HOSPITALITY


THERE WAS no let-up in the post- pandemic recovery of demand for hospitality. The Deloitte hospitality and leisure team described the last 12 months as “very strong”, noting: “Some of the performances, particularly in the Mediterranean, have been exceptionally strong, well above 2019 levels, especially on average daily rates and especially in the luxury segment. “What seems also to have happened


is the shoulder periods have extended as people looked at the pricing in peak season.” However, the team noted: “There


are headwinds, especially on the cost side. The lack of ‘distress’ is surprising given we don’t just have increased costs, we have higher interest rates. From an investor perspective, that is applying a lot of pressure. The only reason that has not filtered through is because average [room] rates have gone through the roof. “London had a strong recovery. The


average daily rates (ADRs) at the top of the market were eyewatering, though below what was achieved in some Italian cities and a good 10%-15% below Paris. “Corporate travel is not fully back. A


Deloitte survey looking at the corporate travel recovery in the US and Europe found


expect a return to more normal performance


The pent-up, post-pandemic demand may have worked through the system


the overarching sentiment was that we would be at a normalised level by Q3 2024. “The survey also looked at how many


companies track their carbon footprint, how many recommend how to travel, how many restrict ways to travel and how many forbid certain types of travel. A huge percentage have an indication of their impact but are not mandating certain types of travel. That is going to change. There is going to be an increasing focus on this in corporate contract negotiations. We have clauses in our contracts around working flexibly and wherever possible looking not to travel.”


LABOUR AND COST PRESSURES “We thought cost pressures were going to have a more severe impact, but people have found ways to mitigate some of the pressures around labour. The big issue is interest rates. For an investor, if your debt servicing has doubled, that is a big chunk out of your bottom line. “The jobs market has cooled a bit


HOSPITALITY leaders see skilled labour shortages remaining a challenge in 2024, ahead of rising costs (Figure 57)


FIGURE 57: RISKS TO HOSPITALITY IN YEAR AHEAD % of hospitality leaders & investors


83% Rising costs 74% Rising interest rates 87% Skilled labour shortages


83% 85%


Increased staff wages 0 2023 2024 20 40 % 60


76% 81%


80 100 Source: Deloitte European Hospitality Investment survey, November 2023 89%


and people have adapted their operating models, having staff work more flexibly and in some cases paying them more. Businesses have also thought about how to create a better working environment. “One of the great things about


hospitality is it creates a huge number of entry-level positions with not huge amounts of training required. But the working hours can be unsociable, with split shifts. The challenge is how to get rid of some of that when competing for staff. There is a lot of talk at industry events about how to create a career path. Historically, you could start working as a waiter or at a front desk and work your way up. We don’t think people see hospitality the same way as 20-30 years ago. So, there is an educational aspect. “There have been a couple of


initiatives to showcase career paths. There have also been initiatives around bringing in people from more economically or socially challenged backgrounds. But this


Travel Weekly Insight Report 2024 45


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