The future is bright for the hospitality industry
 
The future is bright for the hospitality industry
14 DECEMBER 2018 8:13 AM

As the number of travelers continues to rise and the labor market becomes stretched, is there reason for hope in the next generation of hoteliers? Absolutely.

The hospitality industry is as strong as it’s ever been — and growing. The World Travel & Tourism Councilreports the industry’s total contribution to global GDP stood at more than $8 trillion*, or a 10.4% share, in 2017. The group further predicts the travel and tourism business will take a bigger slice of GDP next year, with an estimated jump of 4%. By 2028, the industry is on track to account for 11.7% of GDP, or, in dollars, $12.4 trillion*.

Spurring that growth is increased international travel. People from all parts of the globe now dart to destinations beyond their borders. According to the World Tourism Organization, an arm of the United Nations, overnight stays by international travelers worldwide grew by 7% last year. The WTO estimates the percentage of global tourists venturing outside their countries will rise another 4% to 5% this year.

To make sure those travelers experience a wonderful and relaxing visit, the industry needs a large workforce spanning from support staff to upper management. Worldwide, direct travel and tourism employment reached 118.5 million jobs, or 3.8% of total employment across the globe, according to the WTTC. By 2028, the industry is expected to employ more than 150 million individuals, pushing the percentage of total employment to 4.2%.

In the U.S., employment in the leisure and hospitality sector has been on a steady rise since 2008, going from 13,542,000** at the beginning of that year, to a projected 16,410,000** in October (seasonally adjusted), reports the Bureau of Labor Statistics. Again, those numbers are projected to climb as hoteliers plan to bring on more workers. When ManpowerGroup recently polled 11,500 employers in the U.S. about hiring intentions, leisure and hospitality topped the list with a projected increase of 28%.

While a booming industry is welcome news, the challenge becomes filling the ranks with the next generation of executives who can anticipate and navigate hotels through shifting consumer tastes and unanticipated disruptors. Did anyone see Airbnb coming? Fortunately, a recent competition for hospitality degree undergraduate and graduate students—for which I served as a judge—assured me the industry will be good hands and led by smart, creative thinkers.

The competition
During the HX: The Hotel Experience event held in November at the Jacob K. Javits Convention Center in New York City, I was honored to serve among the notable industry judges for the fourth annual STR Student Market Study Competition. This year, 42 undergraduate and graduate teams from as far away as Australia, Hong Kong and the Philippines were among the participants. (STR is the parent company of Hotel News Now.)

Each team dove deep into the marketplace of their choosing. Students based their study mostly on STR data, with each study presenting a thorough picture of the dynamics of the market and its challenges. The students analyzed leading indicators including RevPAR and occupancy, as well as historical trends and demand generators. The market’s performance was also compared to similar destinations.

The teams that stood out to me dug even deeper into the market beyond their required data points. These students not only analyzed the numbers, but also researched the factors influencing the data. In other words, the standout teams didn’t take the figures at face value. Rather, they strove to identify the undercurrents in the marketplace affecting a particular benchmark, such as average daily rate or occupancy. The students recognized that data provides important industry stats, but doesn’t necessarily tell you the whole story of what is actually happening in a market.

The winning undergraduate team from Virginia Tech University, as well as the other runners up, did a phenomenal job of understanding the whole story. The Virginia Tech team really dug into the hotel market of Richmond, Virginia. Not only did the Virginia Tech students draw upon the STR data, they researched other reports, and interviewed GMs, directors of sales and marketing, and convention center officials to really understand the forces at work in the market. They studied how different demand generators—transient and group—played against each other and influenced the city’s hotel business.

By the conclusion of their presentation, the Virginia Tech team shared recommendations as to how the market could improve. Their insights were so thorough, I left their presentation truly knowing Richmond’s lodging sector.

The future is bright
I was impressed by all the students, not just the winners. Two things in particular stood out to me.

First was the international reach of the competition, with several teams from outside the U.S. Here in the U.S., we tend to focus on our domestic markets, but the hotel industry is a global business and the visiting overseas teams reminded us that international markets indeed face the same challenges.

Secondly, how impressive it was that every team acknowledged those challenges. They commented on the impact of the sharing economy and how it’s influencing the travel industry within their own markets in their own countries. Since Airbnb and other peer-to-peer online rental platforms are a relatively new phenomenon, I was pleased to see students and their educators weighing the ultimate effect the sharing economy will have on the hotel industry.

Participating as a judge for this specific competition assured me that our future leaders are prepared to confront any fresh challenge the industry faces in the future. I can only surmise that it looks as if we’re going to be in very good hands.

Gary Isenberg is president of LW Hospitality Advisors Asset & Property Management Services. With more than 30 years of diversified hospitality experience in Hotel Management, Finance, and Asset Management, Gary’s expertise includes third party asset management, serving as an owner’s representative, due diligence for real estate investors, and development services to negotiate management or franchise agreements. His asset management specialties include, among other services, capital budgeting and PIP costing as well as internal control and accounting.

The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

*Correction 19 December 2018: A previous version of this article misstated the hotel industry's contribution to GDP.

**Correction 19 December 2018: A previous version of this article misstated employment figures for the hospitality and leisure sector. 

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