Hotel Asset Managers Association (HAMA) recently released their spring outlook for the hospitality industry, and the results were largely positive. Hotel Investment Today reported that the majority of respondents predicted their hotels would exceed their 2023 budgeted Revenue per Available Room (RevPAR), and nearly 70% expect 2023 full-year RevPAR to increase compared to 2019. Additionally, nearly 50% expect at least half of their overall portfolio to exceed 2023 budgeted Gross Operating Profit (GOP).
Despite concerns about rising interest rates and the possibility of a recession, the fear of forced sales was low among respondents. However, asset managers did express concerns about demand, wage increases, and labor supply in the industry. In response to these challenges, Chris Hague, COO of HotelAVE, offered a roadmap to help asset managers transform trends into strategy.
One of the top concerns for asset managers is flow-through, or the decelerating growth of top-line revenue and the impact of inflation on expenses. Hague suggests that technology can be leveraged to mitigate inflationary pressures on labor, and asset managers should be nimble when it comes to the products that hit their loading docks. This includes performing regular menu engineering and pricing evaluations, engaging experienced tax counsel and insurance experts to mitigate fixed cost growth, and shifting to alternative products quickly to avoid margin erosion.
Hague also recommends smart use of technology as a cost containment tactic. Staffing can be mitigated with QR codes, kiosks, mobile payment applications, and even robotic cleaning equipment. Labor management systems and other proprietary LMS need to be optimized and used with accountability, and improvements to business intelligence platforms will strengthen the asset manager’s toolbox.
For full-service hotels, savings can be found by streamlining staff and operations on the F&B side of the business – not just hotel staff. Hague suggests that leveraging technologies and BI tools can lead to tremendous opportunities within labor scheduling, overall hours of operations, and dynamic pricing strategies. Deeper-dive time and movement studies throughout the entire property can also identify opportunities within larger operations.
Finally, Hague acknowledges that there is no way to avoid passing on some cost increases to guests. As the cost of delivering services increases, fees such as cost of living fees, urban amenity fees, and parking fees will continue to rise.
Overall, HAMA’s spring outlook indicates that the hospitality industry is poised for continued growth in 2023, despite some challenges. Asset managers can stay ahead of the curve by leveraging technology and being nimble in response to changing trends and market conditions.