Labor remains a concern for asset managers

WASHINGTON—Asset managers gathered here at the Marriott Marquis Washington, DC to discuss the latest issues facing the hospitality industry at the Hospitality Asset Managers Association (HAMA) Spring Conference.

Source: HAMA Spring 2019 Industry Outlook Survey

“The HAMA conference included the perspective of owners, investors and brands, and their view of markets and the current trend and potential of future entity consolidation,” said Tim Dick, SVP of HotelAve and the 2019 president of HAMA. “We also heard from ISHC and HAMA representatives on the most recent CapEx study, which once again indicated that reserve for replacement continues to be underfunded, causing some delays in renovation and, oftentimes, recapitalization to accommodate the expense of refurbishment.”

At the conference, Aran Ryan, director of lodging analytics, Tourism Economics, an Oxford Economics company, updated attendees on the company’s economic forecast; and social media expert Ari Greenberg, president, BCV, and Brian Crawford, EVP of government affairs, American Hotel & Lodging Association (AHLA), provided their perspectives on industry issues.

HAMA also released the results of the latest survey of its members on issues facing hospitality. “The survey supports the discussion, concerns and risks as identified by the participants, particularly as it relates to labor issues—availability and costs,” said Dick. “Most of the survey respondents do not see any change from the previous year with regard to growth projections, but respondents do increasingly think that the months remaining in the RevPAR growth cycle have grown in the ‘less than six months left’ category—which indicates near-term risk for RevPAR growth.”

When asked which trends they are concerned about negatively affecting their portfolios’ results in the next three years, more than 50% of respondents said labor costs. “Labor continues to be an issue for the hospitality industry,” he said. “This includes both the lack of skilled and qualified labor at all levels and the rising cost of labor.”

Supply growth (20%) and health of the U.S. economy (15.56%) were the other two top concerns. 

When asked about those OTA commissions, nearly 87% of respondents said that hotels are “winning and we are seeing the impact on our financials,” “winning, I think, although the benefit is not fully felt” or “maintaining.”

Dick said he was surprised that “an increasing number of respondents think that the battle over OTA commissions is being won. Since there hasn’t been significant change, one would think that the survey would indicate no change or maintaining.”

When it comes to immediate investment plans, one-third of respondents plan to dispose of properties, while nearly 28% are pursuing acquisition opportunities. Despite this, a majority of respondents (56.67%) indicated that the RevPAR growth cycle has seven to 18 months remaining. HB

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