The NYU School of Professional Studies Jonathan M. Tisch Center of Hospitality and Boston Consulting Group (BCG), one of the world's leading management consulting firms, recently collaborated on a survey of hotel owners, management companies, and other industry stakeholders to gauge their sentiment and prospects for the hospitality industry.

The resulting white paper, titled “Hotel Borrowing Costs are Rising – But So Are Occupancy Rates,” projects positive outcomes based upon rising demand that will bolster key industry metrics, such as occupancy rates, average daily room rates (ADRs), and revenue per available room (RevPAR), while new construction is down to 2015 levels.

For the past three years, the Tisch Center of Hospitality and BCG have collaborated on critical research on the latest industry challenges and opportunities. Leading hospitality brands and organizations have come to rely on the insights from NYU SPS/BCG collaboration to help better inform their current and future business decisions.

“We expect this year’s report will arm industry stakeholders with valuable information to help move their businesses forward,” said Sean Hennessey, associate professor at the NYU SPS Tisch Center of Hospitality and contributor to this white paper. “While inflation increases operating costs, it can also help accelerate room rate growth. Further, interest rates rise in an inflationary environment, which affects the feasibility of new construction. On balance, the profitability outlook is attractive,” added Hennessey about the survey findings.

“Uncertainty, inflationary fears, and elevated interest rates will likely be with us for a while,” said Tom McCaleb, managing director and partner at BCG “All can have a chilling effect on hospitality investment. Despite these concerns, our latest work with the Tisch Center shows that strong room demand will keep the hospitality industry an attractive investment for the foreseeable future.”

Survey Highlights

While the NYU SPS/BCG analysis is far from gloom and doom for the hospitality industry, here are a few top-line results from the survey:

Guest Demand: A Major Source of Optimism

• More than 70% of survey respondents anticipate demand will at least somewhat increase by the end of 2023, and 42% expect significant increases in 2024.
• Hoteliers are looking for nominal revenue increases of 4.6% to 5.1% in 2023. Those expecting a significant increase in demand anticipate revenues to rise by about 12%.
• Real growth rates seem likely to exceed the rate of inflation. The revenue increases will be driven by both volume and price.
• Hoteliers expect room rates to rise by 8.3% to 8.8% over the next 18 months, expanding gross margins by about six percentage points.

 Interest Rates: The Biggest Threat for Investors

• Even though hotel industry participants expect the inflation rate to drop below 5% by the end of 2024, they are nonetheless wary.
• High-interest rates spook investors in hotels as in other commercial property sectors. In the current environment, 82% of hotel owners view the hotel industry as less attractive than other investment classes.
• The industry is approaching a trigger point. A summary of recent hotel financings shows spreads topping out at 400 basis points above the secured overnight financing rate (SOFR), which itself is approaching 5%. When borrowing costs exceed 8%.
• In this survey, 89% of hoteliers consider rates above 8% unacceptable for taking out a loan.

Persistent Labor Challenges Add to Investor Reticence

• Prolonged staffing shortages add to investor concerns; 70% of hotel owners view the hotel industry less attractive if labor problems persist.
• More than 60% of respondents reported that they are somewhat or severely short-staffed, which NYU SPS/BCG estimate costs hoteliers about seven percentage points of revenue and two points of operating margin.
• More than 75% of respondents experienced modest or better labor productivity gains in the last three years and are optimistic about improving employment going forward. More than 60% expect continued improvements in 2023, and 100% expect significant improvements in 2024.
• Two challenges still need to be solved in this area: the number of job openings and decreases in real earning potential for industry workers.

View the complete NYU SPS Tisch Center/Boston Consulting Group Survey.

Cvent, a meetings, events, and hospitality technology provider, is proud to collaborate with the NYU School of Professional Studies (NYU SPS) Jonathan M. Tisch Center of Hospitality. As part of the Tisch Center’s Hospitality Innovation Hub Experiential Learning Lab (HI Hub Lab), the engagement aims to provide students with real-world experience in the events industry, through access to Cvent's innovative technology and industry recognized Cvent Certification and training opportunities.

In addition, Cvent CEO & Founder, Reggie Aggarwal, will join the 45^th Annual NYU International Hospitality Industry Investment Conference today, June 5^th, as an expert panelist alongside senior executives from Fairmont, Amadeus, and Travel + Leisure, among others. He will share his industry insights and thoughts on the future of hospitality.

"We are thrilled to work with NYU's Tisch Center of Hospitality to help bridge the gap between classroom education and the real-world events industry," said Reggie Aggarwal, Cvent CEO & Founder. "The events industry is constantly evolving, and it's crucial for us as industry leaders to help prepare the next generation of event professionals with the tools they need to succeed."

The partnership will provide NYU SPS students with access to Cvent's comprehensive event marketing and management platform, including attendee engagement tools and marketing solutions. In addition, Cvent will provide complimentary training and support to ensure students are able to fully leverage the technology to create successful events.

"We're extremely excited to work with Cvent and their best-in-class technology to provide our students with impactful, hands-on experiential learning opportunities," said Vanja Bogicevic, Director, HI Hub Lab and Clinical Assistant Professor of the NYU SPS Jonathan M. Tisch Center. "This collaboration will help our students develop an even stronger foundation and will empower them to learn the skills they need to become successful leaders in the events industry."

The initiative between Cvent and NYU SPS's Jonathan M. Tisch Center is a testament to the importance of continuing education and collaboration between industry leaders and academic institutions. By working together, both organizations aim to elevate the next generation of event management professionals and drive the industry forward.

Smoothie King, the smoothie brand with 1400+ locations, has partnered with  Evocalize to implement intelligent hyper-localized digital marketing at scale, and further differentiate itself from other franchise offerings.

Individual locations will benefit from targeted multi-channel initiatives, automatically triggered by real-time local POS, inventory, weather, and other data — all on-brand with local flavor.

• 71% of restaurants are leveraging data gathered via the POS for digital engagement, according to HT's 2023 POS Software Trends Report

Smoothie King will be able to optimize local marketing spend across Google Search, Google Display Network, Facebook, Instagram, TikTok, Gmail, and YouTube. Their franchise network will benefit from EVOLVE technology, real-time data for automation and machine learning algorithms to optimize performance across multiple ad platforms, ensuring that their messages are seen by the right people, in the right place, at the right time.

"This really is going to be a real game changer for our local marketing efforts," said Smoothie King VP of Brand Marketing, Shannon Gewinner. "By tying our robust location-based data directly into Evocalize, we'll be able to automatically drive marketing engagement with our customer base in real-time. If inventory on a certain item is too high, the weather shifts, or sales need a boost, local ad programs can be triggered on the right channels to ensure each location is connecting with local customers in the right places and hitting their sales goals."

To see how Evocalize makes local digital marketing push-button easy for 1,500,000+ franchisees and local operators to drive real business results and revenue, visit evocalize.com.

Napa Technology, the makers of WineStation and TapStation Intelligent Dispensing Systems, has partnered with CLEAR, the secure identity company, to provide a friction-free self-checkout experience for age-gated purchases on their intelligent wine, beer and spirit dispensers.

Napa Technology has embedded Powered by CLEAR age verification technology to enable consumers to seamlessly and securely affirm their age with CLEAR instead of by manually presenting an ID to a staff member. The integration will eliminate the potential for fraud and human error associated with traditional forms of identity verification and increase operational efficiencies for Napa Technology’s hospitality customers.

After scanning a QR code on Napa Technology’s dispensing system, new users will be prompted to verify their age with CLEAR using their government-issued ID and a selfie. Returning CLEAR users will simply be prompted to snap a selfie to verify their identity.

Powered by CLEAR enables frictionless confirmation of identity and credentials.

Napa Technology, LLC is a designer and manufacturer of intelligent dispensing systems for wine, beer and spirits that ensure optimum freshness and memorable guest experiences, as well as to-the-ounce accuracy with each pour. For more information, please visit www.napatechnology.com.

BeerBoard and Encompass, providers of technology solutions for the hospitality and beverage industries, announce a strategic partnership.
 
The partnership between BeerBoard and Encompass will integrate BeerBoard's solutions for ordering, data and analytics through its SmartOrders and SmartBar platforms with Encompass ERP and eCommerce software. This will deliver visibility and control over beverage ordering, inventory and sales.

• 71% of restaurants are leveraging data gathered via the POS for digital engagement, according to HT's 2023 POS Software Trends Report

 
The integrated technologies will provide a comprehensive view of inventory levels, sales data and ordering trends, enabling retail clients to make data-driven decisions that optimize their beverage programs. Distributors and suppliers will benefit from frictionless integration to online ordering portals, a reduction in off-day deliveries and out-of-stocks, and enhanced insights to empower sales team members as consultative partners.
 
“We are thrilled to partner with BeerBoard,” said Encompass VP of eCommerce, Bill Kraich. “This partnership gives distributors  the ability to reach some of the largest on-premise chain retailers via eCommerce, proving how much further the industry can go when tech firms collaborate and work together.”
 
BeerBoard and  Encompass will be showcasing their joint solution at the BevAge Conference, June 5-8, in Denver. For more information on the partnership and the joint solution, visit www.beerboard.com and www.encompasstech.com.

As over 80% of hotels experience staffing shortages, hoteliers are offering potential hires a host of incentives to fill vacancies, according to a new survey of hoteliers conducted by the American Hotel & Lodging Association (AHLA).

Seventy-five percent of respondents are increasing wages, 64% are offering greater flexibility with hours, and 36% are expanding benefits – but 87% say they are still unable to fill open positions. 

Eighty-two percent of survey respondents indicate they are experiencing a staffing shortage, 26% severely so – meaning the shortage is impacting the hotel’s ability to operate. The most critical staffing need is housekeeping, with 40% ranking it as their top hiring need. 

These numbers have increased slightly from January 2023, when 79% of survey respondents indicated they were experiencing a staffing shortage. The figures have improved since May of 2022, however, when 97% of survey respondents indicated they were experiencing a staffing shortage, 49% severely so.

Respondents to the most recent survey are attempting to fill almost 9 positions per property, up from 7 positions in January but still down from 12 vacancies per property in May 2022.

These staffing challenges are resulting in historic career opportunities for hotel employees. There are more than 100,000 hotel jobs currently open across the nation, and as of April, national average hotel wages were at an all-time high of more than $23 per hour. Since the pandemic, average hotel wages have increased faster than average wages throughout the general economy, and hotel benefits and flexibility are better than ever.

“The need for workers throughout the lodging industry continues to drive historic career opportunities for hotel employees, who are enjoying record wages and better benefits and flexibility than ever before,” said AHLA President & CEO Chip Rogers. “That’s why AHLA and the AHLA Foundation remain focused on growing the industry’s talent pipeline through workforce recruitment and retention initiatives like the Foundation’s Empowering Youth  and Registered Apprenticeship programs. But there is still more to be done. We need Congress to help address workforce shortages with bipartisan solutions, including those that create opportunities for more immigrants to enter the American economy.”

As of April, the United States had nearly 10.1 million job openings, but only 5.7 million unemployed people to fill them, according to the Bureau of Labor Statistics.

Congress can help hoteliers address workforce shortages by taking the following actions:

• Expand the legal H-2B guestworker program by including an H-2B Returning Worker Exemption in the Fiscal Year 2024 Department of Homeland Security appropriations bill. The H-2B program is vital to helping independent hotels and resorts in remote vacation destinations fill seasonal roles, but the program is capped at 66,000 visas each year. AHLA is asking Congress to modify the H-2B nonimmigrant visa program by exempting returning workers from the inadequate 66,000 annual visa cap. These employees would provide critical staffing relief for seasonal small business hotels and help to rebuild the post-pandemic economy.
   
• Cosponsor and pass theAsylum Seeker Work Authorization Act (255/H.R.1325). A historic number of asylum seekers are already housed in hotels across America. They are awaiting court dates and are following the legal process. Unfortunately, current law prevents them from legally working for at least six months, forcing them to rely on assistance from local governments and communities. This bipartisan legislation would help hotels address critical staffing needs by allowing asylum seekers to work as soon as 30 days after applying for asylum.

Methodology: AHLA’s Front Desk Feedback survey of 474 hoteliers was conducted May 3-9, 2023.