A recent report from Ernst and Young says that the global hotel industry is expected to grow in 2014.
The Global Hospitality Insights Top Thoughts for 2014 report anticipates a strong year for the hotel sector; a turnaround after the last five years saw minimal hotel development and few transactions.
“In general, we expect 2014 to be a signature year for the hotel industry,” says Michael Fishbin, New York-based head of Ernst and Young’s global hospitality practice.
The report predicts the rise in average daily room rates and occupancy, increased market fundamentals and higher per-key prices in hotel acquisitions.
In 2013, Asian investors dominated global hotel transactions, with investors looking for high-quality investments in stable markets. Ernst and Young’s report predicts that Chinese and Singaporean investors will account for more than 60 per cent of the total capital invested in the hospitality sector outside of Asia.
Development activity will be increasing in gateway cities around the world, with Ghana, Nigeria, coastal Tanzania and South Africa seeing significant hotel development. However, investors are still hesitant about investing in sub-Saharan Africa as a result of problems with energy and transportation infrastructure.
The two groups that will have an effect on the hospitality sector in the next few years are millennials and Chinese travellers. It is projected that millennials will make up half of the market within the next year — they current account for one-third of the market. This will affect the services and amenities offered by hoteliers.
“Everything from booking applications for your smartphone to room service ordered from in-room tablets and expanded fee-based loyalty programs designed to maximize the stay experience are being put on the table by hoteliers looking to capture the millennial dollar,” Fishbin says.
Chinese leisure travellers are considered to be the only group that could surpass millennial spending. According to the United Nations World Tourism Organization, Chinese tourists have become the world’s biggest spenders, surpassing the travel spending of both Americans and Germans in 2012.
