Hotel transaction volumes are expected to pick up
pace in 2022
Investors are likely
to prefer operational assets or portfolio of assets to expand their footprint
rather than greenfield or brownfield projects. Also, value deals where the
lender and owner have both taken haircuts are the most likely to find buyers.
The ancillary revenue revolution is here to stay
The hotel sector’s
focus on ancillary revenue will gain momentum, with more radical revenue
generating avenues gradually finding favor. There are numerous ways to use
existing infrastructure to create new revenue generating opportunities, ranging
from monetizing parking spaces, deploying electric vehicle (EV) charging
stations, creating dedicated areas for co-working, leasing kitchens for cloud
kitchen requirements during non-peak hours to even developing hotel’s signature
merchandise and souvenirs.
Diversified revenue streams will enhance customer
engagement and brand loyalty, boost real estate revenue per square foot and
safeguard the property’s revenue generating capabilities from unexpected events
in the future.
Partnering with branded restaurants
Restaurant operators can benefit from the hotel’s
captive clientele, location benefits and brand image, while hotels get an
opportunity to elevate customer experience by becoming a ‘destination’ for
hotel guests and locals, resulting in higher food and beverage revenues and
profitability.
Attracting and retaining the right talent will become a priority
The hospitality sector
has long struggled with a shortage of trained workforce and high attrition
rate, with the situation getting worse post the pandemic. Skilled and trained
manpower will be a growing challenge both in terms of availability and cost.
Hotel designs will undergo changes
Hotel designs,
especially in midscale and lower segments, will align towards a more modular
structure that can be efficiently partitioned into smaller operating units in
the event of any disruption from pandemics or similar events in the future,
resulting in lower operating costs during the disruptive period.
Moreover, future
hotel designs will also be influenced by the advancement of smart tech and
other technological aspects.
Debt rationalization will be a key focus area
Soft brands will become a norm
Soft brands that can
comfortably accommodate conversion of unique, experiential independent hotels that
do not comply to traditional hard brand standards will thrive, as the
opportunity to grow through conversion gathers momentum.
An increasing number
of standalone hotels are keen to join larger chains to not only recover from
the disruption caused by COVID, but also to leverage their global distribution
channels, marketing platforms, and high-tech booking systems. Moreover,
regional boutique brands will also gain prominence and expand their presence.
Alternative accommodation will disrupt the hospitality industry
Alternative
accommodation products such as homestay or villa rentals will grow
exponentially, as these have piqued the interest of travelers who are opting
for smaller, more intimate places for their getaways.
Travelers benefit
from greater privacy, flexibility, and convenience, especially when traveling
in small groups or with families and pets.
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