This time last year we were all looking forward optimistically to a period of growth following two years of COVID-19 restrictions. Few would have foreseen Russia’s invasion of Ukraine and the inflationary crisis that impacted much of the world.
Many countries such as the UK are potentially already in recession and the head of the International Monetary Fund has warned that a third of the global economy will be in recession this year.
The next twelve months are going to be hard to predict… but we managed to find a few people willing to gaze into their crystal balls.
Below you’ll hear from:
- Jon Colley, executive VP of acquisitions and development, PPHE Hotel Group
- Michael Grove, chief operating officer, HotStats
- Roger Allen, global CEO, RLA Global
- Seán Worker, founder and principal, T5 Strategies, & AdaptersTECHX
- Tiago Venâncio, senior hotel development EMEA at Fosun Tourism Group
Hospitality Insights: What is the main focus for your business in 2023?
Jon Colley: Growth – both in performance and portfolio. Keep the focus on budgets and continue to roll with whatever operational punches we face in 2023. In addition, I hope that we will see some sensibly priced transactions in our target markets – we are still keen to grow our portfolio. It’s also an important year for art’otal brand with Battersea (soft) opening and Rome.
Michael Grove: We plan to continue to work with our customers to develop further insight into operating performance and use of data to make better strategic decisions.
Roger Allen: We will continue supporting government tourism developments and assisting clients in the resort destination business. We will focus on helping them better position their rates to maximize their results in the luxury segment, while on the other end of the spectrum, in the budget-focused segment, we will provide assistance in ensuring that clients can cater to a market that may be faced with economic challenges. For both of these products, we'll be also looking to support clients in extending the peak season and optimizing financial performance in the shoulder season.
Seán Worker: Volatility is expected and our business advises on solving business, strategy and communication problems. We expect 2023 and 2024 to be active.
Tiago Venâncio: We want to continue our growth push to become a leader in the luxury lifestyle sector in EMEA region, whilst reinforcing our unique concepts as a differentiation point to our peers.
Hospitality Insight: Are you optimistic or pessimistic for the hotel industry in 2023?
Jon Colley: I am forever a salesman, my glass is also half full!! Whilst the performance is holding up, history shows us that there can be good deals done out of distress – which we must see?
Michael Grove: Overall, optimistic. Rates have been repositioned, most segments seem to be recovering and there is an evident and continued focus on the cost lines.
Roger Allen: I'm fairly optimistic about the luxury end of the market, which is well-positioned to stay resilient amid uncertainties about general hotel demand caused by increased energy prices and higher inflation. Luxury properties traditionally find it easier to increase room rates to offset higher operational costs as their guests tend to be less price-sensitive. I think this resilience, combined with sustained demand from wealthy travellers who are insulated from cost-of-living problems, may support continued recovery in the luxury hotel market.
Seán Worker: It’s neither, it’s continuous tacking into the wind. We have yet to find calm seas and the next couple of years will likely test our skills. Likely decreases in ADR and increased costs may well become a buying opportunity for many.
Tiago Venâncio: We remain optimistic for 2023 but aware that there will be less disposable income in some parts of the market. Luckily for Casa Cook and Cook’s Club, being on a lifestyle concept helps, as people still want to travel, and they chase experiences more than hotels – which is what we deliver with great success. We still think we are going to overachieve our own expectations; such is the strength of our concepts and partners.
Hospitality Insights: Do you think the economy will get better or worse in 2023?
Jon Colley: Worse, then better – I know that doesn’t actually answer your question but I do think we will have a tough time in Q1/Q2 and then improvement after that – but who knows?
Michael Grove: I think it is evident it will be much worse than 2022, albeit improving quickly in the 2nd half of the year as inflation is brought under control and the post-pandemic challenges start to normalise.
Roger Allen: I hope we won't have new shocks in energy prices and key economies will be able to avoid recession next year. As for tourism, costlier air tickets, higher power and gas bills and the expected decline in household disposable incomes are bad news for most hotels, which could see demand growth decelerate going forward. But pent-up travel demand could continue driving recovery, especially in high-end tourism. The pandemic has expanded the group of wealthy travellers luxury resorts can target and affluent customers still tend to prioritize travel over other types of spending following Covid-related restrictions.
Seán Worker: The four and half horsemen of Interest Rate hikes, demand rebalancing, stubborn Inflation, increased operating costs and the shadow of war contagion will keep us all sober. However, so far travel is still on many businesses and leisure user’s radar. Assets managers and operators will need to work hard to sweat assets and drive efficiency. Those that embrace next gen business models will do well over the long-term
Tiago Venâncio: I think the first quarter will be tough. You can already see it around you in this last quarter of 2022, but I believe things will pick-up quickly once we come to Spring and travel will continue its push for growth and expansion, as we will also continue to bring Casa Cook and Cook’s Club to new markets.