David Lund · 17 Jan
I heard this about 40 years ago and it has stuck with me. I was a newbie cocktail waiter working part time in my hometown hotel. One of my regular weekend customers was the controller and he was telling me he needed an income auditor for the summer line-up. I suggested my brother who was recently out of work at his articling job at a CA firm.
HVS · 14 Jan
The pandemic, Brexit and ongoing supply issues have prompted key changes in the UK’s hotel sector, many of which are long-term, if not permanent.
Expedia Group Media Solutions · 14 Jan
Travel shoppers today have many options when it comes to paying for travel. Often, consumers don’t think twice before considering which payment method to use—they go with what’s familiar or use the credit card that earns the most rewards or miles. In this post, we’ll discuss how PayPal worked with us to remind shoppers at the beginning of the customer journey that not only is PayPal a safe and secure payment method, but it also comes with many of the same perks as other payment methods.
R.A. Rauch & Associates, Inc. · 13 Jan
Interest rates are low, consumer confidence is stronger, oil prices are high and employment is very uneven. The Purchasing Managers Index (PMI) is at 58.7 in December 2021, down from 60 in November and 61 in October. Any number over 50 shows that the economy is expanding so the PMI is good news. Threats from COVID-19 variant Omicron should peak this month. Perhaps the biggest threat is inflation as that is starting to impact the middle class as well as the poor. The silver lining is that this inflation might cause hotel room rates to grow beyond the 6% inflation rate.
AP Hospitality Advisors · 12 Jan
This is an abbreviated version of the full article, which can be found on our website, linked below. The failure to convert hotels to become net-zero carbon emitters has a major impact on the bottom line by incurring carbon credit expenses or penalties as well as excess energy consumption levels. This article analyses current asset performance, future goals and the value at risk from foregoing necessary conversions to net-zero carbon by 2050. Failure to do so results in stranding of assets – a term the real estate industry should understand as a new form of “ecologic” obsolescence. Asset owners could face impairments (present value) from US$30,000 to US$230,000 (!) per key for an obsolete 5-star hotel– a large part of which can be mitigated while improving the bottom line. Green House Gas emissions and reduction targets Among a global drive to decarbonize the economy, governments across the world have signed up to drastically reduce carbon (or GHG: greenhouse gas) emissions. The United Nations Framework Convention on Climate Change (UNFCCC) with 197 countries represented, through the Paris Agreement in 2015 and the 26th Conference of Parties (COP 26) in Glasgow 2021 implemented specific measures towards mitigating climate change by restricting temperature rises to well below 2⁰C above pre-industrial levels via the reduction of GHG emissions. CRREM pathways Globally, the real estate sector is responsible for 36% of total energy consumption and 37% of total GHG emissions. Naturally, residential real estate plays a large role along both dimensions. However, non-residential uses may be more challenging and costly to decarbonize. To achieve the intended goal of decarbonization by 2050, the EU funded a research project named Carbon Risk Real Estate Monitor (CRREM). “CRREM aims at developing a tool that allows investors and property owners to assess the exposition of their assets to stranding risks based on energy and emission data and the analysis of regulatory requirements. By setting science-based carbon reduction pathways, CRREM faces the challenge to estimate risk and uncertainty associated to commercial real estate de-carbonization, building a methodological body and empirically quantify the different scenarios and their impact on the investor portfolios.” CRREM set regional ‘pathways’ to gradually limit and reduce GHG and energy use to achieve the targets by 2050. It is important to emphasize that both metrics vary heavily by locale based on the carbon intensity of the electricity grid today and the energy use on site due to climate conditions among other factors. Thus, each country in the EU has its own pathway for different uses (residential, office, hotel, etc) and CRREM provided pathways for a selection of international markets as well. Notably, hotels are the assets with the largest carbon footprint and energy use, similar to inefficient office buildings and only trailing industrial manufacturing properties (where the processes and machinery within can create an abundance of GHGs and consume significant energy). Stranding risk as ecologic obsolescence The failure of a building or infrastructure to reduce GHG emissions and energy use below the pathway target at any point in the future results in a so-called ‘stranded’ asset. This is akin to a form of obsolescence. Next to functional (from outdated features) and economic (from changes in market conditions) obsolescence, a stranded asset could be considered to suffer from ecologic obsolescence or to be ecologically obsolete. Ecologic obsolescence is different from economic obsolescence in that market and environmental conditions need to be recognized as two distinct domains (the environment may deteriorate while markets continue to perform well, something we have observed more frequently in the last decade). At the same time, ecologic obsolescence can be understood as a combination of functional and economic obsolescence due to the transition risk. Case Study: 5-star Hotel, Sydney The point in time when ecologic obsolescence is reached is illustrated in the detail below by example of a typical Sydney 5-star hotel and the two Australian CRRREM pathways. The energy usage and carbon footprint are based on the Cornell Hotel Sustainability Benchmarking Index (CHSBI) average values for Sydney 5-star hotels. For this analysis, we have assumed a hypothetical hotel starting in 2020 as show in the first table. Decarbonization pathway for a Sydney 5-star hotel The chart illustrates how a stranded asset (via the decarbonization pathway) incurs additional expenses to remediate ecologic obsolescence by buying carbon credits. Assuming a hypothetical scenario, where this hotel’s carbon footprint remains constant until 2050, carbon credits will need to be purchased annually after becoming ecologically obsolete in 2025. The chart uses the example of a hypothetical Sydney 5-star hotel of 500 hotels rooms and 50,000 sqm GFA with a carbon footprint based on the average value from the Cornell Hotel Sustainability Benchmarking Index (CHSBI). The cost for each carbon credit is based on the Australian Carbon Credit Units (ACCUs) price as of 21 December 2021 (AUD49 per metric ton increased at inflation of 3.0% annually). The detail shows how the annual carbon credit expense increases to US$689,000 by 2050 or US$291,000 deflated to 2021 dollars (cumulative US$4,626,000 through 2050 in today’s dollars). This is a significant expense impacting a hotel’s bottom line, asset values and ultimately, investor returns while carbon credit prices are assumed to be increasing at inflation while it can be expected that prices will outpace it (see chart on ACCU prices towards the end of this article). A similar approach was adopted for CRREM energy reduction goals. Quantifying ecologic obsolescence of 5-star hotels around the world Adopting the above methodology, we analyzed twelve other markets around the world. All cities are based on the same hypothetical asset of 500 room with a GFA of 50,000 m2. The carbon footprint and energy uses are based on the CHSBI and pathways limits on CRREM. Findings are shown in the second table. Applying carbon penalties per the City of New York's LL97 (at US$268 per ton CO2 and well within the ranges outlined under the scenario analysis by NGFS) to the sample of markets, paints a more dramatic picture, shown in the third table. The combined penalties and savings for a 500-room, 5-star hotel ranges from US$31 million to US$115 million or US$63,000 to US$230,000 per key. While this is based on LL97 penalties, projections from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) shows a steady increase in carbon pricing where many markets would be above LL97 levels, as high as US$1,647 per ton CO2. Conclusion This analysis has shown the expenses, savings and penalties attributable to stranded asset through ecologic obsolescence. All stakeholders in the industry should work towards meeting CRREM pathway limits and reduce the industry’s carbon footprint and energy use for existing properties. For those that want to find out how this can be done, please contact the author. Embodied carbon presents another challenge for new hotel projects, which calls for more documentation and analysis
JMBM · 3 Jan
As hotels find new ways to use technology to attract guests and enhance their properties, they need to remain aware of the security challenges these technologies present.
East Carolina University · 30 Dec
The legal environment of the hospitality industry is forever evolving and changing. Given specific hospitality industry events and circumstances, industry professionals need to view the law, policies and regulationswith particular attention to social, political, environmental, and human needs and their responsibilities and obligations.
Hotel Law Blog · 29 Dec
As hotels find new ways to use technology to attract guests and enhance their properties, they need to remain aware of the security challenges these
Lowenstein Sandler LLP · 28 Dec
COVID-19 has been devastating for the hospitality industry. Hotel occupancy rates are still well below normal. While some lenders are still granting relief to borrowers, lenders increasingly have been foreclosing on properties.
JMBM · 28 Dec
Several new pieces of California legislation have either recently gone into effect or will take effect in 2022, impacting nearly all employers and how they handle employment agreements, disability related to COVID, training, rehiring and retention, and a range of other practices. A new presidential administration also means a shift in the political landscape and the role played by the NLRB, OSHA and other regulatory bodies.
Hotel Law Blog · 26 Dec
Several new pieces of California legislation have either recently gone into effect or will take effect in 2022, impacting nearly all employers and ho
R.A. Rauch & Associates, Inc. · 23 Dec
Interest rates are low, consumer confidence is stronger, oil prices are high and employment is very uneven.
GuestCentric Systems · 22 Dec
At the start of this year, we predicted our top 10 Hotel Trends to Watch in 2021. But after 12 months of unexpected twists and turns, which of those trends actually held strong this year? Keep reading this article to find out.
In Extenso Avocats · 17 Dec
The recent Covid crisis has highlighted the resilience of the hotel sector in France. An investment in a hotel (as in a boutique hotel) should also be regarded by investors as a “pleasure asset”. When benefiting from the French favourable tax reinvestment regime, what should investors be looking at if they wish to make the switch to hospitality?
EHL Advisory Services · 16 Dec
In the hospitality and travel industries, experts can perform an opportunity analysis of a hotel or property. This is a helpful tool that shows more about the value and risk of the property. Let’s take a look at what an opportunity analysis precisely entails and how to go about it through a three-step approach.
Cayuga Hospitality Consultants · 13 Dec
An alarming number of lawsuits alleging fraud, discrimination, harassment, human trafficking, and other misconduct at some of the U.S.’s most well-known hotels and restaurants have made headlines in the past few years. But to anyone who has worked in the hospitality industry, this is not a recent phenomenon.
Cayuga Hospitality Consultants · 9 Dec
As hotel lodging performance continues to recover from the effects of Covid-19, there have been increasing signs that investors are again buying, selling or refinancing of hotel assets. This comes sometimes in spite of mixed messages as to the speed and strength of this recovery.
EHL · 7 Dec
What are the latest trends in the hospitality industry? It goes without saying that the pandemic and ensuing economic downturn greater than the 2008 recession and chaos caused by fluctuation in demand have had a significant impact on hospitality throughout 2020 and 2021 - no doubt with lingering effects. Some innovative responses to this extraordinary situation like attempting to entice patrons back into food and beverage outlets and assure holidaygoers that it is indeed safe to enjoy a hotel stay, have accelerated existing hospitality industry trends and triggered lasting change.
AP Hospitality Advisors · 24 Nov
Rapid growth in Chinese outbound travel demand from 2003 onwards was a key driver for tourism and leisure hospitality in many parts of the world. Can this momentum be regained post-COVID to drive more hotel development?
David Lund · 22 Nov
Managing labor costs is a never-ending battle in any hotel. No wonder it adds up to on average 50 percent of the total revenue in hotels around the world. To say labor cost is important is an understatement so in this piece, I will highlight the key controls and features to make sure you are on the right track with this all-important aspect of hospitality.
HotStats Limited · 17 Nov
The supply chain crunch and inflation are compounding what’s already a nettlesome recovery for hotel owners and operators.
Hotel Law Blog · 16 Nov
The Global Hospitality Group® (GHG) of Jeffer Mangels Butler & Mitchell LLP (JMBM) has released an updated version of its Hospitality Credentials, de
HVS · 15 Nov
The Indian hotel sector is finally breathing a sigh of relief as demand has recovered dramatically in recent months, even helping push occupancy and average rates closer to pre-pandemic levels in a few markets. However, the hotel sector, like most others, is reeling under the pressures of rising prices, affecting not only operations but also hotel development plans in the country.
HVS · 10 Nov
Given the significant traction in distribution of the COVID-19 vaccines throughout the United States and general international travel restrictions, leisure travel has begun to recover in 2021 and is expected to continue increasing, with Americans seeking so-called “revenge travel” to a domestic getaway. Business travel is also beginning to show signs of recovery, and some group business related to conference attendance is returning.
David Lund · 9 Nov
That’s right, your eyes and the headline are not fooling you. I learned this from a client in a backwards kind of way and now I want to share it with you. It is a powerful way to justify and prove a return on investment (ROI) for financial leadership training. I use this story as well to show my clients what they are leaving on table in the way of profits and asset value if they are not using financial leadership in their hotel.
Glion · 3 Nov
Jonathan Humphries is a hospitality consultant and also heads the International Hotel Development and Finance Bachelor’s degree specialization at Glion Institute of Higher Education. He argues that in a fragmented, post-Covid commercial landscape the hotels which thrive will do so through constant reinvention and total flexibility in their approach to market. And who sits at the center of delivering this ‘agile state’? The asset manager.