2017 is right around the corner, so AETHOS Consulting Group is sharing some "predictions, concerns and issues" for the coming year. AETHOS Managing Directors Chris Mumford and Thomas Mielke, both based in London, shared some insights about the trends that will have the biggest impact on hospitality in Europe, the Middle East and Africa. Here are some top takeaways.
1. Talent management
Labor and compensation topics–driven by political shifts and policy making–will dominate the operators' agendas. Mumford believes that cross-border movement of labor will dominate the news in Europe with the future of the EU in question. Hospitality markets such as the UK, traditionally so reliant on an immigrant workforce, will face the challenge of where to find new sources for staffing. Mielke predicts that this will result in companies having to review their compensation best practices to attract more local talent or to make it worthwhile for foreigners to jump through the additional administrative hoops to secure work. Profit-participation schemes may be part of the solution. Mielke also believes that this "talent squeeze" will have hotel and restaurant companies seriously re-evaluating their talent management programs in 2017, keen to ensure that there is a sufficiently strong internal development pipeline to fill the gaps.
2. All about the regions
Regional performance and investment activity will be a highly fragmented picture for the EMEA region. Mielke predicts that Spain in particular, where tourism has benefited from turmoil and unrest elsewhere, will perform well in 2017 and attract heightened investment activity. B&B Hotel's acquisition of Sidorme and HI Partners' joint-venture with Starwood Capital are indicators of what is coming. The continent's economic powerhouse–Germany–will continue to be an "investor's darling" and a safe haven (despite the upcoming election). The rapid expansion and performance of the likes of Novum Hotels or the HR Group on the operator side, and Art-Invest or Invesco on the investment side, are testaments to that. Looking at the Middle East, Mumford believes that the UAE and Qatar will dominate, but will have to balance managing growth targets with the fluctuations in oil prices impacting regional travel. The region's mid-market and limited service product offerings will continue to grow. Overall, he adds that Asian money will continue to drive transaction activity in Europe — albeit at a slower pace in Europe where Brexit-related uncertainty in the UK will make investors take pause.
3: Best practices
Mielke believes that given heightened cross-border investment activity, as well as the prevalence of a few key players who are looking to further diversify their global investment portfolio, the potential for conflicts of interest to arise will increase, from "insiders" at the board level or the creation of potential monopolies. The very public shareholder dispute of NH Hotels with HNA will have served as a wake-up call for other companies to be prepared for their board to pass the scrutiny of the strictest corporate governance best practices. On the subject of governance, Mumford expects that 2017 will see more women appear on company boards as the gender diversity agenda continues receiving a big push.
4. Growing brands
Mumford believes that Rosewood will be the luxury brand to make "the biggest splash" in EMEA and Asia. Yotel will dominate the affordable lifestyle segment. Mielke foresees a continued "WeWork-ification" of the hotel industry—shared spaces that mix work and social aspects. Companies similar to citizenM, 25hours, Hoxton, Zoku or—the latest addition—LYF by Ascott/CapitaLand will become more popular in 2017.