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  • Members Only: 2018 HFTP Compensation and Benefits Report

    By Tanya Venegas, MBA, MHM, CHIA. Results to the biannual survey conducted by Hospitality Financial and Technology Professionals (HFTP). Information includes data on compensation and benefits trends for finance and technology professionals in the club and lodging industries.

  • Success in the Sunshine State: Highlights from HFTP's 2018 Florida Regional Conference

    The beautiful Sarasota Westin Hotel — with its bright white facade, multitudinous windows and stunning rooftop pool area — made a very picturesque setting for the 2018 HFTP Florida Regional Conference, which took place July 25–27, 2018.

  • Annual Convention 2018: A True HFTP Experience in the Land of the Kentucky Derby

    On the bank of the Ohio River in the east south-central region of the United States looms Kentucky’s largest city, Louisville — home to the famed Kentucky Derby horse race, Kentucky Fried Chicken (KFC) and Louisville Slugger baseball bats.

  • Members Only: IT Spending in the Lodging Industry Three-year Analysis: 2015–2017

    By Agnes DeFranco, Ed.D., CHAE; Arlene Ramirez, CHE, CHAE; and Tanya Venegas, MBA, MHM, CHIA. PART II: An analysis of IT spending data in the lodging industry based on reporting in the new USALI Schedule 6 — Information and Telecommunications Systems.

HVS Market Pulse: Bangkok, Thailand

HVS ·15 August 2018
Bangkok OverviewBangkok comprises an area of 1,569 square kilometres and has a registered population of approximately 5.7 million. The Bangkok Metropolitan Area, which includes Bangkok, Samut Prakan, Nonthaburi, Pathum Thani, Nakhon Pathom and Samut Sakhon, occupies a total area of 7,762 square kilometres or 1.5% of the total land area of Thailand. It has a registered population of approximately 10.7 million. Bangkok Metropolitan Area accounts for a significant portion of the national GDP.Bangkok can be divided into four main districts: Sukhumvit, Silom/Sathorn, Riverside, and Historic Bangkok. The Sukhumvit area, with its plethora of malls, office complexes, attractions and food and beverage venues, is a prime area for hotels. The area along Sathorn and Silom Road is considered to be the traditional central business district of Bangkok, while the Riverside area, along the Chao Phraya river is popular amongst European tourists for its proximity to cultural attractions and the Historical District of Bangkok. Outside of the city centre, various upcoming business districts are found, including Northern Bangkok and Bang Na.Bangkok's InfrastructureBangkok is the hub of transportation connections in Thailand. The city enjoys a good transportation infrastructure including the country's central train station, two international airports, the Bangkok Mass Transit System (BTS) the Metropolitan Rapid Transit (MRT), port and road networks. The BTS currently has 35 stations on two lines: the Sukhumvit Line and Silom Line; the MRT has 34 stations on two lines: the Blue Line and the Purple Line. There are plans to further expand both the MRT and the BTS as well as to add new lines to ameliorate connectivity within the wider city and ease the heavy traffic congestion.Plans are currently underway for a number of high-speed rail lines (HSR) in collaboration with China and Japan in an effort to promote sustainable development in infrastructure as well as focussing on energy-efficient rail transportation. The first phase of the North-eastern HSR will link Bangkok with Nakhon Ratchasima province over a 252-kilometre long track, which is expected to be operational in 2021. The Northern HSR is expected to cover a total distance of 670 km connecting Bangkok and Chiang Mai over two phases. The Eastern Economic Corridor (EEC) Board has also approved a high-speed rail project connecting Don Mueang, Suvarnabhumi and U-Tapao airports. Spanning a distance of 220 kilometres, the project is estimated to cost 200 billion baht and will allow commuters to travel the total distance in just 60 minutes.Furthermore, Bang Sue Grand Central station in Bangkok is currently under construction and is set to replace the current central station at Hua Lamphong upon its completion, and become the largest railway station in South East Asia with a total of 26 platforms. Bang Sue will connect to the MRT transit line and a number of mass transit routes including SRT Dark Red Line, SRT Light Red Line, Airport Rail Link, and the four major train lines.Bangkok AirportsBangkok is served by two international airports, namely Suvarnabhumi International Airport (BKK) and Don Mueang International Airport (DMK). BKK serves as the main international airport of Bangkok, while DMK is the hub for domestic and regional low cost carriers. BKK featured an initial capacity of 45 million passenger movements per annum, which is anticipated to reach 60 million passenger movements in 2019 and 90 million passenger movements by 2021. DMK currently has a capacity of approximately 37 million passengers per annum and the capacity to handle 650-680 flights per day. Airports of Thailand has recently approved the budget for the third phase expansion of DMK, which will see its capacity increase to 40 million passengers per annum by 2025. Total passenger movements at both airports in the year-to-date June 2018 were higher than the same period of the previous year, registering a growth of 7.1%. Furthermore, as part of the plans for the Eastern Economic Corridor (EEC), the Thai government plans to transform the U-Tapao Rayong-Pattaya International Airport (UTP), located approximately 140 km southeast of Bangkok, into Bangkok's third airport.Guest Arrivals at AccommodationsDespite several crises, the number of guest arrivals in Bangkok grew by 10% per annum from approximately 11 million to 30.6 million arrivals between 2008 and 2016. Over this period, 2009 was the only year when the number of guest arrivals to Bangkok declined. This was mostly the result of the 2008 Global Financial Crisis. The number of guest arrivals stagnated in 2014 as a result of the political demonstrations that took place in Bangkok at that time. However, growth resumed in 2015 and 2016. In 2016, the number of guest arrivals surpassed the 30 million marks for the first time, closing at 31.5 million guest arrivals, which reflected an increase of 3.0% year-on-year. 2017 was another record year for tourism, with a further 6% growth being observed. The following figure shows the relationship between guest arrivals at accommodations in Bangkok and a timeline of political events between 2008 and 2017. The chart illustrates the resilience of Bangkok's tourism industry as international tourist arrivals continue to grow in spite of the multiple crises that occurred over the last decade, ranging from political protests and terrorist attacks to flooding and military coups.Source MarketsFigure 5 illustrates the nationality of visitor arrivals at accommodation establishments in Bangkok in 2016. The largest international feeder markets were China, Japan, Korea and India, which together made up approximately 30% of total guest arrivals. China alone contributes to 21% of visitor arrivals and is one of the fastest growing sub-segments within the East Asia market, experiencing a growth of 29% per annum as a result of increased air access by charters and low-cost carriers from secondary and tertiary cities in China. The crack-down on the 'zero-dollar' tours only had a temporary impact in late 2016. Data by country for 2017 was not released at the time of this article.SeasonalityAlthough Thailand as a whole remains a seasonal destination due to its strong dependency on leisure tourism, Bangkok observes minimal fluctuations in arrivals due to the city's reliance on other market segments such as corporate as well as domestic demand. As a result, seasonality is relatively flat, with only minor dips that result from internal events such as political issues and natural events such as flooding. Between 2011 and 2016, the average length of stay for Thai visitors to Bangkok remained stable at an average of 3.3 days, while the average length of stay for foreign visitors were recorded at an average of 4.8 days. Short haul visitors tend to stay for a shorter period of time than long haul visitors, hence contributing to the shortening the overall average length of stay.Luxury Hotel Market PerformanceThe aggregate performance of a representative sample of approximately 1,800 rooms is shown in Figure 6. Between 2015 and 2017, average rate achieved a CAGR of 5%. This market experienced limited supply growth until the opening of Park Hyatt Bangkok in 2017. Thus, the sample experienced a decline in its occupancy level of four percentage points compared to the previous year, while successfully improving its average rate, which increased by 12% in 2017, resulting in a positive growth in RevPAR of 6%.Upscale Hotel Market PerformanceThe upscale hotel market consists of branded hotels in Sukhumvit area of Bangkok. The aggregate performance of a representative sample of approximately 5,000 rooms is shown in Figure 7. Upscale hotels registered healthy occupancy levels, which hovered around the high 70% mark and reached 80% for the first time in 2016. A minor growth in occupancy was seen in 2017 as hoteliers shifted their strategies to increase average rates. Between 2015 and 2017, average rate grew by 2% per annum, which was the strongest growth experienced since 2012. This could be attributed to a period of increased demand and political stability in the market. As a result, the market experienced positive growth in RevPAR of 8% per annum.Midscale Hotel Market PerformanceThe aggregate performance of a representative sample of approximately 2,000 rooms is shown in Figure 8. Majority of the midscale hotels in this sample are located in Sukhumvit area with good accessibility to the mass transit systems of Bangkok. In 2017, a decline in occupied room nights was attributed to the new supply entering the market. This increase resulted in a decline in occupancy among midscale hotels as the market absorbed the new supply. On another hand, average rates grew annually by 5% over the period. Given the dynamics of occupancy and average rate outlined, RevPAR posted a healthy CAGR of 4%.Hotel Supply and PipelineAccording to HVS Asia-Pacific Hotel Operator Guide 2018, the hotel pipeline landscape in Bangkok is extensive with approximately 10,000 branded hotel rooms entering the market over the next few years. Bangkok's total room inventory is expected to increase by approximately 30% between 2018 and 2022. Notable hotel developments are highlighted below.2018 OutlookBangkok is one of South East Asia's main tourist destinations, offering a variety of attractions, good infrastructure and a secure environment. Despite the political demonstration and bombings, the city's tourism industry has been a growth driver of the national economy. With continued marketing efforts by the Tourism Authority of Thailand, we consider that Bangkok is likely to remain a favoured destination in Asia. Furthermore, the relatively prolonged period of stability should give confidence to international MICE organisers to start reconsidering Bangkok as a MICE destination and lead to the continued growth of leisure visitors.The further expansion of the two main international airports in Bangkok will ensure that the city maintains its status as a gateway city, not only for visitors to Thailand, but also for visitors to the Mekong region. However, it should be noted that typically regional visitors have a shorter length of stay than long-haul visitors. The growing popularity of destinations in Thailand should help boost the number of visitors who will spend a few nights transiting in Bangkok. Accessibility within the city should be further ameliorated when the expansion of the mass transit systems is completed.The overall stability in the market has contributed to the strong performance of hotels during the first two quarters of 2018. The outlook for the remaining months of 2018 is optimistic, driven by expected strong demand levels in international visitor arrivals, coupled with the political stability in the market with elections being postponed to 2019. It is important to also note there is a considerable amount of new branded supply entering the market in the foreseeable future. The right balance between demand and supply of hotel rooms in Bangkok over the short to medium terms will be vital to the success of the lodging industry. We further expect traditional non-core areas to the be the focus of new development, especially those along the new mass transit system routes. Continuous efforts to promote the destination, improve its infrastructure and overall tourism experience should be key priorities going forward.

Zimbabwe - Vote for Tourism

HVS · 3 August 2018
The election on 30 July 2018 is one of the most important elections in the country's democratic history, with 23 candidates and 55 parties contesting the presidential election. This is the first time since 1980 that Robert Mugabe's name didn't feature on the ballot paper after he was forced from power during a bloodless military coup in November 2017. The importance of the election is not lost on the electorate, with voters queuing to cast their vote.The current president and ZANU-PF leader, Emmerson Mnangagwa and Nelson Chamisa, head of the Movement for Democratic Change Alliance are widely seen as the top challengers. While presidential results would be announced only towards the end of the week, there is a likely chance that the contest goes into a run-off in September if no candidate is able to secure more than 50% of the votes. Irrespective of the result, the new government/president will have the responsibility of building up the economy which is not going to be an instant fix. The country, which is under severe external debt, needs to be able to gain access to credit. The government would need to create favourable policies, stamp out corruption and create/revive its own currency.One of the major plans for the new government should be to restore financial and political stability by involving its skilled workforce in national building programmes and schemes. More than 3 million Zimbabweans are estimated to be living outside their country, having left the country for better economic prospects during the last two decades. This accomplished workforce with their experience of living abroad would certainly play a crucial role in the rise of Zimbabwe if they were to return to their country. A phase of restoring confidence among its citizens and the international community could usher an era of increased domestic and foreign investment and growth which perhaps has remained stunted for a better part of two decades; and tourism can play a massive role in this effort.Tourism policies and infrastructure can create massive opportunities for an economy, not only through job creation and direct/indirect income from tourism activities but also creating opportunity for interaction and business avenues. As per WTTC, while the direct contribution of travel and tourism to Zimbabwe's GDP was 3.5%, the total contribution of Travel & Tourism to GDP (including wider effects from investment, the supply chain and induced income impacts) was over 8% in 2016 and 2017.Most travel Itineraries in Southern Africa do not explore Zimbabwe's tourist attractions beyond the famed Victoria falls. Zimbabwe which has abundant natural attractions such as Nyanga National Park, Matopos National Park, Hwange National Park, Lake Kariba, The Great Zimbabwean Ruins, Chinhoyi Caves and so on need to be promoted and established into itineraries and tourism circuits. A masterplan for all these destinations with emphasis on airlines, connectivity, hotels and tourism infrastructure/activities should be conceived with the aim of enhancing the tourist's experience and increasing length of stay in the country. The government would need to invest into building a long-term tourism policy for preservation and conservation while providing incentives for private investments. We at HVS are keen to see democracy win and look forward to the government policy on travel and tourism - 'Blessed be the Land of Zimbabwe'

China and Impact on SA Tourism

HVS · 3 August 2018
Over the past decade, South Africa has continued to strengthen its ties with the People's Republic of China.Many Chinese companies operating in South Africa are geared towards the rising number of Chinese tourists who visit the country each year. South Africa is also home to a large number of Chinese immigrants: Yoon Jung Park, a researcher on Chinese migrants in South Africa, estimates that the numbers are between 350 000 and 500 000. But due to irregular immigration and poor record-keeping, it's hard to say exactly how many Chinese immigrants there are in the country. While Chinese arrivals in South Africa saw a dip in the first few months of 2017, the tourism industry reports that the market has now stabilised and is forecast for growth. Significantly, following erratic arrivals over the last four years, visitor numbers from India and China are growing, both up from their February 2017 numbers.Source Statistics SAAccording to Statistics South Africa, the number of Chinese visitors to the country shows an overall decline in arrivals between April last year and April 2018, with the country seeing 6% fewer arrivals. Additionally, the year-to-date numbers have also dropped by 1%, with total arrivals thus far for 2018 sitting at 958 311.According to SA Magic Tours, 2016 was a bumper year for Chinese arrivals, particularly due to the very low selling price of some of the bottom-end packages offered by a number of large operators. The dip in Chinese arrivals to South Africa in the first few months of 2017 was as a result of a correction in the pricing of the courier service, a RN65 (EUR8.30) charge that was added to Chinese visa applications. Concerns regarding the publicity surrounding follow-home crime also impacted on the safety-sensitive Chinese market during the first half of 2017.What could be in favour of South Africa is the fact that the country is not affected by acts of terrorism and could be viewed as a safer travel option. While crime exists, the crime rate affecting tourists is not as high as many are led to believe.Visas might be a larger barrier to entry for the Chinese market, as Chinese travellers book 14 to 10 days before they want to leave. As a result, they cannot afford to experience a delay in visa applications. Nor are they willing to travel or spend significantly to secure a visa.Morocco was South Africa's biggest competing African destination for Chinese tourists in 2017, after they relaxed their visa regulations. They now allow Chinese travellers entry with no requirement for a visa and, as a result, their arrivals grew by over 350%.However, 2018 has seen numbers picking up again as both government, SA Tourism and the trade industry have introduced a number of initiatives to increase Chinese arrivals.Tour companies have introduced Mandarin-speaking guides, along with promotional materials in Mandarin.Tourism operators and department stores are beefing up their Chinese language service for shopping guides. For ease of shopping, shopping malls are increasingly catering for Chinese visitors by adopting Alipay.In November 2016, about 20 South Africans working in the tourism sector were awarded certificates in Johannesburg after a three months intensive training in Mandarin. They were taken from various parts of the country to be trained in Mandarin so that they can communicate effectively with the Chinese tourists. Some are front line staffs in hotels and lodges while some are tour guides.Credit card discounts are also offered with the launch of a new Bank of China 'BOC Inspirational South Africa FIT Credit Card' in partnership with SA Tourism, along with another new card called 'I Go South Africa', being launched by the Industrial and Commercial Bank of China ICBC in partnership with Standard Bank of South Africa.One things is for sure, with only approximately 5% of all Chinese people holding passports, yet 135M Chinese taking foreign trips in 2016 (up from 8.4M in 1997) the potential is huge and growing rapidly. UNWTO estimates the Chinese outbound tourism expenditure grew to $261Bn in 2016, 21% of the world market and with South Africa only so far securing 0.08% of that spend it is worth all parties time, money and efforts to focus on attracting and welcoming more guests from China.

HVS Market Pulse: Tucson, AZ

HVS ·24 July 2018
Both lodging markets experienced a prolonged recovery following the national recession late last decade, partially attributed to the controversial SB 1070 immigration law; however, the loss of MLB Spring Training in 2011 and the federal government sequestration in 2014 stalled Tucson's recovery even further. Furthermore, Tucson's in-house meeting and group segment is somewhat dependent on the health of Phoenix's resort market, which was affected significantly by the effects of the last recession, as the two markets are often seen as substitutes for one another. Nevertheless, RevPAR in Tucson has been on the rise in recent years, with data illustrating an 8.5% gain in RevPAR for the first quarter of 2018-- the strongest first-quarter growth in the state.While a healthy Phoenix meeting and group market has allowed Tucson hotels and resorts to assert more pricing power than in previous years, the primary driver of growth over the past few years has been economic expansion. In 2016, Raytheon Missile Systems (RMS), Tucson's largest private employer, was awarded a $291-million missile contract from the U.S. Navy. More recently, RMS dedicated a new visitor-access center in May of this year, while two more buildings are currently under construction, and several more are planned to be built by 2020; the expansion is expected to allow RMS to create an additional 2,000 jobs over time. In addition, the $426.7-million expansion of the Banner-University Medical Center Tucson, which began construction in 2016, is on schedule for completion in April 2019, while the $98-million Banner Health Center at the UA Cancer Center opened in December 2017. Moreover, Amazon recently selected Tucson for a new, 855,000-square-foot distribution center, and Hexagon Mining announced that it would lease 26,000 square feet on the third and fourth floors at Bourn Companies' new, five-story, 69,000-square-foot, City Park multi-use complex in the Central Business District. The building is currently under construction and slated for completion this fall. Furthermore, Caterpillar broke ground on its 200,000-square-foot office facility in January 2018; completion is scheduled for early 2019. Caterpillar's decision to locate its headquarters in Downtown Tucson will bring 600 jobs to the city.Tucson's economic expansion has resulted in increasing levels of commercial-related travel and lodging demand, which is anticipated to continue. However, Tucson's reliance on government demand, from sources such as the University of Arizona, Davis-Monthan Air Force Base, US Customs and Border Patrol, and the State of Arizona, limits average rate (ADR) growth in the market, which represents a challenge for potential investors. A limited number of nonstop flights from the east coast to Tucson are another challenge. Furthermore, uncertainty surrounding NAFTA remains a major caveat to optimistic views of Tucson's growth. PRI's The World reported that up to 236,000 jobs in Arizona would be at risk if the U.S. were to pull out of the deal.Source: RCA & CoStar Arizona Transaction DataSource: RCA & CoStarWhile Tucson may be overshadowed by Phoenix, the market is making strides in its own right. The city's lack of corporate headquarters has historically been a stumbling block, but the relocation of Caterpillar, as well as the expansion of Raytheon and Amazon, bode well for the market. New supply remains at healthy levels and is not expected to negatively affect performance for the greater market. And although the uncertainty surrounding the current administration's renegotiation of NAFTA remains a concern, the overall outlook for Tucson is optimistic given the numerous positive factors.Previously published in the Tucson Trend Report July 2018 provided by Tucson Real Estate + New Development.[1] https://tourism.az.gov/research-statistics/data-trends/lodging[2] https://www.pri.org/stories/2017-12-21/trump-s-threats-pull-out-nafta-concern-many-arizona[3] https://www.azcentral.com/story/news/politics/arizona/2018/02/25/stronger-nafta-could-add-63-000-jobs-arizona-study-says/306879002/

Wellness and Hospitality Resilience in Economic Uncertainty

HVS ·19 July 2018
Lessons from 2008The global impact of the Great Recession between 2007-2008 was extensive and significantly touched the lives of millions of people.[1] In the hospitality industry, customary modes to manage the toll of the recession were often layoffs, budgetary cutbacks and business closures. We witnessed a widespread halt in spending, a slowdown in new development and an upsurge of mergers and acquisitions. These changes also greatly impacted executive management roles, compensation structures, and significantly changed the way people worked, traveled and planned ahead. Despite today's social and political turbulence, a decade later, the economy appears to have significantly improved. Hospitality and tourism are growing, and wellness-travel is yielding powerful returns. New investments and real estate developments are underway worldwide and there is an upswing in hotel, resort and mixed-use real estate development to meet increasing demands. Airbnb launched in 2008 and continues to thrive and expand its platform with local experiences, business travel, meetings and groups and more, further evolving today's travel dynamics.[2] Hospitality in general, looks dramatically different today, then it did ten years ago. As markets appear to be trending strong on the surface, what are some of the lessons we can learn from the recession of 2008? First, economic change can be an insidious curve. There are always layers of uncertainty and fluctuations looming in new growth and overstated trends. Second, when times are tough, the number one thing people continue to seek is relief. Personal health, quality of life and feeling good, matter more to people than ever before. Three, being innovative and resourceful can convert to true advantages. Being able to adapt and have the dexterity to surf the waves of change are invaluable business skills.Economic Uncertainty and Program DiversityThe measure "Economic Policy Uncertainty" EPU[3] has been explored by a team of three people to understand the cross sections of "causes and consequences" related to economic-policy uncertainty and how these potentially impact the financial circumstances and management of different markets in the world's economy. This methodology includes human research as well as raw computerized data to create macroeconomic index types. As new markets emerge from smaller subsets, and public policies and tax laws change, these projections show the range of uncertainty over time. Figure 1 below highlights 20-years of the Global EPU index.As with any investment, it's important to have diversity. Leveraging the unique selling points of a hotel or resort can enhance perceived value and motivate guest engagement. It's important to differentiate property amenities, services, and pricing models in ways that increase operational flexibility. For spas it's critical to have a well-balanced range of traditional treatments, add-ons, automated services and retail to effectively develop and deploy multiple revenue streams. I shared specifics about this in a previous article where I revealed a new operation hybrid model based on a trio of services incorporating "automation and technology" [4] These offerings should be based on the concept and theme of the facility and fit appropriately with the property type and its location. For example, customary spa treatments alone such as massage and aesthetics aren't enough to generate increasing profitability. These services should be accompanied with beauty services for hair and nails, medical-grade spa treatments and/or wellness offerings, naturopathic, spiritual or innovative lifestyle programs to enhance the depth and balance of spa and wellness performance. This approach presents compound income streams to establish effective performance safeguards, which should be tracked and reviewed regularly for both fiscal percentages and growth.Management and Staffing ChallengesIn 2008, many hotels underwent management and staffing overhauls to comply with budgetary cutbacks. This left numerous Spa Directors and department managers unable to delegate to secondary management or supervisors. Albeit strong spa and wellness market growth, many of these roles have not been reintroduced to cultivate stronger yields. There are copious ways to protect the budget without cutting back on the people you need. Investing in training, team building, and morale can return three-fold into the business. Having an adequate and committed staff can be an invaluable asset to business growth. While it's important to effectively budget payroll costs, investments made in developing an energetic and successful team can produce long-term and worthwhile results. When the winds of change start blowing, having a dedicated and steadfast team to get through it together can impart unrivaled focus to achieve hearty and earnest business goals.Investments and Strategic PlanningThere's no question the hospitality industry is evolving and will continue to change significantly in the years to come. These changes raise a series of major considerations as to how financial operating models and fiscal framework relate to and benefit these new categories of growth. In order to pivot investment strategies with diligence and foresight, it's essential to examine long-standing and perhaps outmoded methods used to track performance and relevancy. When guarding spa and wellness assets, identifying market changes with well-timed accuracy can help integrate defensive planning. However, before introducing provisions to take action, it's crucial to diagnose performance proportions and existing operating levels to effectively analyze the standing life-cycle of the business. Once the foundation is set, identifying central performance markers can help establish a sequence of metrics to warn against burgeoning challenges and increase stability.Expanding Reach and RevenueThe global demand for new wellness integrations and healthy lifestyle components have provoked a widespread shift in thinking, attitudes and new preferences. Whereas, most spa treatments are viewed as personal-choice cash services, revenue from high-demand wellness services can come from insurance, memberships or payment plans. Offering a mix of spa and wellness services can deliver well-organized returns on investment and significantly increase revenue.Another way to increase earnings is to introduce new membership structures. Instead of providing an exclusive spa and wellness philosophy, choosing to create a dynamic inclusive membership can reach a wider audience of people. Local or community-based memberships can help offset seasonal lows, increase referral program functions as well as inspire new social activities for meetings and groups. For example, introducing memberships to local companies, organizations, women's groups, or prevention focused medical facilities can cultivate a rewarding and sustainable blend of new clients and customers.Wellness Tourism FacetsThe evolution we have witnessed in guest profiles and travel preferences emphasizes the momentum tied to wellness travel. As shown in figure 2, the Global Wellness Institute features a combination of retreats, healthy and organic spa cuisine, fitness, meditation and life coaching as a part of 2015 wellness spending. Tapping into these various wellness-focused areas presents a myriad of hotel, spa and wellness advantages.A primary example of this is organic gardens and agricultural assets. They are an excellent way to invest in sustainable, in-house, health conscious resources at the property. These don't often require a lot of space and they can be a modest investment. However, they convey the importance of well-being, healthy food and complement value across multiple departments i.e. food and beverage programs, spa rituals and treatments, in-room amenities and more. The company Six Senses is one example. I recently stayed at the Six Senses property in Douro Valley, Portugal where they incorporate their organic garden and vineyard in a number of experiential ways throughout the property. They have an Earth Lab for cooking and canning classes and an Alchemy Bar in the spa. Using their own natural resources, they have created extensive programs to add-value and enhance the quality of stay. In a recent article, "Whole food, soul food" they shared some of the company's compelling "farm-to-fork" ideals.[5]Purpose and PreparednessAs automation creeps into all aspects of business from setting reservations and appointments, to semi-automated spa treatments and fully-automated virtual and neurological wellness services; deliberately expanding hospitality and wellness with more purpose can have its rewards. Keeping up with new developments and industry news, can be valuable insight. It always feels better to be ahead of the curve, then behind it. Taking proactive measures to moderate risks, evaluate program performance and construct a calculated plan can have untold advantages. Unexpected changes in business cycles, seasonal successions, and occupancy averages can be met with innovative solutions when you're aware of potential challenges. It's well worth the time to line up routine standards, tracking systems and platform proficiencies.Final ThoughtsIn the years to come, having sustainable partnerships, localized resources, timely analysis cycles and effective management will play key parts in upholding opportunities for growth. Well-balanced programming with a mix of services can support flexibility and expand revenue. Moreover, this is a time of rapid change. The steps you take to examine the performance of business today, can simplify important choices and resiliency in the future.1] https://www.thebalance.com/the-great-recession-of-2008-explanation-with-dates-4056832[2] https://buyingbusinesstravel.com/news/2028710-airbnb-targets-event-planners[3] http://www.policyuncertainty.com/index.html[4] https://www.hotelexecutive.com/business_review/5497/reorganizing-spa-operations-to-leverage-automation-and-technology[5] http://newsletter.sixsenses.com/whole-food-soul-food/Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com.
Article by Magali Castell and Arlett Hoff

The Serviced Apartment Sector in Europe: Alive and Kicking

HVS ·19 July 2018
The last year marked a true consolidation of the serviced apartment industry, which has now found its place within the accommodation sector and in the investor community. This year's article includes the latest announcements in the sector, analyses the different operating models used within the industry through the review of the 2018 survey results, and looks at the future pipeline as well as the latest investment transactions in the market. HVS has conducted a survey to observe and understand the shift in trends in terms of the different operating structures and models used within the sector. The results show a real strengthening of the use of management agreements and the rise of franchises, providing operators with more flexible structures that enable the current expansion needs of brands and reduce the operator's risks. The results also give us no doubt that serviced apartment operating models and structures are increasingly moving towards the hotel sector. Hotel operators are keeping an eye on the rising competition and the serviced apartment sector is getting more and more crowded. Brands are benefiting from complete makeovers, being repositioned and new trendy concepts are emerging, such as Cuckooz Nest with its fusion of coworking spaces with childcare, and Cotels 7Zero1 fitness-focused serviced apartments.In terms of branded extended-stay product, yet another hotel group is jumping on the serviced apartments bandwagon, demonstrating the growing interest of hotel groups in this product type. Yotel has announced the arrival of Yotelpad, compact homes with clever design and smart technology, with already five deals signed. Others are adding new brands to their serviced apartment portfolio: Staycity has announced a premium brand, Wilde Aparthotels.The European serviced apartment pipeline has boomed compared to last year, approaching 20,000 units over the next five years. This is nearly double compared to last year's article, and thus it is safe to say that investors and developers see true potential in the sector. Brands are looking into consolidating their presence in those markets where they are already present, as well as expanding into new locations. The focus is not only on Western Europe; interest is starting to be shown in Central and Eastern Europe, in countries such as Austria and Poland, where further potential in the market can be found.There have been a limited number of serviced apartment transactions and there is relatively little transparency in terms of sales prices. However, recent transactions such as the acquisition of SACO by Brookfield are thought to result in an increase in awareness, security and transparency for the sector, as serviced apartments are starting to be perceived as an investor-friendly asset class.We would like to thank all of the survey participants for their generous input into the study. Your opinions and experiences are crucial in facilitating understanding of this thriving sector. We urge more operators in the sector to recognise the value of sharing data to enable serviced apartments to gain more attention from potential investors.Much has been announced in terms of product and brand expansion in the past year; we take a look at what has actually materialised.Industry Highlights and AnnouncementsAdagio has taken a breath of fresh air for the occasion of its tenth anniversary in November 2017. The brand has undergone an image makeover and redefined its offer, with the objective of creating a more modern and dynamic identity. This new concept, called The Circle, will be implemented this year in 20 aparthotels across 64 establishments to be renovated over three years. With millennial guests in mind, the common areas have been rethought offering new concepts such as welcome areas that will be turned into a table d'hote, shared kitchens, co-working spaces, a delicatessen, a library of objects where customers can borrow several objects to personalise their rooms and a world map display board where guests can take a selfie and leave it on the map to share their experiences. In addition, Adagio's new concept, Co-Living by Adagio, is aimed at guests travelling in larger groups. This concept includes shared common spaces to enhance the guest experience, with a living room and shared kitchen. Each common area is to be shared by four to six guest rooms, designed for a maximum of 12 people.Supercity, the aparthotel operator, has also announced a new company branding and a fresh look for its website. This brand update is thought to greater reflect the company's personality and prepares the brand for its future. Also this year, Go Native has rebranded as Native, as it focuses on product innovation and continues its expansion across the UK and Europe.New Brands and ConceptsStaycity has announced its new premium brand, Wilde Aparthotels by Staycity, with the name inspired by the Irish poet and playwright Oscar Wilde. Properties will be located in gateway city centres across Europe, the first being London The Strand, which opened in April 2018. Wilde Aparthotels have a clear personality; the design incorporates local touches with an Irish stamp. London will quickly be followed by a Wilde in Edinburgh in 2019, two properties in Berlin in 2019/20 and another in Manchester in 2020.The hotel chain Yotel has announced the launch of its serviced apartment brand, Yotelpad. This new concept reinforces the brand's ability to optimise space through clever design and smart technology, creating compact homes known as PADs. The company has already signed deals for five Yotelpad projects in the USA, Europe and the Middle East.To fight the negative health effects that frequent travelling can incur, Cotels launched 7Zero1 in November 2017, a fitness-focused serviced apartment concept located in Milton Keynes. Cuckooz has recently launched Cuckooz Nest, a co-working space with creche facilities, the first of its kind in London.Lamington Group has launched room2, defined as a new brand of 'hometel' properties. The company defines 'hometel' as a space between home and a hotel, 'a flexible living environment that does not force you to conform to a set of rules'.Vienna House R.evo, the new concept by Vienna House hotel group, is a 'tribrid' concept that brings together guest rooms, studios, and friends and family rooms. With zeitgeisty design, laid-back common areas and the sorts of amenities guests appreciate, guests will be able to check in for one night, several months or even for just half a working day. The properties will be located in convenient central locations, the first in Munich, to be followed by other major cities internationally.

Cape Town Calling: Undoing the impact of 'Day Zero' on Tourism | By Rishabh Thapar

HVS · 6 July 2018
At the end of 2017, one of the most picturesque cities in the world, Cape Town, announced a 'Day Zero' to create awareness among its citizens of the severity of its ongoing water crisis. The day marked to be as early as March 2018 at one point of time has been pushed out to 2020 (or potentially 'never') in light of the city's commendable efforts in changing their lifestyle and focusing on water conservation in all aspects of their day-to-day living. It was heartening to see industries, buildings, farmers, hoteliers, each and every citizen coming together for a common cause and making an effort to reduce water consumption. Just for perspective, Cape Town has reduced its water consumption by 60% down to daily consumption levels of as low as ~500-550 million litres a day, a reduction from the 1.2 billion litres per day mark, just three years ago.The hotel and tourism industry has been at the forefront of a lot of these initiatives. While most of the consumption in the city is residential, hotels seemed to be the ones that took the limelight on water consumption. The hotel industry reacted by closing swimming pools, installing borewells, fitting taps with aerators, using sea water for air-conditioning, implemented the use of paper towels instead of hand towels to reduce the laundry load, installing wastewater treatment plants, removing bath plugs, encouraging guests to take two-minute showers, creating awareness and sharing best practices to switch to a greener lifestyle and more. With the efforts of the city, and some blessed rain showers, the dam levels in Cape Town are back up to 48% as of 2 July (as compared to 25% this time in 2017) and rising with a healthy rainfall predicted through the rest of the winter months. While the citizens are cautiously optimistic, this experience over the last year has left citizens environmentally conscious and waterwise.In January 2018, when I traveled to another country, I would have a longer shower, as a relief to my 60 second shower routine, however 6 months later, having realised the impact of conservation and adjusting to a more waterwise routine, I felt no need to have a long shower upon travels abroad. I feel Cape Town can not only claim its fame for being resilient against the drought and becoming a water wise city but it's citizens/visitors can now be ambassadors of sustainable tourism when they travel. Cape Town is one among a host of cities around the world that may face a water crisis and we may have learnt our lesson earlier than others.In gaining this wisdom however, the city of Cape town's hotels and overall tourism has suffered a blow in terms of declining occupancy and visitation considering the publicity that 'day zero' gained across the world. The city along with the globe now needs to market its comeback and the fact that the destination is a water wise sustainable tourism destination, along with the numerous other tourism accolades that stand to its name. Tourists use a fraction of the water and with so many places to see in and around Cape Town, exploring the mountains, beaches and vineyards, who has time for a long shower anyway. We look forward to welcoming the water wise global travelers to the wonders of Cape Town and Western Cape; and getting back on track for the unprecedented tourist arrivals that the city deserves.

HVS In Focus: Malaysia - Reinvigorated Opportunities

HVS · 5 July 2018
Malaysia - Country OverviewThe Federation of Malaysia, located in Southeast Asia, comprises 13 states and three federal territories covering a total area of 329,847 square kilometres across Peninsula Malaysia and East Malaysia. Malaysia's population is approximately 31.4 million (2017 government estimate) with 62% being of Malay heritage. The country's diversity is reflected in the share of different ethnic groups, such as Chinese, Indians and Indigenous, in its total population.According to the World Travel & Tourism Council (WTTC), the direct and total contribution of Travel & Tourism to Malaysia's Gross Domestic Product (GDP) was 4.9% and 13.4%, respectively of the total GDP in 2017, making tourism one of the key supporting industries by the economy.In May 2018, Pakatan Harapan (PH) took over the office from the United Malays National Organisation (UMNO) party and its Barison Nasional (BN) coalition government who has been in office since independence in 1957.The change in government has ushered in a new era filled with optimism but uncertainty about the direction that the country is headed for. As of June 2018, GST has been abolished and several major infrastructural projects are under review as PH demonstrated a stern stance towards fiscal commitment.

The Annual HVS Asia-Pacific Hotel Operator Guide 2018 - Excerpt | By Pawinee Chaisiriroj and Daniel J Voellm

HVS ·26 June 2018
HVS Asia Pacific proudly presents to you the Fifth Edition of the annual Asia Pacific Hotel Operator Guide. Talking to stakeholders in the industry, this publication has become increasingly sought after by the market to evaluate potential candidates to operate a hotel property anywhere in Asia-Pacific. Distribution power, market experience, brand portfolio and geographic presence are all relevant factors in narrowing down the best match. In this fifth edition, HVS has captured over one million existing and more than half a million pipeline rooms spread over 8,395 properties.

Mitigating Spa and Wellness Investment Risks

HVS ·22 June 2018
Conceptual Planning and DevelopmentWellness focused development is generating intense pursuits throughout the hospitality sector. There are a multitude of innovative design styles, new concepts, healthy building, and restorative developments underway worldwide. In the past, simple floor planning and designs were fixed components of a new build. Today, floor planning has become more fluid and organizing design components with a sense of flexibility and freedom is a beneficial advantage. Creating infrastructures that accommodate program changes, fluctuations in guest flow cycles, and future growth can help support spatial alterations and facilitate productive engagement. Understanding what the needs of the property are in tandem with the goals it has for growth, can help tailor essential design segments. This can effectively mark conceptual ideals that fit appropriately or clash with the scope of development and square footage per return on investment. For example, designing spa and wellness spaces with distinct singularities or non-negotiable room allocations, can be counterproductive. This applies to utilities, fixtures, the use of rooms as well as wall density and the overall layout and theme. Concepts that which are tied too tightly to fleeting trends can become a liability. Whereas, general wellness themes that maintain a sense of agility can foster more security, customization and yield stronger outcomes. For example, a spa that offers full-service treatments based on sensational verve is likely to lack the depth necessary to diversify and readily advance extended services. Choosing to modify or expand services from existing systems built on fundamentals leaves room for higher levels of education, innovative add-on services and program flexibility. Since, hotels and resorts are unique, challenges vary as well. Figure 1, illustrates four of the leading spa and wellness investment risk categories that are commonly associated with revenue, profitability and return on investment.111Innovation and RiskBrilliant lineups of new technology and automation are making way for spectacular new spa and wellness additions with rewarding returns on investment. Many of these new offerings do not require hands-on providers to engage the value of these services. In a previous article I wrote for HBR, Reorganizing Spa Operations to Leverage Automation and Technology I highlighted the benefits of featuring a new operational paradigm to offset labor costs and increase financial performance while protecting various facets of investment. That article expresses the importance of integrating new systematizations to stimulate and streamline profitability by retooling the focus from manual services and embracing technologies to support profitability and growth. As increasing awareness has been brought to issues surrounding sexual harassment, assault and misconduct in light of the Massage Envy lawsuits. This has resulted in the process of hiring and screening to gain aggregated importance. Whereas, the urgency to be proactive when it comes to risk management and professional liability have taken a new tone of urgency. Addressing these issues thoroughly as a part of the early hiring process can help ward off unnecessary threats. Thereby, afterwards enacting proactive follow up by offering comprehensive employee intervention, risk management programs or mandatory employee webinars and education. There will always a reasonable measure of risk when it comes to personal services like massage, body treatments, aesthetics, and so on. The recent spotlight on Massage Envy only conveys the obligation and need to enact stronger policies and procedures, clarify employee guidelines and define client etiquette expectations. With systems in place to manage potential interaction issues this makes way for effective protocols, without evasion or delay. Adding clarity to guide conduct anticipations for both employees and guests, will impart increased professionalism and help reduce the opportunities and risks for inappropriate behavior.Operational FlowSome of the most significant challenges properties face are management, leadership and employee turnover. Leadership is the primary driver that nurtures any successful business. And the spa and wellness workforce are a unique pool of highly-individualistic, creative and empathic workers. There are a number of uncommon factors that affect the conditions and resiliency of their daily grind. Approximately, 65% of Spas choose to outsource their management to Spa Management Companies. While this option may appeal to owners and stakeholders, outside management without in-depth performance oversight can create a series of challenging risks and compromise employee stability, financial return, quality of service and overall asset value. Finding quality and committed staff is further challenging, in light of widespread spa and wellness workforce shortages. This creates its own wrinkles in the hiring and advancement process and evokes competitive hiring packages to win employee favor. For example, benefits, bonus' and opportunities for advancement, add substance to any potential new professional prospect. Meanwhile, "it is estimated to cost more than twice an employee's salary to find and train a replacement. At that rate, most spas can't afford to lose an employee but turnover rates in the spa industry are alarmingly high." Going the extra mile for well-performing staff members helps reinforce their value to the business. These investments are always worthwhile. Whereas, extending various types of rewards and recognition for performance and hard work, can be precious expressions of appreciation. This can help alleviate anxiety and curtail discontent employee attitudes. Moreover, supporting employee satisfaction and significance can also greatly improve the quality of customer care and service in addition to amassing a longer-lasting employee duration and improving workplace culture.222Product and RetailWhen it comes to choosing retail products and key suppliers, it's vital to build relationships that enhance the business and support long-range growth. Many times, there are significant changes made to inventory and retail purchasing when there is a transition of leadership. This represents a detrimental trend for owners, stakeholders, employees, and guests in a number of ways. While some purchasing choices may be led by the influx of a Spa Director, incorporating a steadfast collection of products through long-standing supplier relationships can have powerful results, stabilize costs, protect investment benefits and facilitate higher returns. For example, leadership cycles that changeover every 24-36 months, with significant inventory rotations, naturally become a risk that threatens product engagement, sales revenue and consistency. Whereas, retail can generate approximately 30% or more of a spas gross revenue, this trend deserves serious consideration and review. While some degree of product rotation can be healthy-change, supplies like equipment, linens and back of the house items, should be maintained through a long-term advantage of choice suppliers. This further reinforces the importance of tenure and trust. In the case whereas there are multiple purchasing and leadership changes within a 5-year period, the investment per aggravated expense, often results in transient returns. Regulating product purchasing can help create more consistency, form stronger vendor relationships and control mislaid revenue. It's also helpful to choose suppliers who provide excellent product support, regular education and marketing resources, to facilitate greater stability and sales. This shifts procurement from whims and trendsNew Systems and SafeguardsManaging investment risks can start from conception and development complete to long-term performance. Conducting a return on investment analysis with the proper systems in place to digest the trajectory of supposed value, management and financial performance, can set up safeguards to forewarn against low performing revenue segments. Issues like leadership, employee assurance and tenure can also greatly reduce or increase levels of investment risk. Establishing new procedures to track and manage cost-effectiveness can be done in a variety of ways. Moreover, the move to increase efficiency through diligent planning in the early stages will help protect the business navigate poor investment possibilities; that can lead to unexpected, and preventable lost revenue.Final ThoughtsUnderstanding potential risks when it comes to making initial and ongoing spa and wellness investments, holds distinct advantages. This process requires objectivity, with a distinct and comprehensive view on program feasibility and profitability forecasting. Any program or investment that lacks principal management and oversight can become placed at risk for performance. Some of the most effective ways to mitigate against risk, include setting up systems that support the holistic success of the business. These procedures can significantly moderate risks, inspire stronger employee attitudes and cultivate proactive quality and care.Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com

HVS Hotel Cost Estimating Guide

HVS ·22 June 2018
HVS Design and Jonathan Nehmer + Associates (JN+A) are proud to announce the completion of the 2018 Hotel Cost Estimating Guide. The Guide is a comprehensive listing of capital expenditure construction and FF&E costs for hotel renovations in the USA.

The Annual HVS Asia-Pacific Hotel Operator Guide 2018 - Excerpt

HVS ·22 June 2018
The publication continues to serve owners as a reference for which operator has a strong presence in their home market and in potential future markets further ashore as well as key feeder markets across the region.

HVS: Israel Hotel Market Overview 2018

HVS ·13 June 2018
With more than 3.6 million visitors, representing a year-on-year increase of almost 25%, 2017 was the first time in Israel's history that the 3 million mark was reached. This article explores the hotel performance and development pipeline in Israel.
Article by Paola Orneli Bock, Pawinee Chaisiriroj, and Hok Yean CHEE

Key Takeaways from the 2018 South East Asia Hotel Investor's Summit (SEAHIS)

HVS ·13 June 2018
This year's South East Asia Hotel Investors' Summit (SEAHIS) took place at the Westin Grande Sukhumvit Bangkok on May 14-15, and HVS proudly sponsored the conference for the second consecutive year. The event tackled some of the key issues facing the hospitality sector including the role of Online Travel Agencies (OTAs), hotel management agreement negotiations, and fear of oversupply in certain markets, as well as the 2018 regional outlook. These matters were debated during the panel discussions among top executives, ranging from hotel developers, owners, investors, consultants, and hotel operators. Our key takeaways from the 2018 SEAHIS are:The Changing Landscape of Hotel Management AgreementsThe summit kicked off with Daniel J Voellm, Managing Partner, HVS Asia Pacific, moderating a lively panel discussion on the changing landscape of hotel management agreements. The alignment of interests between the owner and the operator were heavily debated. The owner's goal is to select the right management company to maximise profitability of the asset, while at the same time ensuring the operator is incentivised to perform. Over the past decade, due to a shift in hotel investment trends, hotel owners have developed a better understanding of the hotel landscape and have become more sophisticated in their choice of operators, as well as negotiation of contract terms. Operators, on another hand, have become flexible in a number of key commercial terms, ranging from budget approvals to capex control, in order to accommodate owner's need, especially with an asset that is situated in a strategic location. However, sticking points remain especially with regard to termination rights, in case of a merger and restrictive covenants.The Role of Online Travel Agencies The global increase in social media usage has grown exponentially, as a result of direct connectivity via mobile devices. This opportunity has urged many hotel chains to aggressively promote their direct booking channels in an effort to bypass OTAs. It has been well-documented that OTAs have claimed a bigger share of hotel bookings. A pick-up in direct booking business has allowed hoteliers to be less reliant on OTAs, which conversely reduces expenses associated with OTA commissions, creates more loyalty between hotel guests and their brands, and a more profitable business practice. On another hand, OTAs have claimed that the commission paid are marketing costs for hotels, and in many cases lower than costs related with direct booking efforts. Expedia, one of the largest OTAs, has made a significant investment in its technology platform in hope to transform the travel industry through its data collection and leverage customer experience. What will the OTAs do next with all this data is going to be very interesting in the coming years (maybe months?).Fear of Oversupply and Tourism ManagementHotel markets in South East Asia are tipped to continue their growths in demand due to a rise of international visitor arrivals. Stronger demand can be attributed to a surge of regional travellers, who although establish shorter length of stays, frequently visit the destination as return guests; this thanks to low-cost carrier expansions in a number of key airports and continuous promotional tourism campaigns from the various ministries of tourism. High demand has boosted confidence in the hospitality sector with the pipeline landscape looking on the up in many hotel markets across South East Asia. However, some cities and destinations may struggle to absorb new supply if demand struggles to keep up. According to STR, Bali has over 9,000 hotel room inventory entering the market in the near term, but the Mount Agung eruption in September 2017 deterred tourists and had a negative effect on Indonesia's tourism industry, the market is yet to bounce back. Myanmar is seeing subdued levels of demand due to the political challenges that the country is facing, trailing the growing supply. There are a number of bright spots however; Vietnam, for example, that, despite a 43% increase in supply or approximately 35,000 rooms in 2018, seems to be coping well supported by strong demand growth. However, there are fears for oversupply in cities such as Da Nang, Halong Bay, Ha Noi and Phu Quoc. Overall, the hotel landscape in the near future looks promising, however, it is crucial to find the right balance between lodging demand and supply of hotel rooms moving forward. A major concern is going to be tourism management as many destinations struggle to cope with the number of growing visitors from an infrastructural and environmental point of view. Will the closures of Boracay and Phi Phi Island be seen in many more destinations soon?Do investors price in risk premium?Chee Hok Yean, President HVS Asia Pacific and Malcolm Kerr, Director KerrWood, chaired this round table which had active participation from all attendees in the session. The main takeaways from this session were that investors make their decisions based on several factors such as location, size of hotel as in number of rooms and size of rooms, quality and grade of hotel, branding of the hotel, cashflow generation from the hotel's operations and the total investment. In addition, political stability, economic and tourism growth, inflation and lending rates were also of consideration. The degree of importance of each factor may defer amongst the investors depending on whether they are high net-worth individuals/families, funds, developers, local or foreign investors.OutlookThe 2018 outlook remains positive with hoteliers looking to further expand in various markets across South East Asia. The industry is at the stage where the approach of 'one-size-fits-all' no longer works. Hoteliers should strive to embrace the differences of their diversified guests by developing the 'right' products to fit an increasingly multifaceted demand. Millennial-focused hotels and brands are already a thing of the past, as Gen Z is on the rise. Thus, the need to evaluate and create the 'right' projects becomes even more relevant.

Canadian Lodging Outlook Quarterly 2018-Q1

HVS ·11 May 2018
HVS and STR are pleased to provide you with the quarterly report of the Canadian Lodging Outlook. Each report includes occupancy (occ), average daily rate (ADR), and revenue per available room (RevPAR) for six major markets.

HVS Market Pulse: Stockholm - New Supply A Surmountable Hurdle

HVS ·11 May 2018
This market pulse provides an overview of the tourism and hotel market in Stockholm, Sweden. This snapshot discusses recent tourism trends, the impact of new supply on performance and provides a summary of the extensive hotel pipeline.

HVS Market Pulse: Lake Charles Metro Area

HVS · 8 May 2018
Lake Charles MSASWLA's only metropolitan area, Lake Charles, covers Cameron and Calcasieu Parishes. The network of interstates and highways has encouraged the growth of advanced manufacturing, aerospace, agriculture, healthcare, hospitality, gaming, LNG, and petrochemical businesses. Lake Charles is popularly termed the Festival Capital of Louisiana because it holds more than 75 festivals and events each year and is a popular stopping point between Houston and New Orleans for travelers on Interstate 10. The Lake Charles metropolitan area's room inventory has expanded by over 48% in the last decade to over 70 open hotels with roughly 7,900 rooms, primarily due to increasing demand from the petrochemical and LNG industries. Moreover, the maritime, aerospace, and gaming industries have also contributed to increasing the hotel demand base. Although other Louisiana hotel markets have been affected by the downturn in crude oil prices that began mid-year 2014, the continued expansion in petrochemical and LNG industries in SWLA has buoyed this area's economy and mitigated the impact of any substantial downturn. According to the SWLA Economic Development Alliance, over $43 billion in industrial plant projects and other facilities were under construction at year-end 2017, and over $65 billion in projects are in various approval stages. This surge in capital spending and industrial activity has significantly grown hotel demand in the Lake Charles metropolitan area.EconomyPetrochemical and Liquid Natural Gas IndustriesThe Lake Charles metropolitan area is home to sixteen chemical plants, two refineries, one LNG export facility, and three industrial gas-processing plants. Major capital projects under construction include the following:The construction of Sasol's $11-billion chemical complex began in 2012. According to the SWLA Economic Development Alliance's December 2017 report, the facility was reported as 80% complete; the phased commissioning of the plant is scheduled to begin in the second half of 2018. The facility will reportedly create 1,150 jobs, while an additional 1,000 contractors are expected for support upon opening.In 2016, LACC LLC, a joint venture between Lotte Chemical and Axiall Corporation, began the construction of a $3-billion chemical manufacturing facility. The project is anticipated to create 215 new direct jobs and 1,892 new indirect jobs. The mono-ethylene glycol (MEG) plant is expected to be the largest MEG plant in the U.S when operations begin in 2019.Juniper GTL LLC opened a $100-million LNG plant in Westlake during the second half of 2017; it is North America's largest commercial Fischer-Tropsch facility, converting natural gas into ultra-high-quality pure waxes used in construction materials, adhesives, and consumer goods.The construction of Cameron LNG's $10-billion liquefaction export facility began in Hackberry in 2015; operations are scheduled to begin in 2019.Port of Lake CharlesCalcasieu River Ship Channel spurred the industrial growth of the SWLA area; today, the Port's activities continue to bring jobs, commerce, and investment, creating the reputation of an energy corridor. The Port of Lake Charles is a major employer in Lake Charles and reputed as the twelfth-busiest port in the United States. In the first ten months of 2017, Port of Lake Charles was rated as one of the fastest-growing major seaports in the U.S. given a 60% year-over-year increase in activity. According to a December 2017 report in Forbes, exports from the Port of Lake Charles increased $1.99 billion through October 2017. The growth is largely attributed to LNG exports, which increased by 237% to $1.83 billion over the same period.AviationThe city's Chennault International Airport is the site of Chennault Industrial Airpark, a multi-tenant development specializing in aircraft maintenance, repair, and overhaul (MRO). In December 2017, the City of Lake Charles approved the relocation of the adjacent Mallard Cove Golf Course to enable the expansion of the airport's cargo-handling capacity. The $250- to $350-million project is planned to include two rail-served warehouses, four aircraft hangars, a light-industrial park, a business park, new cargo-handling equipment, new roads, and rail infrastructure.HealthcareSWLA has five healthcare facilities: Beauregard Memorial Hospital, Christus Lake Area Hospital, DeQuincy Memorial Hospital, Jennings American Legion Hospital, and Lake Charles Memorial Health System. The construction of a $19-million behavioral health hospital in South Lake Charles began in 2016, adjacent to the Memorial Hospital for Women campus. The first phase is scheduled to open in the summer of 2018, including a 28-bed adult unit and a 14-bed adolescent unit. The second and third phases are planned to include an additional 28-bed unit and a psychiatric outpatient medical office building.EducationMetro Lake Charles has one four-year university, the McNeese State University, and one community college, SOWELA Technical Community College. In response to the increase in demand for a skilled workforce, resulting from the major capital investments by Sasol in the area, a $20-million, 67,000-square-foot SOWELA Regional Training Center opened adjacent to Chennault International Airport grounds in 2016. The facility was built to educate and train SWLA's workforce to meet employer demands, specifically related to Sasol's training needs, after the announcement of its ethane-cracker project.GamingMetro Lake Charles is the primary gambling destination between Houston and New Orleans. The area features three riverboat casinos: L'Auberge Casino Resort, Golden Nugget, and the Isle of Capri, as well as the Delta Downs Racetrack Casino Hotel. Opened in May 2005, the 1,000-room L'Auberge Casino Resort was touted as the largest gambling establishment in the Lake Charles metropolitan area; the resort includes a riverboat casino, an entertainment event center, and an 18-hole Tom Fazio golf course. However, in the spring of 2017, the 740-room Golden Nugget added a 13-story Rush Tower with 353 rooms to its inventory, bringing the total room count to 1,100 rooms, including private villa suites. Furthermore, in the Louisiana Gaming Control Board's 2017 annual report, the Lake Charles gaming market employed roughly 5,300 people.Hotel Room SupplyThe Metro Lake Charles hotel market offers nearly 70 open non-gaming hotels with nearly 5,000 rooms, dominated by small, nationally branded, economy and midscale limited-service hotels, with very few select-service or full-service hotels. The aforementioned projects in SWLA have spurred interest in hotel development, and developers have aimed to bring more hotel concepts to the area; overall, 2,300 rooms have been added since 2012. Prior to the commencement of Sasol's project in 2012, only the SpringHill Suites by Marriott served as an upscale non-gaming hotel in SWLA; however, three upscale hotels opened between 2014 and 2016. In 2017, 352 new hotel rooms opened in the market, representing a roughly 7% increase in supply for the year. An additional 249 rooms opened in the first quarter of 2018, and a 98-room Tru by Hilton is scheduled to open in May 2018. This represents a total increase in non-gaming supply of approximately 19% in the metropolitan area over three years. Considering that demand in the market has doubled since the last recession (2008/09), it is anticipated that future supply will only have a modest impact on the market's performance.OutlookSWLA, specifically the Lake Charles metropolitan area, is undergoing an industrial renaissance with the large volume of foreign and domestic investments in energy projects. Nearly $109 billion in projects were announced in the region from 2012 through December 2017; $1.9 billion in capital projects have been completed, a little over $43 billion in projects are under construction, and roughly $65 billion are pending final approval, as reported by SWLA. The resulting development has reportedly created roughly 18,000 construction jobs and over 10,000 permanent jobs and is anticipated to add nearly 32,000 jobs in the near term. Demand growth continues to be strong, and although not all announced projects are expected to come to fruition, a steady stream of capital projects is anticipated to continue to boost strong economic growth for Lake Charles and the SWLA region and drive demand for the hospitality industry.
Article by Sheetal Singh & Court Williams

How to Minimize the Cost of Emotional Labor

HVS · 8 May 2018
Why is There a Cost to Emotional Labor?Over three decades ago Arlie Hochschild (1983) introduced the concept of emotional labor that extended our understanding of work related challenges beyond physical labor. A majority of her work focused on understanding its impact on airline personnel and how they coped with it. She found that they either faked it or convinced themselves that they were feeling positive. Hochschild's initial work (1983) and hundreds of studies following that have confirmed that there is a cost associated with emotional management. For example, a 2011 study involving over 27,000 participants found that emotional labor was directly linked to emotional exhaustion and strain (Hulsheger & Schewe, 2011).Faking one's true emotion or surface acting for extended periods can make an individual feel drained of limited cognitive resources that are constantly stretched in customer facing work environments. Surface acting involves constant monitoring of how you display your emotion, while at the same time you continue to feel the emotion (anger, despair, sadness, anxiety etc.) you are trying to hide. This also makes an individual experience emotional dissonance, which is the disconnect felt by individuals because of feeling and emoting different emotions.Some of us are better at emotional labor than others since we can convince ourselves that we are feeling the emotion that we are displaying or by deep acting. We do so either by shifting our focus, or changing our perspective about the situation. For example, when an airline personnel was asked about how she prevented herself from feeling anger towards an unreasonable customer she said, "I try to remember that he's drinking too much, he's probably scared of flying, or I think to myself that he is like a little child....and when I see him that way, I don't get mad that he is yelling at me" (pg.55, Hochschild, 1983). This way we can display positive emotions more authentically, however, we are able to achieve this at the expense of the same limited cognitive resources.Constant draw of resources by engaging in emotional labor therefore, leads to emotional exhaustion, reduced sense of personal accomplishment, a disconnect from our true emotions (depersonalization), eventually leading to burnout. Needless to say, that the related cost of burnout is reduced performance efficiency, absenteeism, and in some cases unwanted turnover. A survey of 614 HR professionals in U.S. found that 95% of the HR leaders were concerned that workplace burnout was causing increased employee turnover. Another large-scale survey by Gallup found that more than 40% of the workers in U.S. were burnt out. This translates into millions of dollars in wasted resources towards hiring cost, training cost, health related cost and additional labor cost due to absenteeism and reduced performance. However, these costs do not account for additional cost associated with increased mistakes, and errors made by employees because of elevated levels of emotional exhaustion. The customer service incidents that we have read about more recently in reference to certain airlines are particularly indicative of employees who are emotionally exhausted and disconnected both from their own feelings as well as the customer's.How do You Minimize the Cost of Emotional Labor?We have come to accept emotional exhaustion, burnout and other related costs of managing our emotions for work. Yet so many of us have thrived in these customer-facing work environments for decades. What separates the ones who thrive from ones who get burnt out? The answer lies in whether we can replenish the resources we draw from constantly. We have spent last decade studying this question and working with hospitality firms trying to understand the answer as well as solutions that have greater likelihood of helping us minimize the cost of emotional labor. We bring you solutions drawn from our work as well as last three decades of research on the subject that help us understand how organizations and leaders can reduce the cost of emotional labor.What Should Organizations do?Firstly, it is critical that organizations regularly assess emotional exhaustion and burnout as part of their regular employee assessments. The key to overcoming a challenge is objectively assessing how big the challenge is. Secondly, it is important to seek expert advice as you deal with the consequences of emotional labor in your organization. We share below advice based on our experience with dealing with these challenges within organizations.- Build a Supportive CultureOpen and supportive cultures allow individuals who are constantly juggling multiple demands from customers to know that they are taken care of. A study of 334 participants in a service firm found that organizational support reduced the negative impact of emotional labor on employee satisfaction and performance (Duke, Goodman, Treadway, & Breland, 2009). While there can be several aspects of a culture that could be positive, having a culture that encourages individuals to do the following can be particularly helpful:Reach out if they need support.Speak honestly without any fear.Have friends they can rely on at the place of work.Have access to training that can help them get better at their customer facing jobs.Participate in decision making so they have some sense of control.Building a supportive culture not only requires time but also resources and leadership that upholds the cultural values. Since it's the people who truly build the culture, hiring individuals that are not only skilled but also good fit culturally is essential. This requires a deeper understanding of the critical cultural values that form the foundation of the organization. Several behavioral assessment tools as well as psychological interviews can ascertain the cultural fit of a candidate with high levels of accuracy. ExecView is one such tool that we have built at HVS Executive Search that allows us to ascertain cultural fit for new hires. It is particularly reassuring to have the data to support decisions that can have far reaching financial and cultural impact.As the new employees try to learn how to adjust to the environment, they are constantly looking for information. Organizations can provide several cues to the new employee through symbols or cultural artefacts, rituals or processes and practices that help these individuals become part of this supportive culture.- Provide Training ResourcesHospitality industry spends millions of dollars every year on skill based and other role specific training programs. Yet, most employees learn to cope with their emotions and manage them on their own through trial and error. Some of us prevail, picking up the right skills, conserving our resources and excelling at what we do and, yet others struggle as they are unable to cope with the resulting emotional exhaustion.Appropriate training might be the key to ensuring individuals do not reach that point of emotional exhaustion or burnout that starts reflecting in their performance. The training should include leadership training that equips the leaders with the toolbox of leadership skills. a relatively recent study conducted by the Center for Creative Leadership that surveyed 2200 leaders across 15 organizations and multiple countries found that leadership skills in today's organizations are insufficient to meet current or future needs of an organization. The biggest gap was identified in the areas of Leading people, employee development, resourcefulness, change management and inspiring commitment. Closing these gaps is essential for better leadership performance and for more effective work force that can respond to the challenges of changing work environments.While most individuals have a natural leadership style they are most comfortable with, having additional skills in the leadership toolbox can go a long way towards providing the necessary support and development that can be effective and inspirational to the employees. Through our work in leadership development we have identified several skills that should be part of this leadership tool kit apart from the situational leadership styles. These skills include decision-making, conflict management, team development and ability to leverage emotion and empathy. Having studied the participants of our leadership development workshops, we have found that training leaders in these leadership skills not only leads to an improved leadership experience for the employees but also has a trickle-down effect of an overall stronger leadership culture within the organization.Training individuals in emotional intelligence that enhances their ability to perceive, decipher, use and manage not only their own emotion but also the emotion of others they interact with. Improved emotional intelligence not only results in a work force that is better able to handle their own emotions but also able to manage the customer's emotions in their quest to create memorable experiences for them. Although, some of us are born with high emotional intelligence, through our experience with training hospitality professionals we have found that it is a skill that can be learnt and taught with relative ease. We have taught emotional intelligence skills in a workshop or a one-on-one coaching setting and found them both to be equally effective.What Should Leaders Do?- Provide CoachingWhen leaders engage in coaching behaviors, subordinates feel supported and appreciated by the leader, and by extension, the organization which the leader represents. The coaching mentoring and support further improves their ability to deal with emotional management in customer service roles. This is especially true for new employees who are still learning the customer service skills and related behaviors. While most strong leaders have been found to be good coaches, it may not come naturally to all. Considering most coaching behaviors may be learnt with ease through practice, it would help for leaders to consider evaluating their leadership behaviors to take stock. We encourage leaders to get more well-rounded feedback through a 3600 review for much deeper insight. Leaders who participate in our 3600 reviews find the information they gather particularly valuable in closing any gaps they might have due to blind spots.- Create a Culture of Psychological SafetyIndividuals who feel psychologically safe at their workplace do not fear rejection from coworkers and feel valued. Individuals working in customer service environments encounter a great deal of uncertainty in terms of the situations they experience. Working in an environment where individuals feel comfortable being themselves can help reduce the level of uncertainty involved in these customer interaction situations and the resulting strain or emotional exhaustion. A 2014 study of nearly 178 participants who were part of 27 service management teams in a restaurant setting found that higher levels of psychological safety was linked to higher levels of team cohesion and team performance (Guchait, Tews, & Simons, 2014).Specifically, work environments that allow individuals to be more open and comfortable with emotion expression and make individuals feel appreciated may result in less emotional exhaustion for employees because employees may be able not only to share bottled up emotions with colleagues and leaders but also feel more comfortable doing so.The are several ways leaders can create a culture of psychological safety. Some suggestions are:Create open forums where employees can share their concerns without fear.Include team members while making decisions that affect their work experience or how they serve the customers, providing them more control.Create a space where employees can be themselves and relax.Be a good listener when subordinates need to share their challenges.Show empathy.- Provide SupportConstructive support and recognition provided by a leader directly influences the level of stress a subordinate feels by replenishing emotional resources and providing physical resources that allow subordinates to recover from a challenging situation. The level of support provided by a leader may also, as a result, influence the amount of effort an employee invests in improving their performance and customer experience.It is important to note that the kind of support that might be needed by the subordinate may be individual and situation specific. For example, following a stressful situation some employees may just need a short break, while others might need coaching or even training. Either ways it is important that a leader keep the employee needs in mind while being supportive.What Should Individuals (who manage emotions) Do?- Display Authentic Positive EmotionRemember that we don't always have to manage our emotions at work. We can be genuinely happy, positive and enthusiastic. This would completely take away the need to deal with either stress, emotional exhaustion or burnout. It may not be feasible for everyone to be at the peak of their energy always, however, building more mindful practices can help keep us calm, balanced and neutral at most times. We talk about some of these practices below.- Use HumorHumor or the ability to look at a situation with a much lighter perspective allows individuals who are engaging in emotional labor to view the situation in a new light which, not only gives them a sense of control, but also helps release any negative emotion resulting from a serious or tense situation. Use of humor and laughter allows individuals to experience positive emotion and thus ensures that there is no further expense of resources towards managing the negative emotion.- Have Friends at WorkResearch has confirmed that individuals who have friends at work are more likely to be satisfied with their work life. However, individuals who have friends at work also have someone who understands them, that they can talk to and share their stressors and frustrations with. Having such a friend at work not only provides a release for any negative thoughts that we may carry but also allows us the luxury of another perspective that helps us relook at a situation with a fresh outlook, hopefully a more positive one!- Practice MindfulnessMost of us are constantly in thought. Most of our thoughts revolve around regrets about something that happened in the past or a worry about something that is yet to happen in the future. Mindfulness helps us get rid of our baggage by helping us be in the moment without any judgement. Mindfulness practices, thus, help us find a more balanced or neutral state reducing our stress levels and emotional exhaustion we may experience. A 2013 study in Journal of Applied Psychology found that individuals practicing mindfulness experienced lower levels of emotional exhaustion and higher levels of satisfaction (Hulsheger, Alberts, Feinholdt, & Lang, 2013).There are several physical and meditative practices that have been found to be effective in helping an individual become more mindful. However, in our experience with teaching mindfulness, it is more important to build mindfulness into your daily activities such as walking, eating or even engaging in tasks at work that may be routine. Doing so provides the necessary breather to break from a pattern of activities that may be particularly draining both physically and emotionally. We started offering weekly mindfulness sessions for our HVS Americas team recently and have received very encouraging results.Emotional labor is a real challenge that has not yet received much attention in organizations. However, the research on its impact on emotional exhaustion, stress, burnout and reduced performance is extremely compelling. These negative outcomes not only affect individuals working in customer service roles, but also organization's bottom line directly and indirectly.Measure the level of emotional exhaustion and burnout experienced by your employees. As an organization, seek expert advice to bridge gaps in training, leadership development, cultural assessment and emotional intelligence training. Invest now so you can see better financial results and improved employee satisfaction. As a leader, provide support, coaching, training and create a culture of participation and psychological safety. Invest in your leadership development for greater self-awareness and leadership development. As an emotional laborer, try to be positive, find humor if you can, have friends at work and learn to practice mindfulness to create a more positive experience for yourself while you create memorable experiences for your guests.References:Duke, A. B., Goodman, J. M., Treadway, D. C., & Breland, J. W. (2009). Perceived Organizational Support as a Moderator of Emotional Labor/Outcomes Relationships. Journal of Applied Social Psychology, 39(5), 1013-1034.Guchait, P., Tews, M. J., & Simons, T. (2014). The Influence of Transactive Memory Systems and Psychological Safety on Effectiveness of Service Management Teams in a Restaurant Setting. Journal of Human Resources in Hospitality & Tourism, 13(3), 234-252.Hochschild, A. R. (1983). The managed heart: Commercialization of human feeling.Hulsheger, U. R., Alberts, H. J. E. M., Feinholdt, A., & Lang, J. W. B. (2013). Benefits of Mindfulness at Work: The Role of Mindfulness in Emotion Regulation, Emotional Exhaustion, and Job Satisfaction. Journal of Applied Psychology, 98(2), 310-133.Hulsheger, U. R., & Schewe, A. F. (2011). On the costs and benefits of emotional labor: A meta-analysis of three decades of research. Journal of Occupational Health Psychology, 16(3), 361-389.Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com

South Korea Overview Opportunity: High-Speed Rail and Winter Olympics

HVS · 8 May 2018
South Korea Tourism OverviewKorea is a popular tourist destination for both Japanese and Chinese visitors, who, when combined, accounted for nearly 50% of its total international visitors in 2017. The geographic proximity plus its charming tourism offerings are ideal for short getaway visits, particularly to the capital city Seoul.The Korean tourism industry is driven by the peppy cultural trend called 'Hallyu', also known as the Korean wave. Originating from popular media, including K-Pop artists and TV dramas, it gradually spread to industries such as cosmetics, food, electronics, etc. According to the Korea Foundation for International Culture Exchange (KOFICE), the Korean wave effect on production inducement was estimated to be approximately KRW 15.6 trillion (USD 14bn) in 2015.Among the numerous regional tourism destinations, Korea consistently ranks within the top 5 destinations for Chinese travelers for more than 10 consecutive years.

The HVS Quarterly Macau Update

HVS · 1 May 2018
An HVS Quarterly Macau UpdateWith the introduction of various family-oriented resorts in the Cotai Strip, more diversified tourist base is embracing Macau as a destination, as compared to the casino crowd in the downtown area of old. The wide range of activities offered in these resorts, from gaming to non-gaming, have led tourists to visit Macau. The newly-opened resorts induced demand, notably tourists from mainland China, South Korea, and Japan, which greatly improved hotel performance in both occupancy and average rate (ADR).Macau Visitor ArrivalsThe results of diversifying Macau tourism from solely a gaming hub to a family-resort destination seemed to be well-received among travellers, given that visitor arrivals in 2017 reached a record high at 32.6 million, a 5.4% YoY increase. As more resorts are being introduced in the Cotai area, such as The Parisian Macao, Studio City, and MGM Cotai, these resorts increasingly target customers who enjoy non-gambling activities.Compared to the previous quarters in the year which also registered positive growths, the fourth quarter registered the strongest YoY growth of 8.4%. The top five key source markets remained the same as the fourth quarter of 2016 (in order of size): mainland China, Hong Kong, Taiwan, South Korea, and Japan.Good news for the city is that the family-oriented resort concept is particularly appealing to Chinese travellers, as their spending pattern trend is evolving from shopping to intangible experiences, such as dining, entertainment, and cultural activities. In the fourth quarter, Macau received an impressive 14.9% YoY growth of 6.1 million mainland Chinese visitors, credited to the varied types of attractions from glamourous resorts and entertainment shows to historical tours.The persistent trend of rising South Korean visitors coming to Macau could be seen in the fourth quarter, recording a remarkable growth of 25.4% YoY to 230,000. The positive impacts of the Macau Government Tourism Office (MGTO)'s successful marketing initiatives in promoting the city as a travel destination, Korean TV shows and drama shoots in Macau, and more importantly, the increased in direct and low-cost flights from South Korea made Macau a viable getaway destination.Thanks to the increasing interest among Japanese travellers to Hong Kong and proximity to Macau, Japanese travellers continued to post stable YoY growth of 2.7% to 88,000. However, both Hong Kong and Taiwan noticed a decline in visitation, by 7.1% and 2.8% YoY, respectively. In a larger scale, Southeast Asia and South Asian countries such as Thailand, Singapore, India, and Malaysia witnessed a decrease in visitor arrivals in Macau by -26.3%, -17.7%, -5.8%, and -2.2%, respectively.Macau Overnight Visitors ArrivalsMacau overnight visitor arrivals increased by 7.5% to 4.6 million during the fourth quarter, mainly fuelled by the growth from mainland China and South Korea, at a YoY growth rate of 16.2% and 37.7%, respectively, to 3.3 million and 143,000 visitors. South Korea surpassed Taiwan and became the third largest overnight source market to Macau, ranking behind Hong Kong and mainland China.Compared to its 7.1% YoY decline in visitor arrivals, Hong Kong overnight visitors plummeted by 17.4%. Given the proximity to Macau, the city has always been a familiar getaway destination for Hong Kong travellers. In particular, the openings of two hotels in Cotai in the second half of 2016, namely Wynn Palace and The Parisian Macao, powered a spike of Hong Kong overnight visitors. However, as the city and these hotels started to lose its viral appeal to Hong Kong travellers, it triggered the comparatively drastic decline to 687,000 overnight visitors. Similarly, Taiwan visitors saw a 7.5% YoY decline in overnight stays to 127,000, followed by Japan which witnessed a decline by 3.1% to 51,000, despite the increase in visitor arrivals.Looking forward, with the opening of the long-awaited Hong Kong - Macau - Zhuhai bridge in 2018 and numerous integrated resorts in Cotai, as well as Government support in developing the city as a multi-day travel destination, Macau is expected to attract more visitors to the city.Macau Hotel Sector PerformanceAs hotels in Macau have started to feature more non-gaming facilities, attractions in Macau have spread from the downtown area to Cotai, which has established itself as a mass-market and family-friendly destination. The development of the area is further supported by the newly-opened resorts; The Parisian, Wynn Palace, and Studio City, which stimulated the overall hotel performance in Macau.In the fourth quarter of 2017, ADR of Macau hotels registered an YoY increase by 4.9% to MOP1,359. The openings of the integrated resorts in Cotai induced demand to the city, boosting the occupancy by 4.2% from 88.0% to 91.7%. With both healthy growth in occupancy and ADR, RevPAR recorded a substantial jump by 9.3% to MOP1,246, compared to MOP1,139 in the same period in 2016.Looking forward, Macau hotel owners are set to enjoy demand growth in line or in excess of supply growth. Notable hotels opening soon include Morpheus at City of Dreams with approximately 780 rooms in 2018 and Grand Lisboa Palace with 1,400 rooms in 2019. Macau Gaming Sector PerformanceFollowing the market's upturn at the end of 2016 when it realised a 10.2% increase in gross gaming revenue, the city saw a 19.1% YoY increase in 2017 to MOP266 billion of gross gaming revenue, an addition of 43 billions from 2016. This is an indicator of the market's recovery from the negative growth in three years. In the fourth quarter of 2017, the growth of gross gaming revenue remained positive at 19.8% to MOP72 billion, thanks to the returning Chinese gamblers and rising mass-market gamblers. Accounting for 99.7% of total gaming revenue, Games of Fortune experienced a 19.1% YoY growth in 2017 to MOP266 billion of revenue. VIP Baccarat saw a dramatic 26.7% YoY increase to MOP150 billion, while Standard Baccarat recorded healthy growth of 9.6% to MOP84 billion.In the fourth quarter of 2017, gaming tables increased 2.1% YoY to 6,419 tables, while revenue per table per day increased by 17.4% from MOP99,000 to MOP116,000. While the number of slot machines increased by 13.0% to 15,622 machines, revenue only increased marginally by 4.9%, or MOP118, to MOP2,523 per slot machine per day.

HVS Market Pulse: Paris - Spring in the Step

HVS ·30 April 2018
This market pulse provides an overview of the tourism and hotel market in Paris, France. It discusses recent tourism trends and the causes for optimism for 2018 as well as providing a summary of the extensive hotel pipeline.

Market Pulse: Annapolis, MD

HVS ·30 April 2018
Tourism and Group DemandTourism continues to represent the bulk of demand for Annapolis hotels. Residents of the Mid-Atlantic within driving distance of Annapolis regularly take to the city as a weekend destination, and guided tours along the Boston-Washington corridor also often stop in Annapolis. The multitude of boutique retail shops and restaurants that line the downtown streets further bolster Annapolis's status as a tourist destination. Millions of visitors come to Annapolis annually to enjoy the historic architecture, cuisine, maritime amenities, and diverse cultural arts activities. Institutions like the U.S. Naval Academy, the Maryland State House, and numerous theaters, museums, and historic mansions are a main draw for tourists, as are events such as the U.S. Sailboat Show and the U.S. Powerboat Show, which have been held annually in Annapolis since 1970. Annapolis Restaurant Week, the Annapolis Film Festival, and the U.S. Naval Academy Commissioning Week also attract thousands of visitors to the area yearly.According to the United States Naval Academy's (USNA) Public Affairs Office, approximately 350,000 visitors visit the academy annually for a variety of reasons, including guided tours, graduations, and cultural performances by various performing groups, such as the USNA Glee Club, making USNA the top visited attraction in Annapolis.According to the Maryland Tourism Development Board and the Department of Business and Economic Development, visitor spending in Maryland totaled over $17.3 billion in 2016, nearly 20% of which was spent on lodging (see Figure 1). Reportedly, lodging spending and overall tourism spending have increased year-over-year since 2012.Historically, the city's meeting and group demand has largely comprised association business. SMERFE (social, military, educational, religious, fraternal, and ethnic) demand plays a strong supporting role, followed by a significantly smaller amount of corporate group demand, which is reportedly limited to small regional meetings, seminars, and focused training groups. The average length of stay for groups tends to be between two to three nights. SMERFE groups take on a stronger role in the late summer and early fall months, as the number of weddings held in the region peaks during that time of year.Annapolis lacks a dedicated convention center or event space to draw large groups or events to the market. Presently, meeting and group demand is accommodated by the few hotels in the market with notable amounts of available meeting and events space, such as the Loews, Westin, and Annapolis Waterfront Hotel Autograph Collection. The Loews Annapolis boasts roughly 20,000 square feet of meeting space, the largest among the local area hotels, followed by the Westin Annapolis, with 19,000 square feet of meeting space, and the Annapolis Waterfront Hotel Autograph Collection, with 14,000 square feet of meeting space.Business, Industry, and DevelopmentState and Local GovernmentAs the state capital of Maryland, government activity throughout the year helps anchor the local Annapolis economy. The city hosts the annual Legislative Session for the Maryland General Assembly, beginning the second Wednesday in January of each year, and local officials and hoteliers report that the presence of government officials during this 90-day session significantly bolsters demand in Annapolis during the market's shoulder season.Higher EducationHigher education has a long and lauded history in Annapolis and serves as a central support for the city's economy, anchored by St. John's College and the United States Naval Academy (USNA). Special weekend events at both institutions, including graduation ceremonies, parents' weekends, the annual Annapolis Cup croquet match between both colleges, and USNA home football games, make a significant economic impact on the city and drive demand to local hotels.The following table (Figure 2) illustrates a list of the top ten employers within the City of Annapolis, reflecting the diversity of government, education, and healthcare sectors, as well as the leisure and hospitality industry, in the local market.The New Tech HubThe Anne Arundel Economic Development Corporation (AAEDC) has recently embarked on a push to make Anne Arundel County, the county seat of Annapolis, a new technology hub. Major assets, such as Fort Meade, the U.S. Naval Academy, and Baltimore-Washington International Airport, coupled with a highly educated resident workforce and a high quality of life factor, make the area attractive to technology companies looking to relocate. Several AAEDC-led programs, such as the Next Stage Tech Fund and TEDCO Seed Investment Fund, have been implemented to seek out companies to further enhance the prominent government and tech ecosystem that currently exists in Annapolis. Collectively, information technology (IT) companies in Maryland were awarded $28 billion in government contracts in 2015, and the AAEDC is hoping to build on the strengthening demand for government contractors in the field of IT by drawing more of that business to the county.Lodging Market EconomicsCorporate and Convention Hotel Demand--The Arrival of Live! Hotel & Conference Center in Anne Arundel CountyAccording to local hoteliers, the city has traditionally struggled to capture midweek room nights given the limited amount of corporate-related demand. The lack of a dedicated convention center has also been cited as a handicap, with the city unable to host large-scale conventions and to receive the economic benefit that those big events tend to deliver. As such, hotels in the market are in healthy competition to capture their fair share of corporate and group demand to fill rooms from Sunday through Thursday. The $200-million Live! Hotel & Conference Center is scheduled to open next to the Maryland Live! Casino and the Arundel Mills shopping and entertainment complex in May 2018. Developed by The Cordish Companies, the 350,000-square-foot addition will feature a 17-story hotel tower with 310 five-star guestrooms; a 1,500-seat concert venue; 14,000 square feet of event space; dining options; and a day spa/salon. Reportedly, seasoned hotelier Brian Coughlin has been appointed General Manager. Located approximately 18 miles from Downtown Annapolis, some outward compression from this development is anticipated to benefit the local Annapolis hotel market.Stable Rooms Supply and Recent AcquisitionsAccording to Smith Travel Research (STR), Annapolis encompassed just 25 hotels and 2,510 available rooms as of February 2018. To put Annapolis's cozy hotel community in perspective, the area's supply nearly quadruples with the inclusion of hotels proximate to Baltimore Washington International Marshall Thurgood Airport, which is about a 30-minute drive to the north. No new hotels have entered the Annapolis hotel market since both the Westin Annapolis and the Hilton Garden Inn opened in 2007. Since the fall of 2017, there have been two hotel transactions in the market. The 119-room O'Callaghan Hotel, located in Downtown Annapolis, closed on October 1, 2017. The hotel was purchased by South Carolina-baded OTO Development Group from the Dublin, Ireland-based O'Callaghan Hotel Group. The purchase further strengthens OTO Development Group's position in the Annapolis market, adding to the Hampton Inn & Suites that the company already manages. It is reported that the O'Callaghan Hotel will be significantly renovated, inclusive of the guestrooms and public areas, and will reopen as a Hilton Garden Inn in August 2018. Hersha Hospitality Trust (BYSE: HT) purchased the 150-room Annapolis Waterfront Hotel, an Autograph Collection affiliate, for $41.5 million in early April. This acquisition represents an addition to Hersha's 14 other independent and soft-branded hotels, out of the 49 hotel properties already owned by this REIT. According to Hersha's CEO, Mr. Jay H. Shah, the asset was purchased for "an attractive economic capitalization rate of 8.7%." Other than this change in existing supply, no new hotel developments are currently under construction in the city, per our research.Hotel PerformanceWhile supply has remained virtually unchanged since 2008, market demand has fluctuated. The Annapolis market was affected by the negative impact the 2013 government sequestration and budget cuts, though the strength of leisure demand has helped to maintain occupancy levels between roughly 61% and 66% since 2007. Due to this relatively stable level of occupancy, hoteliers have been able to increase average rate (ADR) after the Great Recession, as evidenced by year-over-year ADR growth in Annapolis since 2009. As a result, RevPAR has largely increased since 2009, despite a minor decline during the government sequestration. Hoteliers remain optimistic that 2018 RevPAR performance should continue to be bolstered by ADR growth. The closing of the O'Callaghan Hotel for its renovation and conversion should also cause some displacement and drive occupancy to the other hotels in the market.Ebbs and Flows of Hotel DemandThe Annapolis hotel market is highly seasonal in nature; Figure 3 illustrates the monthly changes in RevPAR between two sets of hotels: the economy to midscale hotels, and the upscale to luxury hotels. Based on STR data, the higher-quality hotels are much more seasonal than the economy to midscale hotels, with sharper swings in RevPAR. Occupancy levels within this set of hotels typically exceeds 70% during the months of May and June, as well as in September and October, while the economy to midscale hotels realize occupancy levels in the high 60s. Weekend demand often drives occupancy into the mid-80s to high 90s throughout the high and shoulder seasons, largely attributed to strong leisure demand and government activity. There is a deep disparity in RevPAR between the high and shoulder seasons versus the low (winter) season in Annapolis. The data suggest that while average rate in both the peak and shoulder seasons has surpassed its pre-recession peak, in terms of occupancy and RevPAR, the low season is still on the recovery path.Outlook on AnnapolisOpportunities and ConcernsStrong leisure demand, coupled with healthy government demand, has remained a positive factor for local hoteliers in the last few years. These types of demand, however, remain highly seasonal, and the market is still reliant on association business to fill hotel rooms and meeting space midweek. Increases in supply in nearby Washington, D.C. and Baltimore have reduced the amount of compression and overflow into Annapolis during citywide events in the last few years. The lack of strong corporate demand is also a concern to local hoteliers. Nevertheless, the prospects for growth within the government sector, as well as the county's push for growing the local tech scene, should do well to contribute to the city's near-term prospects. Additionally, a lack of new supply in the market should continue to bolster ADR growth as demand levels stabilize. Hoteliers, city officials, and other resident stakeholders in the Annapolis economy present a positive outlook for the city's lodging industry, sharing predictions that occupancy will remain stable through the near term. Given the lack of new hotel development, as well as the anticipated rebranding of the O'Callaghan Hotel in the summer of 2018, hoteliers are expected to usher-in continued rate-driven strategies as RevPAR continues to grow to new heights. It will pay to keep a close watch on the lodging dynamics of this historic eastern seaboard city, especially if performance continues to improve and new opportunities for proposed hotels come to light.

HVS Market Pulse: Birmingham, AL

HVS ·20 April 2018
Birmingham is also home to the University of Alabama at Birmingham (UAB), which reported a record student enrollment of 20,902 for the Fall 2017 semester. UAB has an estimated annual economic impact of more than $5 billion on the state of Alabama and is highly renowned for its medical research and natural sciences programs. UAB offers over 140 degrees at baccalaureate, master's, and doctoral levels. The UAB Hospital is the only Level I trauma center in Alabama verified by the American College of Surgeons Committee. Moreover, a $32-million, 72,000-square-foot expansion of the UAB School of Nursing began in October 2016, with completion scheduled for August 2018. Considering its growing enrollment, UAB will often sell out the downtown market on peak weekends, particularly during graduation and homecoming. The University also contributes to the market's meeting and group segment, with demand driven largely by sporting events associated with its 17 collegiate sports teams. Mercedes-Benz U.S. International (MBUSI), a subsidiary of Mercedes-Benz USA, is one of the largest exporters in the state of Alabama and has operated a factory in nearby Vance since 1997. Because of several expansion projects, the factory has grown to over four million square feet. The plant currently produces the Mercedes GLE- and GLS-class SUVs, the C-class sedan, and the GLE Coupe. In September 2017, Mercedes-Benz announced plans for a $1-billion expansion at the campus. New facilities will allow the plant to produce electric automobiles and will include a new, one-million-square-foot battery plant. Additionally, Mercedes is building a new global logistics center (opening 2019) and after-sales center less than five miles from the existing plant (opening 2020). Given the continual growth of the Mercedes-Benz plant, local hotels have benefited from a variety of engineers and related workers staying in the market, often for extended periods of time. The plant also supports numerous ancillary companies that contribute modest amounts of commercial demand to the local hotels.Recent DevelopmentsCompleted in early 2017, the Thomas Jefferson Tower opened following a $30-million renovation. The building now features 96 apartments, street-level retail space, a high-end restaurant, and a ballroom. Originally opened as a hotel, the Thomas Jefferson Tower was one of the first redevelopment projects to utilize the state's historic tax-credit program. Another project that benefitted from the state's historic tax credit was the redevelopment of the former Pizitz department store, which had remained vacant since 1988. In 2017, following a $70-million renovation, The Pizitz building reopened. Highlighted by Birmingham's first open-concept food hall, the mixed-use development also features 143 apartments and 13,000 square feet of office space. In December 2017, the popular entertainment and event venue, Topgolf, opened its 37th location in Downtown Birmingham. Located near the BJCC and Uptown Birmingham entertainment district, Topgolf provides the market with a top-flight leisure attraction, which is expected to contribute to stronger meeting and group demand levels for the BJCC. Additionally, the 65,000-square-foot facility created roughly 500 new jobs for Jefferson County. In early 2018, Jefferson County committed to finance $30 million, while the City of Birmingham voted in favor of a resolution to contribute $90 million ($3 million annually over 30 years) toward the construction of a new, $174-million, 45,000-seat, open-air stadium adjacent to the BJCC, as well as renovations to Legacy Arena and an outdoor plaza. The remaining funding is expected to come from a mix of contributions, including a 3% rental car tax and a $4-million annual lease agreement with UAB, as well as a $10.7-million contribution from the BJCC Authority. Officials are hopeful that the new stadium will be open by the time Birmingham hosts the 2021 World Games. In addition to UAB football games, the stadium will also host Division 1 bowl and neutral-site football games, soccer games, outdoor concerts, and trade shows, among other events. The stadium, along with the upgrades to Legacy Arena and the outdoor plaza, is part of the BJCC's 20-year, $300-million master plan.Birmingham's new upper-upscale segmentPrior to 2015, the Birmingham market was largely void of an upper-upscale boutique hotel, but the opening of the Grand Bohemian in Mountain Brook quickly changed this reality. The Grand Bohemian was very well received in the market, serving a previously underserviced niche. Since the opening of the Grand Bohemian, two more high-end boutique properties have opened in the market. The Redmont Hotel reopened as part of Hilton's Curio Collection in 2016, while the former Empire Building, with help from Alabama's historic tax-credit program, opened as the Elyton Hotel, an Autograph Collection affiliate. Birmingham's new upper-upscale segment is not showing any signs of slowing down. The Hotel Highland is undergoing a significant renovation to convert to a Hotel Indigo, slated for the spring of 2018, and a second Curio Collection hotel is planned for development in Homewood. Moreover, the former Protective Life Building in Downtown Birmingham sold in November 2017. The vacant office building will reportedly be redeveloped into another upper-upscale hotel, with construction slated to begin in the summer of 2018. The recently sold 193,000-square-foot Brown Marx Building will also likely have a high-rated hotel component included in its redevelopment.Recent transactionsFollowing limited transaction activity in 2014 and 2015, a significant increase in transaction activity occurred in 2016. Notable sales that year included the DoubleTree by Hilton in Downtown Birmingham, which was sold to the University of Alabama at Birmingham (UAB) with plans to be converted to a full-service Hilton following a property-wide renovation, and the Hotel Highland, which is in the process of undergoing a renovation and conversion to a Hotel Indigo. UAB purchased a second hotel in 2017, the Courtyard by Marriott in Downtown Birmingham, which sold for a record price in the market. Birmingham's first dual-branded hotel, the Hilton Garden Inn/Home2 Suites by Hilton, also sold just months after its opening. Source: HVS, RCAOutlookWith numerous mixed-use developments recently completed or under construction, Birmingham's renaissance is showing no signs of slowing down. From luxury condominiums, high-end office space, upper-upscale hotels, and a variety of well-regarded dining and entertainment options, Birmingham is well on its way to establishing itself as a top-tier destination in the Southeast. Market-wide average rate (ADR) levels are anticipated to continue to increase in the near future, while occupancy levels are expected to decline slightly given the recent and upcoming influx of new supply.

Factors Driving Hotel Wellness, Asset Management and Revenue

HVS ·19 April 2018
Built-In from the Ground UpHotel design aspects have lined up with wellness construction counterparts and evolved into a thriving wellness-driven real estate market. This marks a profound shift in the design and permutation of wellness and hospitality. Wellness Lifestyle Real Estate represents approximately $119B USD of the $3.7T USD global wellness economy and is projected to increase 6% annually in the next several years, growing to $180 billion by 2022. "Source: GWI Build Well to Live Well 2018 ReportManagement and LeadershipThe urge to activate new wellness overlays continues to gain momentum. Yet, operational development is often encumbered by lack of investment, time, or concentrated action. Generally, a Spa or Fitness Director would assume the responsibility of developing a property's wellness channels. Meanwhile, their primary focus would be dedicated to these respective areas, without typically being able to effectively cross into other departments i.e. food and beverage programs, in-room services or expanding into potential meeting and group opportunities. If the intention is to create substantial layers of well-being throughout the hotel or resort, it's wise to form a complete department assigned to appropriately develop and refine these features throughout the property. Companies who are seeking to advance their wellness programming and diversify their approach, should consider the benefits of enlisting a proficient Wellness Director or Well-Being Manager. This person would facilitate program excellence and drive successful department crossovers. Furthermore, having a dedicated manager to oversee program efficiency, would add focus to the wellness lineups. This individual would manage and track the percentage of growth to safeguard the ratio between program performance and return on investment. Having someone in this role to lean on would shape the property's unique attitude towards wellness and measure the impact and percentage of wellness-driven revenue on ADR and RevPAR performance. This person would also unite the wellness theme throughout the hotel, be responsible for quality auxiliary services and facilitate discoveries for internal and external marketability that is suitable for the property.Cross-Department RevenueIn the past, spa and fitness assets have mainly been viewed as amenities to augment guest comfort and convenience. While the booming years of luxury spa experiences thrived in the 1990's until 2008; the spa market has rebounded and surpassed the success of prior years with an upsurge of both new spa development, and wellness-driven market growth. Spa revenue in the U.S. has been experiencing steady growth since 2010 and now represents at $16.3 billion market.For many properties it has become essential to not only offer a well performing spa and fitness component but also include features that support healthier choices and nurture well-being. These assets impact the eminence of stay, healthy food, level of quality experiences and so on. For example, food and beverage outlets must increasingly cater to specialized lifestyles, food and diet restrictions, i.e. vegan, gluten-free, and so on. These distinct menu selections are common requests shared across the whole of the hotel, no longer considerations for singular outlets. With increasing department overlaps, the rise of business and solo travelers has amplified the demand for various, beneficial in-room and poolside amenities. These have taken the form of in-room fitness programs, private tele-guided yoga and meditation sessions, relaxing in-room tub soaks, and on-demand massage services. New products are showing up as in-room indulgences, in addition to snacks and drinks in the mini-bar. And spa and fitness features are actively mixing with other key areas throughout the hotel. These segments stimulate guest stay, add value and advance new opportunities to increase the capture of add-on revenue.Ways to Boost Add-on EngagementIntroduce add-on offers at check-in or through in-room marketingCreate add-ons that enhance existing treatments or servicesDesign new spa and dining combinations with motivating themes for couples, etc.Format memberships with an uncommon mix of add-on benefitsCreate employee recommendation structure with percentage incentivesStrategic OverlaysNothing beats a well performing business strategy when it comes to incorporating various enhancements and add-ons. However, it's vital to understand how manageable and appropriate the range of services are. Just because something might be trending in the marketplace, does not mean it will produce lucrative results, or have rewarding potential. Customizing the operational business structure with tactical planning is fundamentally important. It's as vital as setting up goals for successful integration and program development. The success of the Miraval Group represents one example of how a well-tooled strategy can significantly impact the RevPAR and the ADR of a business by incorporating an advanced perspective and mobilizing well-being at the core of the company mission. "As a global leader in wellness resorts and spas, we observed that Miraval understood that wellness is a mindset, not a commodity to be thrust upon consumers, which is a distinction that underscores our wellness strategy moving forward. Miraval is truly an integrative and authentic approach to wellness and wellbeing - an approach that we, over time, think will go over the broad mention of Hyatt in general." Said Marc Ellin, the global head of Miraval Group. Last year, Miraval Arizona's RevPAR grew 20.4 per cent, he said, while its ADR increased by 15 per cent and occupancy grew by another 6 per cent.Add-ons and EnhancementsOne of the most effective ways to instigate new service engagement is to create offers that add weight to existing, premium selling packages. Introducing services this way, reduces perceived customer risk and complements overall package value. Add-ons are a popular way to expand upon spa treatments, and fitness amenities. They are generally easy to sell and have unique benefits when paired with the right services. Enhancing a well performing offer can spark curiosity and help garner attention for less noticeable services. There are multiple ways to craft a solid selection of services. Committed retail partners can be valuable resources to provide support through special spa product allowances or backboard discounts. They are also good allies to develop and collaborate with to form a new layer of services. "Packages targeted at couples were mentioned by over nine in 10 resort/hotel spas (94%) compared to 71% of day spas. Wedding party packages were more frequently mentioned by resort/hotel spas (70%) than day spas (51%). "Final ThoughtsChoosing to embrace wellness with an all-inclusive methodology can transcend wellness themes to new heights. On behalf of new property development, it's prudent to review the capacity and influence new building and construction possibilities hold. The lines between health and hospitality will undoubtedly continue to crossover into the future. These intersections will intensify the need for diligence, program management and new outlooks on enhancement provisions. This will also reveal new value propositions and drive the creation of new revenue channels. Disjointed programming is a common challenge. The central keys to building successful wellness integrations rest in understanding how to incorporate add-ons that add meaning, capture with a widespread attitude, and spearhead meaningful momentum.HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.

The HVS Quarterly Taiwan Update

HVS ·19 April 2018
An HVS Quarterly Taiwan UpdateThe positive impact from Taiwan's tourism source market diversification supported its increase in visitor arrivals, which witnessed a 10.1% YoY rise to 3.1 million in 2017 quarter four. To compensate for the loss of mainland Chinese tour groups, Taiwan strategically improved its relationships with other Asian countries, particularly in Southeast Asian countries. Notably, South Korea passed the 1 million visitor arrivals mark in the fourth quarter. Amid the shift of source markets, hotel players in Taiwan experienced the rebalancing towards more value-based demand.Overall Visitor ArrivalsFrom the time when the current Taiwan president Tsai Ing-Wen came to power in May 2016, her political strategy was not to further improve relations with mainland China. As a result, the Taiwanese tourism industry suffered the withdrawal of mainland Chinese visitors which plummeted by 22.2% to 2.7 million in 2017. However, Taiwan still managed to offset the loss with visitors from South Korea and Southeast Asian countries, reaching a marginal growth of 0.5% in visitor arrivals in 2017.In 2017 Q4, the top five feeder markets were mainland China, Japan, Hong Kong and Macau, South Korea, and Malaysia. Although the increase of mainland Chinese visitors was significant in the fourth quarter, a 18.3% YoY growth to 756,000, the total number of visitors was still 29.5% lower than the same period two years ago in 2015. For Japan, Hong Kong and Macau, these markets did not post any significant change in Q4. Japan noticed a slight increase in visitor arrivals by 0.7% YoY to 541,000, while Hong Kong and Macau combined saw a minor 0.8% YoY decrease in visitors to 427,000.Ranking as the fourth largest source market, South Korea recorded an impressive 19.7% YoY growth in visitor arrivals to 306,000. More importantly, South Korea surpassed the 1 million visitor arrivals mark in 2017, reflecting a 19.3% increase in visitors compared to 2016. Similar to Macau, the continuous growth of South Korean visitors in Taiwan has been the result of successful marketing initiatives the Taiwan Tourism Bureau had implemented in the past few years, such as celebrities endorsements, advertising campaigns, and collaborations with local entertainment (TV show and film), as well as improved air connectivity with more direct and budget flight options.To rebalance the shift in mainland Chinese demand, "the New Southbound Policy" was implemented in May 2016 to increase collaborations with other countries in South and Southeast Asia, as well as Australia and New Zealand, specifically in economic trades and exchanges. A major contributor to the improving tourism industry is the relaxation of visa restrictions for Southeast Asian countries, which greatly helped to offset the shortfall from mainland Chinese visitations. Malaysia, with a large ethnic Chinese population, was the fifth largest market source for Taiwan in Q4 of 2017, registered a 6.4% YoY increase in visitor arrivals to 180,000. This is followed by Singapore which is the sixth largest visitor provider, while the U.S. got pushed back to 7th place.Looking forward, with the unpredictable political relationship between mainland China and Taiwan, Taiwan will continue to build relationships with other Asian countries in order to stimulate its tourism industry. In addition, Taiwan is aiming to become a "Muslim-friendly" place in order to attract more Muslim travellers. For example, over 150 hotels and restaurants are already serving halal-certified food and some are offering praying areas.Taiwan Hotel Market PerformanceIn 2017 Q4, the Taipei hotel market saw slightly positive improvement in performance with RevPAR growing at 0.6% YoY to NT$3,674. This growth was achieved by sacrificing average rate (ADR) by 2.2% YoY to NT$4,510 in exchange for an increase in occupancy by 2.9%, which was recorded at 81.3% in the same period in 2016. Taipei hotels continued to rebalance their pricing strategy in light of the shift to more value-based demand.On the contrary, Kaohsiung hotel market experienced a decline in performance. Both occupancy and ADR registered a YoY decrease by 5.3 percentage points and 1.7%, respectively, to 64.9% and NT$2,393; bringing RevPAR down by 9.2% to NT$1,553. Kaohsiung was once a destination for mainland Chinese group tours; hence, the shift in visitors source markets that are mostly Taipei-bound, affected hotels in Kaohsiung considerably.Compared to the fourth quarter of 2016, hotels in Taichung shifted their strategy by bringing up their average rate slightly by 1.0% YoY to NT$2,460, yet suffered from a 2.9 percentage points YoY decrease in occupancy to 73.8%. RevPAR declined by 2.8% YoY to NT$1,815. This is a reversal from the same quarter in 2016, when the market adopted a more value-based pricing to build occupancy.Overall in 2017, the increase in visitation from other regional source markets helped Taiwan to diversify after the loss of mainland Chinese tour group travellers. The marginal increase of mainland Chinese travellers in quarter four shows continued interest among mainland Chinese FIT visitors. As the Taiwan tourism industry continues to rebalance, Taipei fared significantly better than other markets, which used to be part of tour group itineraries but cannot draw the same number of regional FIT visitors, many of whom visit Taiwan for the first time.

HVS Market Pulse: New Orleans, LA

HVS ·19 April 2018
Business and IndustryThe service industry supports much of the employment in the city, and while some industries have declined in recent years, new entities have entered the market, and overall unemployment has improved. The decline in oil and gas prices in recent years has led to a softening in the city's commercial demand drivers; in August 2017, it was announced that One Shell Square would be renamed Hancock Whitney Center in 2018 after the founding company's space needs were reduced. Film production has also declined in recent years since the "Hollywood South" boom years; however, several television shows remain based in the area, and New Orleans remains a popular feature filming destination. The medical industry has exhibited growth in the city, starting with the opening of the University Medical Center and the VA in Mid-City's BioDistrict in 2015 and 2016, respectively. Although the newest expansions are taking place outside of the CBD, the local economy will benefit from the $360-million Ochsner expansion and the $300-million Children's Hospital expansion.TourismVisitation to New Orleans has been on a steady rise since 2010, with at least 5% growth in visitor spending each year. Although official counts for 2017 will not be available until the second quarter of 2018, other metrics point to a strong year for New Orleans tourism in 2017. Major events announced that should further increase visibility include the College Football National Championship Game in January 2020 and the NCAA Men's Final Four tournament in 2022. The Port of New Orleans is the sixth-largest cruise port in the United States. Port NOLA reported 2017 as a record year, with 1,150,172 passengers, celebrating the fourth consecutive year of more than one million passenger movements in the city. Royal Caribbean is returning to the market in December 2018; Norwegian Cruise Line will bring the first 4,000-passenger ship to the Port in November 2018. Carnival Cruise Line will increase capacity to a 3,000-passenger ship in 2019. Riverboats are also making a comeback, and American Cruise Lines plans to add a new 190-passenger ship in September 2018. Hotel operators report that cruise passengers remain a continued source of weekday demand, as travelers book shoulder dates before and after cruises to explore the city.Airport passenger counts have exhibited strong growth since 2013. In 2017, both Spirit and Frontier Airlines added flights, and international flights to London, Frankfurt, and the Bahamas were added by other airlines. The New Orleans Convention & Visitor's Bureau has concentrated on marketing the city as an international destination in recent years. There is room for growth in both the number of passengers and international flights, as groundbreaking on a new airport began in January 2016, and a topping-off ceremony was held in December 2017. The $993-million project will include a 972,000-square-foot terminal (69,000 square feet of concessions will include many local purveyors), a 2,190-car garage, and 35 gates; the new airport is expected to open in February 2019.New Hotel SupplyThe pipeline for hotel development has slowed in recent years. Major events like the NCAA Final Four in 2012, the Super Bowl in 2013, and the NBA All-Star Game in 2014 highlighted the city's visibility as a major leisure travel market, and many new hotel projects were announced. However, several of these projects have stalled or been canceled in recent years, leaving a slightly smaller amount of new rooms entering the market in the next few years. In 2017, three new hotels opened in the CBD, and one new hotel opened in Uptown, leading to a 2.5% increase in rooms within the Central New Orleans market. A Homewood Suites by Hilton along the new Rampart streetcar line offers 207 extended-stay rooms, the NOPSI luxury hotel occupies a revitalized a historic building, and the Cambria Hotel & Suites Warehouse District is the newest Choice-affiliated brand in the market. The Alder Hotel was developed in a former nurses' dormitory adjacent to Ochsner Baptist Medical Center. These hotel openings continue a development trend within New Orleans that is focusing on higher-rated, more-upscale products.Many of the hotels announced for the city are more luxury-oriented, a change that may help elevate average rate (ADR) levels in the city. The Jung Hotel, which opened in early 2018, is the reincarnation of a 1907-built former hotel, offering over 21,000 square feet of meeting space to host upscale events. By the end of 2018, the Jung and the under-construction, dual-branded SpringHill Suites/TownePlace Suites by Marriott will result in 1.6% growth in rooms within the CBD. Several additional hotels throughout the city are expected to open by 2019, including the Virgin, Hard Rock, and Four Seasons. Initially, many developers intended to build for openings by 2018, the tricentennial year of the founding of the city; however, many of these openings are now scheduled to come on line in 2019, resulting in a 9.3% increase in rooms by year's end. The number of rooms projected for 2020 is not yet definite, as we only have room counts for half of the properties announced; however, growth will be over 6.4%, especially given the introduction of the 1,200-room convention center hotel. Hotel operators have cited the influence of Airbnb as a negative impact, both on occupancy and ADR, as they compete with last-minute cancelations, shorter booking windows, and growing short-term-rental supply; however, we believe that when this new list of upscale and luxury hotels open, New Orleans will attract a more affluent customer who may not have had the city as a top-of-mind destination in past years, and who would not likely look to Airbnb as an option.OutlookThe New Orleans market will continue to be a popular leisure market. Major infrastructure developments like the new, world-class airport will increase accessibility to the city. Although cumulative growth in supply will be over 25% from 2015 through 2020, many of the hotels coming on line are redevelopments of former hotels or blighted buildings. Furthermore, much of the new supply announced in the market is destination-focused, ensuring less of an impact on existing hotels; these developments include the Harrah's expansion, the Curio by Hilton Higgins Hotel (planned to supplement the World War II Museum expansion), and an eventual convention center hotel envisioned as part of the riverfront redevelopment. It seems likely that the number of visitors to the city will reach the goal of 13.7 million visitors by year-end 2018. With more diverse hotel products, increased numbers of flights, and continued development in the New Orleans CBD, the city should continue to top the lists as a world-class destination in the years to come.

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