New research urges hotel investors to transform recruitment strategies and be careful about rate rises.

In a recent research study conducted by JLL – one of the world’s leading real estate consultancies – it was found that the EMEA hotel sector is turning a corner and performance is finally nearing pre-pandemic levels.

In the region, the UK, UAE and Qatar are predicted to post higher ‘revenue per available room’ than in 2019 – demonstrating the growing strength of the sector following a difficult few years.

According to analysis in the Hotel Global Asset Management Report, the sector has ‘turned a corner’ and performance is nearing pre-pandemic levels.

The research looks ahead to a complex economic environment in 2023 and sets out a series of recommendations for investors to ensure they can optimise profits and mitigate risks.

However, in the face of a complex economic environment and rising inflation, the Hotel Global Asset Management Report warns that hotel investors must transform their recruitment strategies and be careful about rate rises if they are to build on the sector’s recovery.

In response to staff shortages in a tight labour market, JLL experts urge consideration of new labour strategies to help maintain quality, from investing in automation software to designing creative pay and work structures.

JLL also warns against rate rises in response to inflation unless they can be matched by improvements in quality. Instead, hotels should look to offset inflationary pressures with careful analysis of operational costs and identify possible cost-efficiencies, such as in energy/water use or even food and beverage costs.

The new report also sets out new opportunities emerging from changing trends in the sector. For example, corporate groups now have different needs in the hybrid working world as they look for shared experiences like culinary classes and wine tastings while weddings have come back at a quicker pace than expected and digital nomads are a growing customer sector with specific requirements.

Lastly, JLL recommends focussing capital expenditure on improving the physical product, such as renovating rooms, in response to the high number of new hotels entering the European market. This will enhance the value of the real estate and protect market share against new competition.

Rastko Djordjevic, Head of Asset Management, Hotels & Hospitality, EMEA, said: “There is no doubt we have turned a corner this year in the sector and Europe has led the way as we recover to average rates above pre-pandemic levels of performance. But a range of factors, from fears of recession to the Ukraine/Russia war, rising energy prices and labour costs make for a challenging outlook next year.

“At a time of economic uncertainty, we expect the hospitality industry to continue its recovery but possibly at a slower pace. Hotel owners and operators can give themselves the best chance to succeed in this new environment by controlling their energy consumption and payroll, embracing creative solutions to attracting demand and maintain high service levels.

“Owners and operators will need to embrace a defensive approach to asset management, remaining razor focused on their operating structures as they continue to navigate the challenges of running a hotel during such unprecedented times. As such, the role that hotel asset managers play continues to be critical, with hotel owners requiring strategic management of their hotel portfolios.”