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HOTELS

Global Midyear Real Estate Market Outlook 2021
July 29, 2021

After their worst year of performance since the Great Depression, global hotel owners and operators are focused on ways to improve operating performance and asset value.

 

SUMMARY

Top of Mind

Visa restrictions, low wages and competition from other industries have made it difficult for hotels to find the employees needed to meet the rise in room demand. Wages in the sector are rising very quickly.

Outlook

People in heavily vaccinated regions of the world are increasingly traveling to leisure destinations, particularly to low-density rural resorts. Business travel continues to lag. The scarcity of labor, combined with COVID disruptions to the supply chain, has resulted in the first signs of inflated operating costs and forced owners to be creative in optimizing the value of their assets.


LABOR PRESSURES

Hospitality labor shortages and wage pressures are prevalent in many parts of the world, fueled by less fluid immigration policies (Brexit and the U.S. J1 visa program), above-market wage increases for frontline workers in other industries like retail, government subsidies and former hotel workers seeking employment in other industries during the depths of the COVID crisis. As the industry moves forward, owners and operators will seek efficiencies like replacing frontline labor with technology-based solutions where possible. We expect key areas of focus will be the front desk/concierge, food & beverage and housekeeping services.

ASSET OPTIMIZATION

As the speed and extent of recovery for different customer segments and revenue lines become clearer, there will be increased focus from owners and operators on asset optimization—the alignment of services with anticipated demand in order to capitalize on market recovery. Hotel finances have been hit hard by the pandemic and the need to deliver maximum returns at minimal cost will be critical. We will likely see more bedrooms at the expense of traditional meeting rooms, for example, but there is no one-size-fits-all approach. Brand evolution will continue to inform our view of what guests are looking for and new formats suggest that lifestyle, flexibility and design will all have a major influence on booking decisions, regardless of the reason for travel and the price point. Those that deliver value for experience will yield the strongest relative revenues per square foot in the year ahead.

Figure 16: U.S. Hotel Performance by Location Category

2021-midyear-global-market-outlook-figure16-report-wysiwig-1000x536

Source: CBRE Hotels Research, Kalibri Labs.

Figure 17: U.S. Hotel Labor Costs by Property Type

2021-midyear-global-market-outlook-figure17-report-wysiwig-1000x533

* Includes salaries, wages and employee benefits.
Source: CBRE Hotels Research, Trends® in the Hotel Industry.

Global Midyear Real Estate Market Outlook 2021

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Contributors

Joe Stather
Associate Director, OPRE, Hotels
+44 2071822523
+44 7990692910