they must think much more fluidly about what the customer needs and know customers can morph over time.” — Indy Adenaw, SVP upscale brands at Choice Hotels International.
— Ife Taiwo, associate editor at Hospitality Investor
July 2024
Selecting High-Quality Chef-Driven Tableware for Hotels and Restaurants:
A Comprehensive GuideIn the competitive world of hospitality, every detail counts. One often-overlooked element that can elevate the dining experience is the tableware. High-quality, chef-driven tableware not only enhances the presentation of dishes but also reflects the establishment's commitment to excellence. This guide will help you select the perfect tableware to impress guests and stand out in the crowded market of hotels and restaurants.
Why Chef-Driven Tableware Matters
Chef-driven tableware is designed with the chef's vision in mind, ensuring that each piece complements the culinary creations it holds. This type of tableware:
Key Considerations for Selecting Tableware
Top Brands for Chef-Driven Tableware
When it comes to chef-driven tableware, certain brands stand out for their quality and innovation. Consider the following options:
Conclusion
Selecting high-quality, chef-driven tableware is a critical decision for hotels and restaurants aiming to enhance their dining experience. By considering material quality, design, consistency, sustainability, and budget, you can choose tableware that not only showcases your culinary creations but also reinforces your brand's commitment to excellence. Investing in the right tableware can transform an ordinary meal into an extraordinary dining experience, leaving a lasting impression on your guests and setting your establishment apart in the competitive hospitality industry.
Selecting High-Quality Chef-Driven Tableware for Hotels and Restaurants:
A Comprehensive GuideIn the competitive world of hospitality, every detail counts. One often-overlooked element that can elevate the dining experience is the tableware. High-quality, chef-driven tableware not only enhances the presentation of dishes but also reflects the establishment's commitment to excellence. This guide will help you select the perfect tableware to impress guests and stand out in the crowded market of hotels and restaurants.
Why Chef-Driven Tableware Matters
Chef-driven tableware is designed with the chef's vision in mind, ensuring that each piece complements the culinary creations it holds. This type of tableware:
- Enhances Presentation: Thoughtfully designed plates, bowls, and utensils highlight the visual appeal of dishes.
- Improves Dining Experience: The right tableware can enhance the sensory experience, from the texture of the plate to the weight of the cutlery.
- Shows Attention to Detail: Investing in high-quality tableware signals to guests that every aspect of their dining experience is important.
Key Considerations for Selecting Tableware
- Material Quality
- Durability: Choose materials that withstand frequent use and washing. Porcelain, bone china, and high-fired stoneware are excellent choices for their durability and resistance to chipping.
- Aesthetic Appeal: Consider the look and feel of different materials. Porcelain offers a classic, elegant appearance, while stoneware can provide a rustic, artisanal feel.
- Design and Functionality
- Chef Collaboration: Select tableware that has been designed in collaboration with chefs. These pieces are often tailored to enhance specific types of cuisine and presentation styles.
- Versatility: Opt for versatile pieces that can be used for multiple dishes. This reduces the need for a large inventory and simplifies the dining setup.
- Comfort and Usability: Ensure that the tableware is comfortable to handle and use. The weight, balance, and ergonomics of the pieces should enhance the dining experience.
- Consistency and Theme
- Cohesive Look: Choose tableware that complements the overall theme and decor of your restaurant or hotel. A cohesive look ties the dining experience together and reinforces your brand identity.
- Custom Options: Many manufacturers offer custom designs, allowing you to create unique pieces that reflect your brand's personality and the chef's vision.
- Sustainability
- Eco-Friendly Materials: Consider eco-friendly materials and manufacturing processes. Sustainable tableware options include recycled glass, bamboo, and biodegradable plastics.
- Supplier Practices: Research suppliers' sustainability practices, ensuring they align with your establishment's values.
- Budget
- Cost vs. Quality: While high-quality tableware is an investment, it's important to balance cost with quality. Durable, well-made pieces may have a higher upfront cost but will save money in the long run by reducing the need for frequent replacements.
- Bulk Purchasing: Look for opportunities to purchase in bulk, which can reduce costs. Some suppliers offer discounts for large orders, helping you stay within budget while still investing in quality.
- Factory Direct vs. Distribution.
Top Brands for Chef-Driven Tableware
When it comes to chef-driven tableware, certain brands stand out for their quality and innovation. Consider the following options:
- Revol
- Known for their high-quality porcelain, Revol's tableware combines durability with elegant design. Their pieces are versatile and suitable for a variety of cuisines. Click here for the catalog.
- Degrenne
- This French manufacturer is renowned for its luxurious porcelain tableware. Degrenne collaborates with top chefs to create bespoke collections that elevate dining experiences. Click here for the catalog.
- Corby Hall
- Specializing in durable and stylish tableware, Corby Hall offers a wide range of designs that cater to different culinary styles. Their products are known for their resilience and aesthetic appeal. Click here for the catalog.
- Richard Ginori
- RIchard Ginori's tableware is synonymous with luxury and artistry. Their collections often feature intricate designs and high-end materials, perfect for fine dining establishments. Click here for the catalog.
- Jars Ceramics
- For a more artisanal touch, Heath Ceramics offers handcrafted tableware that combines rustic charm with modern design. Their pieces are ideal for establishments that emphasize a farm-to-table dining experience. Click here for the catalog.
Conclusion
Selecting high-quality, chef-driven tableware is a critical decision for hotels and restaurants aiming to enhance their dining experience. By considering material quality, design, consistency, sustainability, and budget, you can choose tableware that not only showcases your culinary creations but also reinforces your brand's commitment to excellence. Investing in the right tableware can transform an ordinary meal into an extraordinary dining experience, leaving a lasting impression on your guests and setting your establishment apart in the competitive hospitality industry.
Bread & Butter
TEA TIME - Lobby
Elegance and Delicacy for every tea moment
Elegance and Delicacy for every tea moment
JUL 10, 2024
Pioneering growth in the high-end hospitality landscape
Good morning. For consumers it’s easy to believe that luxury hotels make the most money. After all, have you seen how much it costs to stay at a five-star property in Paris or London these days!? But, take a step back, and you’ll quickly realise that’s not always the case.
What’s happening: From an investment perspective, budget and economy hotels are often more profitable and give investors a quicker ROI. But that doesn’t mean there aren’t reasons to invest in premium properties. Often they are one-of-a-kind assets in the chicest of locations.
Why it matters: The key reason for the increase in luxury hotel product is the doubling of global wealth since 2012. From 2012 to 2022, the number of adults with a net worth ranging from $1 million to $5 million grew from 25.6 million to 51.5 million, according to Visual Capitalist research. Despite economic challenges such as inflation, this growth in the millionaire population is a clear indicator of the expanding wealth at the upper echelons of society.
1 big quote: “It’s about discovering something that they don't know, that they haven't seen yet and that they can also easily communicate to their close ones. We try to put in places which are Instagrammable.” — Stephane Baghdassarian, senior vice president development – hotels and restaurants, Barrière Group
— Patrick Whyte, editor-in-chief of Hospitality Investor
Pioneering growth in the high-end hospitality landscape
Good morning. For consumers it’s easy to believe that luxury hotels make the most money. After all, have you seen how much it costs to stay at a five-star property in Paris or London these days!? But, take a step back, and you’ll quickly realise that’s not always the case.
What’s happening: From an investment perspective, budget and economy hotels are often more profitable and give investors a quicker ROI. But that doesn’t mean there aren’t reasons to invest in premium properties. Often they are one-of-a-kind assets in the chicest of locations.
Why it matters: The key reason for the increase in luxury hotel product is the doubling of global wealth since 2012. From 2012 to 2022, the number of adults with a net worth ranging from $1 million to $5 million grew from 25.6 million to 51.5 million, according to Visual Capitalist research. Despite economic challenges such as inflation, this growth in the millionaire population is a clear indicator of the expanding wealth at the upper echelons of society.
1 big quote: “It’s about discovering something that they don't know, that they haven't seen yet and that they can also easily communicate to their close ones. We try to put in places which are Instagrammable.” — Stephane Baghdassarian, senior vice president development – hotels and restaurants, Barrière Group
— Patrick Whyte, editor-in-chief of Hospitality Investor
1 BIG THING
APR 30, 2024
Why better procurement could be the answer to your problems
Good morning. For a long time, procurement has been treated as a perfunctory part of the operational stack. Today we're delving deeper into the subject, to try and find out where so many people go wrong.
What’s happening: Given all that is going in the world, procurement is having a moment. The traditional view, that it is merely a function of operations, is being challenged, with experts stressing that procurement practices need to form a core part of companies’ long-term strategies.
Why it matters: Procurement is evolving from being just a cost centre, with companies starting to realize the value of procurement as a profit centre as the function can also be used to generate revenue whether that be through sales commissions from suppliers selling into company networks or collaboration when it comes to marketing initiatives.
1 big quote: “[Procurement] can really be a source of great added value and cost-control, especially considering the current economic headwinds. And so very carefully controlled procurement with decisions that take the long-term view into account can really start to pay dividends in difficult times such as this.” — Phil Halanen, head of sourcing & sustainability, EMEA at Wyndham
-- Patrick Whyte, editor-in-chief of Hospitality Investor
APR 30, 2024
Why better procurement could be the answer to your problems
Good morning. For a long time, procurement has been treated as a perfunctory part of the operational stack. Today we're delving deeper into the subject, to try and find out where so many people go wrong.
What’s happening: Given all that is going in the world, procurement is having a moment. The traditional view, that it is merely a function of operations, is being challenged, with experts stressing that procurement practices need to form a core part of companies’ long-term strategies.
Why it matters: Procurement is evolving from being just a cost centre, with companies starting to realize the value of procurement as a profit centre as the function can also be used to generate revenue whether that be through sales commissions from suppliers selling into company networks or collaboration when it comes to marketing initiatives.
1 big quote: “[Procurement] can really be a source of great added value and cost-control, especially considering the current economic headwinds. And so very carefully controlled procurement with decisions that take the long-term view into account can really start to pay dividends in difficult times such as this.” — Phil Halanen, head of sourcing & sustainability, EMEA at Wyndham
-- Patrick Whyte, editor-in-chief of Hospitality Investor
How to achieve profitable chef-hotel F&B partnerships
With uncertainty over top-line revenue growth, profitability was a key talking point across many of the sessions at IHIF EMEA in Berlin last week. One area that has come under a lot of pressure is F&B, with some investors looking to pull back their offering. Obviously for many high-end establishments this isn’t an option so today we’re looking at the pros and cons of chef-led hotel F&B concepts.
What’s happening: With hotels looking to develop distinctive food and beverage (F&B) offerings that compete directly with restaurants, some are turning to chefs with profile to draw guests in. Raffles London at The OWO in London, for example, has launched three culinary concepts designed by Mauro Colagreco, of the three-Michelin-starred Mirazur in France, while recent years have seen the Savoy take its number of Gordon Ramsay-run restaurants up to three. But how can owners and investors nurture a profitable partnership that’s going to bring value for both sides?
Why it matters: According to HotStats data, across Europe, food and beverage revenues have not improved as much as other revenue streams post-pandemic. While rooms revenue per available room (revpar) in February was up 17 per cent compared to January 2020, F&B was just 5 per cent. If F&B is a critical component to a property, operating partners should understand the needs and demands of the local market and develop a concept that targets that, which will in turn drive in-house guest capture – something that is particularly key if owners plan to lease out to an operator.
1 big quote: “The profitability from F&B is lower than rooms so if that changes/fluctuates for any reason and revenues drop, the drop in value is significant. F&B is hard. It’s nuanced and labour intensive and relies heavily on highly skilled operators and culinary heads. A change, wobble, misstep etc. and the impact to asset value can be significant.” — Euan McGlashan, global co-founder and chief executive of hotel management group Valor Hospitality
-- Patrick Whyte, editor-in-chief of Hospitality Investor
With uncertainty over top-line revenue growth, profitability was a key talking point across many of the sessions at IHIF EMEA in Berlin last week. One area that has come under a lot of pressure is F&B, with some investors looking to pull back their offering. Obviously for many high-end establishments this isn’t an option so today we’re looking at the pros and cons of chef-led hotel F&B concepts.
What’s happening: With hotels looking to develop distinctive food and beverage (F&B) offerings that compete directly with restaurants, some are turning to chefs with profile to draw guests in. Raffles London at The OWO in London, for example, has launched three culinary concepts designed by Mauro Colagreco, of the three-Michelin-starred Mirazur in France, while recent years have seen the Savoy take its number of Gordon Ramsay-run restaurants up to three. But how can owners and investors nurture a profitable partnership that’s going to bring value for both sides?
Why it matters: According to HotStats data, across Europe, food and beverage revenues have not improved as much as other revenue streams post-pandemic. While rooms revenue per available room (revpar) in February was up 17 per cent compared to January 2020, F&B was just 5 per cent. If F&B is a critical component to a property, operating partners should understand the needs and demands of the local market and develop a concept that targets that, which will in turn drive in-house guest capture – something that is particularly key if owners plan to lease out to an operator.
1 big quote: “The profitability from F&B is lower than rooms so if that changes/fluctuates for any reason and revenues drop, the drop in value is significant. F&B is hard. It’s nuanced and labour intensive and relies heavily on highly skilled operators and culinary heads. A change, wobble, misstep etc. and the impact to asset value can be significant.” — Euan McGlashan, global co-founder and chief executive of hotel management group Valor Hospitality
-- Patrick Whyte, editor-in-chief of Hospitality Investor
1 BIG THING
APR 11, 2024
How to get the most bang for your buck when considering capex improvements
Good morning. In an environment where interest rates continue to impact priorities, shifting away from capex improvement and towards deploying capital in order to cover debt costs, many assets aren’t getting the face-lifts they desperately need. Today we’re going to find out why that might be a huge mistake.
What’s happening: How can investors use capex to create competitive differentiation in their hospitality assets, especially in a time where simply adding a spa or leisure facilities just doesn’t cut it anymore? The answer is to really focus on one specific offering rather than purporting to be a jack-of-all-trades.
Why it matters: Experts agree that capex need to be specific and targeted. It has to be able to refresh the space and to infuse a new spirit in the property which is instantly and very clearly recognized by the customer, and there needs to be a strategy in place to ensure that any improvements are future-proof.
1 big quote: “With guests preferences moving more and more towards experiences, especially in the luxury segment, we are seeing a greater allocation of capital expenditure towards experiential investments.” — Christian Bunte, managing director at Avingstone
-- Patrick Whyte, editor-in-chief of Hospitality Investor
APR 11, 2024
How to get the most bang for your buck when considering capex improvements
Good morning. In an environment where interest rates continue to impact priorities, shifting away from capex improvement and towards deploying capital in order to cover debt costs, many assets aren’t getting the face-lifts they desperately need. Today we’re going to find out why that might be a huge mistake.
What’s happening: How can investors use capex to create competitive differentiation in their hospitality assets, especially in a time where simply adding a spa or leisure facilities just doesn’t cut it anymore? The answer is to really focus on one specific offering rather than purporting to be a jack-of-all-trades.
Why it matters: Experts agree that capex need to be specific and targeted. It has to be able to refresh the space and to infuse a new spirit in the property which is instantly and very clearly recognized by the customer, and there needs to be a strategy in place to ensure that any improvements are future-proof.
1 big quote: “With guests preferences moving more and more towards experiences, especially in the luxury segment, we are seeing a greater allocation of capital expenditure towards experiential investments.” — Christian Bunte, managing director at Avingstone
-- Patrick Whyte, editor-in-chief of Hospitality Investor
How to get the most bang for your buck when considering capex improvements
By Ifeoluwa Taiwo
Apr 11, 2024 8:00am
In an environment where interest rates continue to impact priorities, shifting focus away from capex improvement and towards deploying capital in order to cover debt costs, many assets aren’t getting the face-lifts they desperately need. However, these face-lifts may be exactly what’s needed to improve the value of these assets and jumpstart the transactions market. But the question remains: how to deploy capex, measure it and manage it effectively in order to get the most bang for your buck.
The end goal
Experts say it’s of the utmost importance that the end result not just improve the effectiveness of the hotel operations but also give the feeling of experiencing something special, thereby driving average daily rates.
“With guests preferences moving more and more towards experiences, especially in the luxury segment, we are seeing a greater allocation of capital expenditure towards experiential investments,” says Christian Bunte, managing director at Avingstone.
He adds that strategic capex allocation should be guided so that there’s an improvement in the market perception so that customers have a perceived value for the higher rates for example improving the experiential elements of a property as well as give protection to the asset in the event of any unforeseen shock to the sector.
ADR growth
However, Rastko Djordjevic, head of asset management at JLL Hotels & Hospitality Group stresses the importance of being mindful as to exactly how much room there is for ADR growth, especially after the pandemic’s shock to the sector.
“Over the last two to three years, we had a fantastic ADR growth, and if you had a renovated asset coming out of a pandemic, you did great. But now ADR growth is slowing down. So if your market share is indicating that there is more room for you to grow within the competitive set, then it makes sense to invest in your hotel. But if you're already at the top 10 percentile with your ADR, the room for ADR improvement is much smaller. So you have to really consider how much room you really have to grow?”
How to stand out So how can investors use capex to create competitive differentiation in their hospitality assets, especially in a time where simply adding a spa or leisure facilities just doesn’t cut it anymore. The answer is to really home in one specific offering rather than purporting to be a jack-of-all-trades.
“We need to get away from the traditional thinking of ‘we're best at everything, we do everything’ because nobody does that anymore. Look at the value chain and ensure that within your value chain, you as a brand align yourself with partner brands and aim to be the best in class,” Djordjevic advises.
“For example ‘I’m going to have the best F&B operator, I'm going to have the best spa operator, I'm going to have the best the best fitness operator or co working’. So it's more about working towards a value proposition where you align yourself with your partners in order to provide the best experience to the customer. And that's key - ensuring that you have a clear differentiation strategy and ensuring that your capex is being deployed towards meeting that objective.”
Harriet Durbin, managing director at Panorama Hospitality agrees. “It comes down to where can you best fit in so you're meeting unmet needs and where can you best find a niche.”
Bunte adds: “Hotel owners and operators are seeing that it is no longer enough to be the most luxurious property in the market. You have to have a unique selling proposition, whether it is exceptional F&B, specialty spas or other experiences such as those related to the arts.”
ESG, technology and AI Separately, with ESG improvements becoming a necessity especially in Europe, it is becoming increasingly important to pay attention.
“You need to be aware of all the ESG regulations coming into effect, Djordjevic says, adding “if gas boilers are being phased out in certain countries by a certain year, you will need to deploy more capex into the mechanical and electrical plan.”
However, he says that spending money in this way need not only be an effort to be compliant, but could also help with reducing costs, therefore positively impacting the bottom line.
“If you invest into your building management system - to control the temperature of your room, to control the lighting in your room - and invest into a clever system which changes the cooling and the heating of your building in line with the with the outdoor conditions, you will have an immediate saving on electricity. And this will tick two boxes in one where you will tackle the ESG component of it but also tackle your costs.”
However, he warns that with green initiatives, it’s important to have a clear strategy to achieve whichever standards are being pursued as well as to be mindful of the real-life operation of any ESG-focused technology.
He explains: “We have seen buildings where new systems which are very environmentally friendly have been implemented, yet they only allow you to cool down the room a certain number of degrees compared to the outside temperature. And then in summer when it gets extremely hot, the system doesn't have enough power to cool down the room. What happens then is that you need invest into a new system which has enough capacity and that's going to be very costly.”
Theodor Kubak, managing partner at Arbireo Hospitality Invest agrees, noting that getting investments in technology right can be a tricky endeavour and it’s an area which many don’t get right.
“Sometimes, new technology appears that you feel has to be implemented immediately. However, an area that is less risky is the hardcore FF&E; if you create something where the guest can physically benefit from and where they feel the comfort of the upgrade, then it’s generally more straightforward.”
“So you need to be aware of what the regulations are, how systems work in real life, how do they save energy. You have to be clear about what you want to achieve, what the associated costs, and what's the ceiling is,” Djordjevic adds.
Another common pitfall, Bunte warns is owners attempting to cut corners in order to save on costs.
“Often, those perceived savings from cutting corners are really just amortised over a longer period of time and sometimes cost more as the property will need more capex sooner if, for example finishes are lower quality or F&B concepts aren’t fully maximized. If a capex budget needs to be reduced, try to do it in an area that guests will not see, smell, feel or hear, and always spend the funds where the guests will experience the impact.”
Asset management and teamwork Bunte adds that effective asset management is a critical part of optimizing capex investments, with Durbin stressing the importance of having a thorough asset management which has the buy-in of all stakeholders who all work together to stay on top of that plan.
Djordjevic adds: “It’s very important to keep a balance between the owner’s and the operator’s priorities. Many times, whilst some elements may be important for the brand to rollout, not necessarily are they going to have an immediate impact on the owner’s return. So it’s keeping the balance on which are the must-haves from the brand and which are the ones that are going to create that differentiation factor and that immediate return to the owner. It's about ensuring that the brand and the product manager and the owner are all working in synchronization and they're aligned.”
Additionally, Djordjevic advises not to underestimate the benefits of good collaboration between the members of the team. “If you have the opportunity to work with a project manager or general contractor and designer that previously worked well together and delivered on projects and they have a good understanding and teamwork, that's really going to help you,” he says.
He also stresses that owners need to stay abreast of brand standards and how these standards are changing. He notes: “If there's a new brand standard coming into effect where the brand will ask all its owners to make certain capex investments into specific items, you want to be aware of it while you're planning today rather than tomorrow.”
Kubak adds it’s also important to seriously consider how the various capex considerations interplay with each other, rely on each other and may affect one another.
“One should not just look at one single aspect but also look at how would it affect any other aspects in the hotel and trigger potentially other considerations. There is interactivity between every single capex consideration, which may have an effect on further costs further down the line,” he warns.
Looking to the future Looking ahead, Kubak says technological advancements and AI will have significant impact on capex in future.
“It will impact AI will impact us in all aspects; how we conceptualise property, which kind of services we provide, how we communicate with the guest – it will impact every single aspect of the guest journey. And so therefore, we need to see how we can adapt to this new reality as quickly as possible and make it serve the hospitality sector. If we can get it right, it can result in bigger returns. AI is something we need to come to terms with.”
He adds: “In terms of technology and sustainability, right now, we’re at an important junction where if you don’t recognise the window of change and take the right steps, there’s a risk of not staying relevant over the next five to 10 years.
Djordjevic notes a shift towards a more residential product where improvements utilise the use of working with warmer colours, getting rid of the typical working desk and making a lower desk which can also be used for working but also for dining as well as a merger of different spaces coming together.
“We've seen co-working spaces and F&B spaces merging together and creating more of a meeting space rather than just a lobby,” he says.
However, he warns. “Where the industry is going towards is that everything needs to be Instagrammable and glamorous. So when you're investing, your cycles are getting a lot smaller and so your concept could be obsolete in five years. So how can you have a product in place which is going to address the current trends but also be able to be upgraded and facelifted in four or five years times as the trends change?”
Durbin concurs. “At the very beginning while you’re working out what you want to do and how much things would cost, you should at the same time be seriously considering exactly what impact will be had on the profitability and the overall performance of the asset in for example, the next five years.”
Positively, Durbin notes that the prevalence of unbranded, tired hotel properties in southern Europe means there’s a lot of opportunity in that region. “There are tons of people working on turnaround projects from 2-star through to luxury and there’s big opportunity there,” she says.
In a nutshell, experts agree that capex need to be specific and targeted. It has to be able to refresh the space and to infuse a new spirit in the property which is instantly and very clearly recognized by the customer, and there needs to be a strategy in place to ensure that any improvements are future-proof.
By Ifeoluwa Taiwo
Apr 11, 2024 8:00am
In an environment where interest rates continue to impact priorities, shifting focus away from capex improvement and towards deploying capital in order to cover debt costs, many assets aren’t getting the face-lifts they desperately need. However, these face-lifts may be exactly what’s needed to improve the value of these assets and jumpstart the transactions market. But the question remains: how to deploy capex, measure it and manage it effectively in order to get the most bang for your buck.
The end goal
Experts say it’s of the utmost importance that the end result not just improve the effectiveness of the hotel operations but also give the feeling of experiencing something special, thereby driving average daily rates.
“With guests preferences moving more and more towards experiences, especially in the luxury segment, we are seeing a greater allocation of capital expenditure towards experiential investments,” says Christian Bunte, managing director at Avingstone.
He adds that strategic capex allocation should be guided so that there’s an improvement in the market perception so that customers have a perceived value for the higher rates for example improving the experiential elements of a property as well as give protection to the asset in the event of any unforeseen shock to the sector.
ADR growth
However, Rastko Djordjevic, head of asset management at JLL Hotels & Hospitality Group stresses the importance of being mindful as to exactly how much room there is for ADR growth, especially after the pandemic’s shock to the sector.
“Over the last two to three years, we had a fantastic ADR growth, and if you had a renovated asset coming out of a pandemic, you did great. But now ADR growth is slowing down. So if your market share is indicating that there is more room for you to grow within the competitive set, then it makes sense to invest in your hotel. But if you're already at the top 10 percentile with your ADR, the room for ADR improvement is much smaller. So you have to really consider how much room you really have to grow?”
How to stand out So how can investors use capex to create competitive differentiation in their hospitality assets, especially in a time where simply adding a spa or leisure facilities just doesn’t cut it anymore. The answer is to really home in one specific offering rather than purporting to be a jack-of-all-trades.
“We need to get away from the traditional thinking of ‘we're best at everything, we do everything’ because nobody does that anymore. Look at the value chain and ensure that within your value chain, you as a brand align yourself with partner brands and aim to be the best in class,” Djordjevic advises.
“For example ‘I’m going to have the best F&B operator, I'm going to have the best spa operator, I'm going to have the best the best fitness operator or co working’. So it's more about working towards a value proposition where you align yourself with your partners in order to provide the best experience to the customer. And that's key - ensuring that you have a clear differentiation strategy and ensuring that your capex is being deployed towards meeting that objective.”
Harriet Durbin, managing director at Panorama Hospitality agrees. “It comes down to where can you best fit in so you're meeting unmet needs and where can you best find a niche.”
Bunte adds: “Hotel owners and operators are seeing that it is no longer enough to be the most luxurious property in the market. You have to have a unique selling proposition, whether it is exceptional F&B, specialty spas or other experiences such as those related to the arts.”
ESG, technology and AI Separately, with ESG improvements becoming a necessity especially in Europe, it is becoming increasingly important to pay attention.
“You need to be aware of all the ESG regulations coming into effect, Djordjevic says, adding “if gas boilers are being phased out in certain countries by a certain year, you will need to deploy more capex into the mechanical and electrical plan.”
However, he says that spending money in this way need not only be an effort to be compliant, but could also help with reducing costs, therefore positively impacting the bottom line.
“If you invest into your building management system - to control the temperature of your room, to control the lighting in your room - and invest into a clever system which changes the cooling and the heating of your building in line with the with the outdoor conditions, you will have an immediate saving on electricity. And this will tick two boxes in one where you will tackle the ESG component of it but also tackle your costs.”
However, he warns that with green initiatives, it’s important to have a clear strategy to achieve whichever standards are being pursued as well as to be mindful of the real-life operation of any ESG-focused technology.
He explains: “We have seen buildings where new systems which are very environmentally friendly have been implemented, yet they only allow you to cool down the room a certain number of degrees compared to the outside temperature. And then in summer when it gets extremely hot, the system doesn't have enough power to cool down the room. What happens then is that you need invest into a new system which has enough capacity and that's going to be very costly.”
Theodor Kubak, managing partner at Arbireo Hospitality Invest agrees, noting that getting investments in technology right can be a tricky endeavour and it’s an area which many don’t get right.
“Sometimes, new technology appears that you feel has to be implemented immediately. However, an area that is less risky is the hardcore FF&E; if you create something where the guest can physically benefit from and where they feel the comfort of the upgrade, then it’s generally more straightforward.”
“So you need to be aware of what the regulations are, how systems work in real life, how do they save energy. You have to be clear about what you want to achieve, what the associated costs, and what's the ceiling is,” Djordjevic adds.
Another common pitfall, Bunte warns is owners attempting to cut corners in order to save on costs.
“Often, those perceived savings from cutting corners are really just amortised over a longer period of time and sometimes cost more as the property will need more capex sooner if, for example finishes are lower quality or F&B concepts aren’t fully maximized. If a capex budget needs to be reduced, try to do it in an area that guests will not see, smell, feel or hear, and always spend the funds where the guests will experience the impact.”
Asset management and teamwork Bunte adds that effective asset management is a critical part of optimizing capex investments, with Durbin stressing the importance of having a thorough asset management which has the buy-in of all stakeholders who all work together to stay on top of that plan.
Djordjevic adds: “It’s very important to keep a balance between the owner’s and the operator’s priorities. Many times, whilst some elements may be important for the brand to rollout, not necessarily are they going to have an immediate impact on the owner’s return. So it’s keeping the balance on which are the must-haves from the brand and which are the ones that are going to create that differentiation factor and that immediate return to the owner. It's about ensuring that the brand and the product manager and the owner are all working in synchronization and they're aligned.”
Additionally, Djordjevic advises not to underestimate the benefits of good collaboration between the members of the team. “If you have the opportunity to work with a project manager or general contractor and designer that previously worked well together and delivered on projects and they have a good understanding and teamwork, that's really going to help you,” he says.
He also stresses that owners need to stay abreast of brand standards and how these standards are changing. He notes: “If there's a new brand standard coming into effect where the brand will ask all its owners to make certain capex investments into specific items, you want to be aware of it while you're planning today rather than tomorrow.”
Kubak adds it’s also important to seriously consider how the various capex considerations interplay with each other, rely on each other and may affect one another.
“One should not just look at one single aspect but also look at how would it affect any other aspects in the hotel and trigger potentially other considerations. There is interactivity between every single capex consideration, which may have an effect on further costs further down the line,” he warns.
Looking to the future Looking ahead, Kubak says technological advancements and AI will have significant impact on capex in future.
“It will impact AI will impact us in all aspects; how we conceptualise property, which kind of services we provide, how we communicate with the guest – it will impact every single aspect of the guest journey. And so therefore, we need to see how we can adapt to this new reality as quickly as possible and make it serve the hospitality sector. If we can get it right, it can result in bigger returns. AI is something we need to come to terms with.”
He adds: “In terms of technology and sustainability, right now, we’re at an important junction where if you don’t recognise the window of change and take the right steps, there’s a risk of not staying relevant over the next five to 10 years.
Djordjevic notes a shift towards a more residential product where improvements utilise the use of working with warmer colours, getting rid of the typical working desk and making a lower desk which can also be used for working but also for dining as well as a merger of different spaces coming together.
“We've seen co-working spaces and F&B spaces merging together and creating more of a meeting space rather than just a lobby,” he says.
However, he warns. “Where the industry is going towards is that everything needs to be Instagrammable and glamorous. So when you're investing, your cycles are getting a lot smaller and so your concept could be obsolete in five years. So how can you have a product in place which is going to address the current trends but also be able to be upgraded and facelifted in four or five years times as the trends change?”
Durbin concurs. “At the very beginning while you’re working out what you want to do and how much things would cost, you should at the same time be seriously considering exactly what impact will be had on the profitability and the overall performance of the asset in for example, the next five years.”
Positively, Durbin notes that the prevalence of unbranded, tired hotel properties in southern Europe means there’s a lot of opportunity in that region. “There are tons of people working on turnaround projects from 2-star through to luxury and there’s big opportunity there,” she says.
In a nutshell, experts agree that capex need to be specific and targeted. It has to be able to refresh the space and to infuse a new spirit in the property which is instantly and very clearly recognized by the customer, and there needs to be a strategy in place to ensure that any improvements are future-proof.
