From the desks of the Hotel News Now editorial staff:
- Oyo to invest $300 million for US expansion
- Patrick Mullinix forms Advantage Hotels
- 5 obstacles to the evolution of revenue management
- Fed won’t cut rates until 2020
- ‘Dynamic factors’ supporting Puerto Rico’s comeback
Oyo to invest $300 million for U.S. expansion: Oyo Hotels & Homes will invest $300 million in its U.S. expansion, Bloomberg reports. The company opened its first U.S. hotel at the beginning of 2019 and believes this investment will lead to the type of growth in the U.S. that it has seen in India and China.
Following its first U.S. hotel earlier this year, Oyo’s now has properties in Dallas, San Antonio and Houston, according to the article. CEO Ritesh Agarwal told the news outlet the funds will be used to build out technology, design and operating teams and to renovate U.S. properties.
The company is “adding hotels the pace of one a day, and aims to expand its U.S. offerings at five times that rate by the end of the year.” But Agarwal said the focus is on building a good product, so “if that means three a day and not five a day, life goes on.”
Patrick Mullinix forms Advantage Hotels: Industry veteran Patrick Mullinix has formed Advantage Hotels and acquired brands Vista and Select Inn from Advantis Hospitality Alliance, according to a news release.
“Advantage will be more of a franchise family that looks at business a bit differently,” Mullinix said in the release. “We understand individual needs, so our cornerstones will be customizable solutions for every owner and a highly responsive staff. Franchise owners will also enjoy reasonable fees, innovative programs, comprehensive resources, an advanced reservation system that offers uncompromised, discount pricing for the technology, and dedicated marketing and operations support that all contribute to increased profitability.”
Select Inn is an upper economy brand, with properties across Minnesota, North Dakota, Tennessee and Texas. Vista Inn and Vista Inn & Suites are midscale brands, with a presence in Florida and Tennessee, according to the news release.
5 obstacles to the evolution of revenue management: The evolution of the revenue-management discipline to focus more on strategy is a continuing effort, but there are a few key areas that need some improvement, writes Hotel News Now’s Sean McCracken from the 2019 HSMAI Revenue Optimization Conference.
Dave Roberts, a professor at Virginia Tech University and former SVP of consumer insight and revenue strategy for Marriott International, offered fives ways hoteliers can help ease the process. One hurdle he highlighted was the hotel industry still struggles with forecasts, both in overall accuracy and knowing when to best use them.
“If I’m forecasting demand to be 50% of capacity but it turns out to be 40%, that’s a horrible forecasting error, but it also doesn’t matter because it doesn’t change you how price your inventory,” he said.
Fed won’t cut rates until 2020: The Federal Reserve said on Wednesday it doesn’t anticipate any rate cuts to happen this year, but they likely will occur in 2020, according to CNBC. The median target for the federal funds rate remains unchanged for 2019 at 2.4%; however, eight members of the Federal Open Market Committee noted they are in favor of one rate cut this year.
The Fed lowered its expectations for future years, and nine members of the committee indicated they expect the rate likely will approach 2.1% near the end of 2020, below the previous outlook for 2.6%, the article states. The central bank announced the target range will remain between 2.25% to 2.5%.
Interest rates have not been trimmed since the financial crises, the news outlet reports, “but recent reports of softer jobs data and consumer price inflation have led economists to predict that the Fed may cut rates as a preventative measure.”
‘Dynamic factors’ supporting Puerto Rico’s comeback: A new report from JLL states Puerto Rico’s lodging market is poised for a comeback following past crises, due to investment opportunities, economic incentives and efforts from both Puerto Rico’s government and the U.S. government, according to a news release
The Puerto Rico Hotel Destinations Report states that by 2020, about 2,400 hotel rooms are expected to be reintroduced to the market. Another 850 new rooms are currently under development, the report states.
“Spurring tourism development is a priority of the Government of Puerto Rico. The Island’s ‘Open for Business’ policy, strategic geographic position, air and maritime access, modern infrastructure, and highly skilled bilingual workforce coupled with unprecedented incentives packages make it a fertile environment for hospitality industry investors. In addition, Puerto Rico is under the U.S legal system with financial sectors regulated by the FINRA, SEC and FDIC and part of the U.S. free trade zones and custom system. The combination of these characteristics and unique advantages make Puerto Rico the ideal destination to invest in right now” Carla Campos, executive director of the Puerto Rico Tourism Company, said in the news release.
Compiled by Dana Miller.