by Steve Kirby, Managing Principal
Throughout 2022, resilience will be the word heard most frequently in the lodging industry . Over two tumultuous years – through disease, labor shortages, supply chain issues and inflation – the hospitality industry has faced the challenges, reshaped itself, and moved ahead. The second most frequent reference will be hope. Hope that the issues out of our control will stabilize themselves, that we can adapt to them, and that we might enjoy normalcy in some reasonable fashion.
People in the lodging industry demonstrate its resilience. People power hospitality and enable its ability to anticipate, react and triumph over challenges. Few industries in the United States reflect the population as much as the hospitality industry. The forces that have caused many to leave their positions, whether due to fear of disease exposure, government subsidies, alternate opportunities, and so many more, should be alleviated over time. Wages will rise as the demand for labor balances with necessary staffing levels. A fundamental shift in the labor/management relationship has occurred and will ultimately change the way operators hire and staff facilities. A major demand by workers seems to call for more “flexibility”. To get the best personnel, smart operators will adapt. All of this will contribute to inflationary pressure and room rates will follow. New technologies are already being utilized from self check-in kiosks via mobile phones to robot workers in housekeeping and room service in the back of the house.
The flow of offshore goods will stabilize gradually, as will the operational models of various service industries. Supply and labor changes are nothing new and, over time, will reach equilibrium. Those that adapt quickly will profit, while those that don’t adapt will fail.
Destination locations have allowed many properties to thrive over the past two years. Leisure travel has carried the industry to new peak levels on a number of metrics and that trend seems very likely to continue in the coming years. While business travel has been slow to return, it WILL return, as the best way to do business is face to face. Many “road warriors” are anxious to get back out there, and as competition sharpens, their competitors will also be on the road. Group business, fueled first by social activities and more recently, conventions and seminars, is also recovering. This growth should happen in 2022 on a substantial level.
Lodging is a hugely popular real estate sector now. 2020 transactions were low, based on uncertainty over the first phase impacts of Covid with few buyers willing to pay for assets. In 2021 buyer demand soared, along with prices, as few opportunities were available for sale. The good news for sellers was that there were many more “eyes” on fewer offerings; the bad news for buyers, even those with very deep pockets, was that competition for available product was fierce. We foresee 2022 having some similarity to 2021 but we do anticipate substantially more properties to be marketed as owners attempt to monetize equity positions. Some of the long awaited distressed assets will finally come to market.
2022 looks promising for lodging real estate, Mumford Company starts the year with a wide array of solid listing opportunities and a strong pipeline of deals slated to close early in the year.
How can we help you this year? Buying, selling, considering either or both? Our brokerage, analytic, marketing and administrative teams are available to assist you with your 2022 objectives!
