IHIF 2023: Key Highlights and Insights Shaping the Hospitality Industry
The International Hospitality Investment Forum (IHIF) 2023 recently concluded with the theme “Fortune Favours the Bold”. This year’s event brought together a diverse group of industry leaders and experts to discuss the latest trends, challenges and opportunities in the dynamic world of hospitality. Here, Hospitality People Group’s Dan Akhtar and Mara Cattaneo share their highlights and key insights that continue to shape the hospitality landscape.
The Battle to Attract & Retain
Earlier this year Hospitality People Group published an article on The Battle for Retention, that spotlighted the challenges that the hospitality industry continues to face, so it was no surprise that this topic took centre stage in Berlin. Jan Hein Simons, Hotels Director at Colliers specifically highlighted labour shortages as the major industry challenge, and said that “some companies had been turning down revenue because of a lack of staff.” Participants explored the increasing competition to attract and retain skilled professionals in an ever-evolving job market. As the industry faces a growing demand for talent, strategies and initiatives were shared to address this challenge. These included innovative recruitment practices, talent development programs, and creating a positive work culture to attract and retain the best talent available.
Focus on Luxury
We found that there was huge optimism for the ongoing recovery of the luxury hospitality sector. The event shed light on the evolving expectations of luxury travellers and the growing demand for personalised and exclusive experiences. Concepts such as hyper-personalisation, unique amenities, and curated experiences were discussed as key drivers to enhance guest satisfaction in this segment. While the labour shortage has certainly affected the luxury segment’s ability to fill hotels, they have also been far more successful in passing increased room rate onto their guests than midscale properties, leading to ADRs that are already well ahead of 2019. The integration of cutting-edge technology and partnerships with luxury brands were also highlighted as strategies to provide unforgettable and personalised luxury experiences.
ESG Goes Mainstream
The development of Environmental, Social, and Governance (ESG) considerations from a niche subject to centre stage at IHIF 2023 is remarkable. It clearly signals a willingness to shift towards more sustainable and responsible practices in the hospitality industry, driven by increasing consumer demand and regulatory requirements. However, it is still not clear that what consumers demand, and what they are willing to pay for are quite the same. Attendees discussed how governmental policy would likely drive the implementation of ESG strategies, including energy efficiency programs, waste reduction strategies, community engagement, and ethical sourcing. Overall, establishing your company’s values and beliefs and clearly communicating them with potential employees as well as customers seemed to be a growing trend and excellent advice to businesses looking to grow, attract investment and/or win the battle for retention.
Subdued Hotel Transaction Market
From our experience at IHIF, there is usually a news ticker sharing updates on the various deals that have been struck during the week. This was noticeably absent this year and points to a hotel transaction market that remains subdued, with a gap between seller expectations and buyer financing capabilities. While it seems clear that there is capital available, rising seller expectations and the subsequent lack of distressed assets, coupled with the increased cost of debt have made financing a challenge for potential buyers. Despite the challenges, participants expressed great optimism about the market’s resilience and the potential for future growth.
Participants highlighted the increased cost, and reduced accessibility of debt financing in the hospitality industry. However, it was noted that lenders are still open to financing projects that demonstrate institutional appeal and align with their investment criteria. Factors such as sustainable themes, commitment to the hospitality sector, and desirable locations were identified as crucial elements in securing financing for hospitality projects. Alternative financing options, such as private equity and crowdfunding, were also explored as viable alternatives to traditional debt financing.
The Potential of AI
The potential of artificial intelligence (AI) to transform the hospitality industry was widely discussed at IHIF 2023. Participants delved into the various applications of AI, and how it could be leveraged to address the biggest challenges in the industry. Reducing the impact of mundane tasks on hospitality employees would likely increase employee retention. AI could also help with elements of the customer journey that are not considered to be drivers of delight, such as cleaning rooms, allowing the potentially reduced workforce to concentrate on ‘value-adding’ activities The event showcased pilot projects and initiatives that leverage AI technologies, such as chatbots for personalised guest interactions, smart room controls for enhanced comfort and convenience, and AI-powered data analytics for market trend analysis and predictive modelling. While AI is still in its early stages, industry leaders expressed optimism about its ability to revolutionise how hotels operate and deliver exceptional guest experiences.
IHIF 2023 provided a platform for industry professionals to gain valuable insights into the current state and future direction of the hospitality industry. The event emphasised the need for bold strategies and innovative approaches to address challenges such as the Battle for Retention, the evolving demands of luxury travellers, the mainstream adoption of ESG practices, the subdued hotel transaction market, financing challenges, and the future potential of AI. As the industry continues to evolve and build resilience, a forward-thinking mindset will be crucial to thrive in a rapidly changing landscape.
If you would like to discuss any of the topics raised in this article or would like to chat about your people strategy, then please get in touch.
Dan Akhtar, Managing Director of HPG Advisory Services +44 20 8600 1166 / +44 7808 157796 / firstname.lastname@example.org