Here are the key issues of concern to the industry’s owners, investors, lenders and operators in the coming year:

  • With the hospitality market in the early stages of recovery, a significant amount of equity has been raised and targeted toward hotel investment under a range of strategic alternatives. As a number of hotel companies, real estate funds and other owners have flooded the market with “for sale” assets, the volume of transactions is expected to increase significantly.

 

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  • As hospitality development becomes more varied and complex, with multiple real estate uses and intricate capital structures, including condo hotel projects, the selection of an appropriate management company will continue to be important.

 

  • Because energy is an essential commodity and a major operating cost, energy management will become an even more important area for management focus and innovation.

 

  • Because of its labour-intensive business model, the hospitality industry is vulnerable to market pressures on benefits, compensation and related human capital programme expenses.

 

  • The downturn in the economy in the past few years has contributed to a reduction in tax revenues and increasing city and state deficits. The public sector is looking more proactively to tourism to enhance revenues to combat such deficits. Cities and states are assessing their current tourism infrastructure and developing strategic marketing/economic plans to create a sustainable tourism market with improved infrastructure, anchor attractions, and both public and private support and investment.

Jan Siemons is a partner in Ernst & Young.

E-mail: jan.siemons@nl.ey.com