Earlier this month I had the opportunity to participate in a lively panel discussion and exchange with many of the most active asset managers in European hospitality at the Hotel Asset Managers Association’s annual meeting at the IHIF conference in Berlin.
These discussions are always interesting – I was struck by how engaged asset managers have become in the progress of technology and innovation and the extent to which they see it as critical to performance and the future values of the hotel assets they manage.
The immediate challenges facing asset managers are well known: Demand and market segmentation dynamics are in a state of constant flux. Rising costs have prevented hoteliers from realizing widening margins alongside a rapid increase in travel. And there is a constant struggle to source labor and control costs that impact NOI and ultimately asset value.
Here are some of the key takeaways from our discussion in Berlin:
Guest demand trends have yet to return to pre-2020 norms, but there is still reason for optimism if hotel asset managers can remain flexible. It has become abundantly clear that the post-pandemic travel landscape is dominated by leisure travel, a significant shift in guest demand and segmentation compared to what the industry is used to.
Hospitality’s core metrics have yet to normalize as well. According to data from STR, U.S. hotel occupancy for April 2023 is still down 1.4 percent from April 2022, while average daily rates continue to push the envelope after a 3.4-percent increase. Asset managers are continuing to learn more about the drivers influencing occupancy’s uneven recovery from market to market to keep up with the rapid pace of change and business mix.
What’s required, above all, is for asset managers to create a flexible business model capable of adapting to shifts in guest demand and travel patterns. Doing so requires diversification in chain scale and segmentation, room type, and available amenities, but would enable a more flexible staffing environment capable of reacting to real-time shifts in guest demand. Today’s asset managers are looking for ways to quickly pivot in response to shifts in demand and capitalize on the previously unknown, and for many of them, the answer is rooted in existing technology.
Spend More, Greater Efficiencies
If hotels are unable to continue raising rates until occupancy improves, asset managers have limited routes to improve NOI. Some hoteliers will invest in new amenities or refine existing ancillary services. However, the most efficient path to profitability is increasing hotel efficiencies. And many of those efficiencies center on labor.
Asset managers must also continue to focus on balancing lean operations and maintaining a high level of guest satisfaction. Technology has been invaluable helping hoteliers navigate some of the most challenging events of the last business cycle, and today it is assisting in simplifying training, communications, and revenue management. Tools that can help streamline operations while preserving the guest experience are critical.
These tools are even more essential in European markets, where properties, their guests, and operational strategies are more fragmented.
Automate for Greater Personalization
Most hoteliers still rely on manual checklists, Excel workbooks, and phone calls for managing staff operations. These time-consuming and often disconnected processes can be replaced with a unified program capable of automating and optimizing staff workflows.
Today’s workforce demands a more dynamic approach to operations and scheduling. Workforce management software can address many diverse factors when forming a schedule or informing workers of new tasks. The technology can reduce burdensome manual tasks to notes on a checklist, making life easier and critical data more available to asset managers and on-property operations.
By helping staff teams function more efficiently, automated staff scheduling can help hotels focus more time on where it belongs – improving the guest experience. Other properties may benefit from dynamic task assignments, which can save time and money by creating a chain of accountability and ensuring messages are delivered. Hoteliers are using workforce management software to create a more consistent operational environment today, increasing the asset value of a property over time.
As technology improves and operational efficiencies are refined, workforce management tools will quickly be invaluable for maximizing revenue in the face of rising expenses. Asset managers will be looking for ways to diversify, streamline, and automate their properties even more in the second half of 2023, and using technology, they can do so while continuing to focus on adapting to the changing business mix and keeping a strong focus on guest experience.