2023: A Year in Review and the Road Ahead
With just a few weeks left in 2023, it’s an opportune moment to reflect on a year that has been as challenging as it has been rewarding for the hospitality sector.
This year, the hospitality industry has continued to demonstrate resilience, adaptability, and a commitment to excellence that has helped to build confidence amongst operators, owners and investors.
The team at Hospitality People Group, including Madison Mayfair, FM Recruitment and HPG Advisory Services are proud to have worked alongside our clients to navigate this evolving landscape. This experience, together with a commitment to share ideas and continuously learn from industry specialists around the world, has given us a unique perspective to share insights to help support our clients’ with their people strategies.
Our team travelled more this year and attended conferences including IHIF in Berlin, FHS in Abu Dhabi and AHC in Manchester. With an even more bustling travel diary for 2024, we have a front-row seat to the vibrant world of hospitality.
The Battle for Retention
One of the most pressing issues this year has been the ongoing battle for talent. The hospitality industry, known for its high turnover rates, has faced an unprecedented challenge over the past few years. The impact of a demographic shift, with nearly half a million less 18 year olds than 10 years ago, was exacerbated by the impact of Brexit and the pandemic. In a time where recruitment is far more challenging, there has been a renewed focus on retention in order to manage employee turnover. The key to this success has been in promoting stronger workplace cultures and recognising that our employees are a far more valuable part of what we offer guests than may have been previously considered. Innovative strategies, including enhanced development programs, competitive compensation packages, and a focus on workplace culture, have been pivotal. When we invest in our people, they, in turn, invest their loyalty and passion in our services.
While we are keen to support our clients and their retention strategies, our core business has always revolved around executive search and we work closely with our long-standing clients and a network of candidates to find ideal matches for available roles. This year we were delighted that some of the candidates we placed took time out of their busy schedules to be interviewed in our Success Stories series. Imran Bhatia, Claire Llewellin-Davis and Natasha Eldred all joined us in conversation to discuss their achievements, inspirations and challenges, as well as to share tips and insights for those who might be considering a career in hospitality.
AI’s Role in Hospitality
The influence of Artificial Intelligence (AI) has been felt across most industries in 2023, and hospitality is no different. While talk about the Metaverse has diminished due to setbacks from major companies like Meta and Disney, AI has gained significant traction, becoming more integrated into everyday technology. AI’s potential in the hospitality industry lies in automating routine tasks, thereby enhancing efficiency and allowing employees to focus on more value-adding strategic and/or guest-facing roles.
This shift may go on to change the nature of the skills and roles required in the industry. In recruitment, AI can streamline processes, reduce bias, and improve candidate engagement, although concerns about AI’s potential to overlook valuable candidates remain. Despite AI’s advancements, we believe that it will not replace human consultants but rather augment their capabilities, allowing them to concentrate on relationship-building, retention, and culture, thereby adding more value to businesses and candidates.
Hotel Investment Trends
The Hospitality People Group team attended a number of hotel investment events throughout 2023 and discovered a number of key themes that ran through them all. The luxury hospitality sector in particular, is experiencing a robust and continuing recovery. Despite the impact of inflation, by focusing on personalised and exclusive experiences to meet the evolving demands of luxury travellers, hotels have been better able to enhance guest satisfaction in this segment, while raising average rates.
Environmental, Social, and Governance (ESG) considerations have continued to grow more central to the industry and are driven by increasing consumer demand for sustainable practices and a willingness from hotel investors to future-proof their investments in the long term. The integration of ESG strategies into operations is evident, though challenges remain in aligning consumer expectations with their willingness to pay for these practices. A recent article from Hospitality Investor also pointed to the increasing risk presented by climate change, but we also learnt that some regions are also using it as an opportunity to extend the summer season.
We have also seen some diversification of the leisure hospitality investments, moving beyond traditional models such as beach and golf resorts to include more varied offerings like wellness retreats and Alpine resorts. This trend highlights a broader investor interest in more sustainable, long-term leisure assets.
Despite challenges in the hotel transaction market and financing landscape, including the gap between seller expectations and buyer capabilities, there remains optimism about the market’s resilience and potential for growth. These trends collectively signal a dynamic phase of innovation and opportunity in the hospitality sector.
The Evolution of Hotel Asset Management
As the hotel investment scene has developed, the role of the Hotel Asset Manager has become essential, serving as a critical link between investors, owners, and operators. In 2023, this position became central to maximising profitability and operational efficiency, while enhancing guest experience and optimising the return on investment. This comes at a time for hotel investment, when investor interest is peaked by industry recovery, yet continues to be mindful of the recent challenges the sector has faced.
Hotel Asset Managers are instrumental in driving financial performance, identifying revenue opportunities, and implementing strategies to safeguard profits in a competitive market. They play a key role in risk management and investment strategy, evaluating market conditions to inform investment decisions and risk mitigation. Additionally, they focus on operational efficiency and quality assurance, ensuring the hotel meets evolving guest expectations and maintains high service standards. Together, this reflects a shift from traditional owner-manager dynamics to a more specialised, strategic approach, designed to appeal to the market.
Looking Ahead: 2024
We look forward towards 2024 with excitement. With plans to attend events in Berlin, Florida, Riyadh, New York, Dubai, Rome, Manchester, and London, we are committed to staying at the forefront of industry trends and innovations. These events are not just opportunities for learning and networking but also a testament to our dedication to supporting and connecting the hospitality world.
The challenges we have faced in this industry over the last few years have only strengthened our commitment with a renewed sense of purpose and a clear vision for the future – where we can help support people strategies that align seamlessly with our client’s business goals.
Here’s to a new year filled with more travels, learnings, and opportunities to redefine the essence of hospitality.
If you would like to have a chat about your people strategy for 2024 and beyond, please get in touch on Tel: +44 20 8600 1166.