September 2022 Digital Issue

On the
domestic
front, Canada
continues
to be an
attractive
investment
market for
hotels, says
Robin McLuskie,
managing
director,
Hotels,
Colliers.
“Despite
the rising
interest rates,
increased
construction
costs, and
high inflation,
hospitality
market
landers
are still
interested in
the space.”
30 | SEPTEMBER 2022
On
Home
Turf
in the mid-West. China and other
parts of Asia, on the other hand,
have been among the slowest to
recover because of their COVID
restrictions.”
Europe has been choppier in
its recovery, where recovery lags
behind North America. “Europe is
not as penetrated with global brands
that we see in other regions,” says
Kramer. “It’s more fragmented and
more hotels are family owned or
parts of smaller chains.”
THE STATE OF
THE PIPELINE
Major brands are looking closely
at the all-inclusive resorts sector,
says Shi. “As people are dealing
with inflation, customers like to
book all-inclusive as there are no
surprises or hidden costs. Marriott
and Choice’s focus this year and
next is expanding into that sector.”
“There’s a growing push to
extended stay,” confirms Kramer.
“Hotel brands and private
equity are really invested in that
space. They are trying to play as
many strategies as they can and
execute them well, knowing the
uncertainty of the environment.”
However, Kramer says hotels are
facing the same pressures other
industries are. “There are looming
questions around the recession, a
rising interest-rate environment,
supply-chain issues that are still
unfortunately there, and labour
constraints. There’s not
a lot of confidence around
new builds.”
According to STR, hotel
pipeline activity is down globally,
reporting year-over-year declines in
current construction projects at the
end of the second quarter 2022.
Europe showed a 12.6-per- cent
decline, Middle East and Africa
a 6.2-per-cent decline, and the
Americas a 16.9-per-cent decline.
The exception was Asia Pacific
with a 2.1-per-cent increase, led by
China and Vietnam.
“IHG made a statement around
a push into Thailand, and Accor
and Wyndham are also pushing
aggressively into Asia,” says Kramer.
“We’re also seeing big luxury
brands starting to make stakes in
sun destinations, home sharing and
branded residences, such as Taj
Hotels in India and Banyan Tree
Hotels in the Philippines.”
Fairmont is focused on
expansion into several Asian and
Middle-East markets, including
Dubai, Morocco, Japan, and
Vietnam, says Mansi Vagt, global
brands leader and vice-president,
Fairmont. “Coming out of the
pandemic, the Middle-East market
is definitely more bullish. Asia-
Pacific, however, is a bit more
challenging, including China.
Their reality with the pandemic
was very different than in the
western and Middle-Eastern parts
of the world.”
A BUMPY ROAD FORWARD
The fall and winter will be the true
test for the hotel industry, says Shi.
“Leisure demand will be fading out.
Supposedly, meetings and groups
will help with fall demand, but it
is still recovering very, very slowly.
The question is can they hold onto
their rates?”
The biggest friction point
for hotels moving forward will
continue to be talent shortages.
“The industry took two steps
forward and one back as staffing
has not caught up,” says Kramer.
“With massive pent-up demand,
the question is now how the
industry can accommodate the
volume as they ramp up hiring.”
The industry is in a different
place than it was before the
pandemic, says Vagt. “The world
has changed. No one should expect
that everything will get to what I
was before March 2020. We need
time to digest that and approach
the business in light of the shifting
focus on hybrid work, employment,
wellness, and mindful travel,
among others. It’s so much more
than financials. It’s about coming
back better than we were before
and understanding the new world
we are entering.” ◆
hoteliermagazine.com
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