Gazing into the Crystal Ball… what’s in store for the hospitality industry in 2017

Looking into the crystal ballEach and every year between November and February I watch with interest to see the various reviews of the past year and predictions for the year ahead.

Will the hospitality industry live to survive another year?

What will be the next ‘big thing’ or destination?

Will it be massive development for luxury resorts or the budget market?

Will there be a return to fine dining and are hotel restaurants doomed?…again…

Will we be eating cronuts and acai bowls or will there be a return to “meat and 2 veg”?

It seems everyone has their own barrow to push, whether it is the headline grabbing clickbait from the internet media forecasting impending disaster and global collapse of the hospitality sector, or perhaps the international commercial real estate companies who seems to predict an imminent upturn in even the most depressed hotel market! I guess this is the epitome of the “glass half full or half empty” philosophy reflected in the self-interest of each writer…

2016 in general terms was certainly extraordinary, there is little doubt about that…

In February, if you had told me that the global economy was still difficult and growth would be patchy and volatile, then I would have probably believed you and it certainly turned out that way…

However, if you had told me that Great Britain would be leaving the EU, sending the whole of Europe into potential chaos, and a tax dodging, real estate developer/TV personality would be president of the United States, I would have been calling the authorities and applying for your commitment to the nearest mental asylum!!!

Those 2 matters alone have the potential for an unprecedented upheaval in the global economic and political systems, not seen since the 2nd world war.

So, what does this all mean for the hospitality industry and what will happen in 2017?

Well, I think I can say, with the upmost confidence, I have no idea whatsoever!

If you know anyone who is able to accurately predict what the next couple of years has in store, you need to also ensure they give you the lotto numbers!

My feeling is that even though the past few years (since the global financial crisis, have been volatile, we probably ‘ain’t seen nothing yet’! Matching economic instability with political instability is what lead to the rise of Adolf Hitler, and we all know how well that went…

But back to hospitality, and what is in store for our industry…

Since hospitality is generally a discretionary spend, whether it is traveling and staying in hotels or just going out for dinner at your local restaurant, the potential impact of the factors above could be enormous, whatever your location or region.

The merging of several international hotel management companies (Marriott – Starwood, Accor- Fairmont etc) has yet to really play out, so expect to see changes to structures and inevitable job losses as a result of this consolidation.

The growth of OTA’s shows no sign of decline, so expect continued flexing of their market power and subsequent increased cost burdens for hoteliers.

In slow/low/no growth markets, expect continued decline in RevPar (eg In Paris, generally considered a stable and leading destination, RevPar fell a staggering 15.1% in the 9 months to Sept 16).

With slowing demand and revenue, expect increased cost cutting from owners and managers and the inevitable continued pressure to reduce labour costs – less staff, less training, more unemployed higher cost expat hoteliers…

On the positive side…

There is still a large amount of development in new hotels and resorts across many regions. This development in new properties and infrastructure may slow, but so many projects are beyond the point of no return, expect some exciting new hotel and resorts to open.

In many regions, the growth in eating out is expected to continue, regardless of the economic situation, as all generations increase their food spending (for example, in Sydney, millennials not able to afford to buy a house will continue to have smashed avocado on toast for breakfast in restaurants, phew…J)

Whilst pressure on hospitality expat salaries and terms will continue, early signs are that well trained, high quality candidates with stable career records will still be a major target for hotel and resort employers, particularly in smaller chains and in the luxury segment.

So in conclusion, 2017 is likely to be a year of uncertainty. My crystal ball is decidedly cloudy, but I draw confidence from the ongoing resilience of our industry and the resourcefulness of the majority of hospitality employees…

Oh, and I think that acai bowl is also going to be around for a little longer…

About the Author

rsz_tim_johns_cc1Tim Johns is a former Hotelier and Managing Partner with Elite Search – a leading hospitality recruitment firm. For more information about Tim and Elite Search visit http://www.elitesearch.com.au and The Elite Hotelier http://www.elitehotelier.net

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