The Skift Global Forum brought travel’s most powerful people to New York, where they discussed some of the industry’s most important issues. What stood out from the event?
08.09.2024 - 14:11 / skift.com / Sean Oneill
Hotel earnings season has ended, so Skift reviewed what executives at hotel companies belonging to the Skift Travel 200 (ST200) said. We looked at companies beyond the half-dozen largest hotel groups.
Here are seven themes that stood out.
Perhaps the most used term on earnings calls was “normalization.” Much media coverage has focused on the revenue side, as leisure travelers pull back from their post-pandemic surge while business travelers return to booking Tuesday and Wednesday nights at past levels.
Less discussed has been how the cost side of the hotel business is also normalizing. Executives are pleased to see inflation moderate, and supply chain issues ease.
Exhibit A: Apple Hospitality, the largest real estate investment trust that owns hotels, said its labor costs are easing. A more competitive job market is leading to higher worker retention at its 224 hotels on average. Contract workers now comprise 8.6% of staff, down from 10.6% a year ago.
“With lower turnover and less reliance on contract labor, we are better positioned to drive incremental property level productivity,” Knight said.
CEO Justin Knight sees an upside in the return of business travelers. Their midweek stays are less costly to service than leisure guests’ because they are typically in and out. If leisure travelers become more price-conscious, rising numbers of business travelers could offset some pressure.
Chatham Lodging Trust, which owns nearly 40 U.S. hotels, said it was pleased to see a taming of operational cost inflation beyond wage hikes. However, Dennis Craven, chief operating officer, said some costs were still spiking.
During the second quarter, the cost of serving complimentary breakfast was up 21% year-over-year, hitting margins by approximately 30 basis points. Property insurance premiums were up almost 20%, hitting margins by about 20 basis points.
When asked by Skift for more color, Craven said the spiking cost of free breakfast reflected “a combination of inflation as well as brands requiring more items in the face of inflationary pressures impacting owners.”
He added that, in addition to property insurance, healthcare insurance for employees has also “gone up double digits for probably the last decade, which is egregious.”
When times were tough, hotels used to run sales to put heads in beds and chase occupancy. But more recently, hoteliers have tolerated vacancies to try to sustain their pricing power with consumers who remain willing to spend.
In London, PPHE Hotel Group (formerly Park Plaza Hotels) talked about its approach to managing its roughly $2 billion portfolio.
“We try to find a balance between rate and occupancy,” said Robert Henke, executive vice president of commercial affairs.
“Rate gives us
The Skift Global Forum brought travel’s most powerful people to New York, where they discussed some of the industry’s most important issues. What stood out from the event?
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