When is the "Soft Landing" and How Do We Prepare for it?
DLR Group focuses on design, but we also remain alert to shifts in the economic and business landscape and look to advise our clients on how best to prepare themselves for the opportunities and challenges that lie ahead. In hospitality, there’s a lot of chatter these days about a “soft landing”
Briefly explained: The industry has been hot for several years now, with demand outpacing supply since 2010 and nearly all sectors registering 10% or better growth. Every time people think this won’t continue, it does. That said ... although signs indicate a good, if not spectacular, 2016 (perhaps 6% growth), it seems clear that 2017 will likely bring a significant slowdown, dropping growth to 1% to 2%. If you’re in hospitality, how should you be thinking about things?
It’s Still All About the Experience. Travelers will continue to search for that customized, differentiated experience, and millennials, who are entering their prime earning years even as they remain plugged-in, will continue to push growth. In short, it’s the mix of amenities you’re offering, and how well they are presented (design) and integrated (technology), that matters.
Be Smarter About Business. When it comes to capital investments, there’s a balance to be struck between maintenance and what keeps guests coming. New-build projects will likely ebb in favor of refreshing current properties. During slowdowns, it’s midsize companies — which lack the financial robustness of the big brands and are not quite as nimble as smaller hoteliers in responding to market needs — that are most at risk.
Things continue to feel good in the hospitality industry, and probably will for a little while, but the smart guys are already making their moves for 2017 and beyond. Are you ready for what’s next?