Hotel Index Performance
The hotel index overperformed the broader NASDAQ market and underperformed the S&P market over the three months ending September 30, 2024, posting a gain of 4.26%.
Leading Industry Indicators
Sources: 1CoStar September Monthly Hotel Report and
2Ankura Q2 U.S. Economic Overview
Year over Year Change Ending September 30, 2024 (RevPAR, ADR, OCC,
CCI, GDP, CCD, AIR)
The Big Story
The hotel industry has undergone rapid growth over the last decade with industry leaders increasing their top line revenues through acquisitions, which has ultimately led to unprecedented brand saturation. With over 17.5 million guestrooms across 187,000 hotels worldwide, the landscape has shifted from limited choices to a highly competitive market featuring over 1,200 hotel brands, including major players like Wyndham Hotel Group and Marriott1.
In this crowded market, hotels must develop unique value propositions to stand out. The saturation presents challenges in brand differentiation and increased operational costs but also offers opportunities for targeting specific market segments, such as wellness hotels or accommodations for digital nomads. To manage brand saturation strategically, hotels need to create unique guest experiences, leverage loyalty programs, and consider consolidating brands2.
Sources: 1New York Times and 2Cloudbeds
Largest Global Brand Owners
Brand Outlook Across The Industry
The future of the hotel industry will require adaptation to changing guest expectations and emphasis on lifestyle-oriented and experiential offerings. Success will depend on hotels' ability to differentiate strategically, segment their target markets effectively, and innovate in response to consumer preferences, technological advancements, and the balance between brand proliferation and market demand1.
Source: 1Cornell Peter and Stephanie Nolan School of Hotel Administration
The Role of Finance in Branding Issues
CFOs and their organizations should be well integrated into marketing budgeting and reporting processes to ensure branding and marketing strategies are bolstering profitability – not detracting from it. Effective branding and marketing strategies are built on the proper application of data analytics and statistical methods in market segmentation and target markets to ensure effective capital allocation and return on branding and marketing initiatives. As hotel companies seek to optimize the number of brands in their portfolios, strong collaboration between the finance and marketing functions will unlock value.
Furthermore, there is an opportunity for strategic brand and industry consolidation to unlock value and capital-intensive resources. There are numerous bands in the marketplace lending themselves to strategic consolidation around similar customers needs and profiles. Organizations can benefit through use of marketing as endeavors to differentiate become counterproductive and duplicative after acquisitions. Brands can be consolidated with better market segmentation analysis (i.e., statistical clustering and customer fit analysis) and consolidation of brands to eliminate the excess customer segments being appealed to.
A complicating factor is that brands are likely being segmented on different factors (various demographics, behavioral, lifestyles, interests, values, and social status), which will lead to push back from stakeholders in the drive towards consolidation of brands and customer segments. The conglomerate that successfully navigates and tackles this human element first will surely derive a competitive advantage in the industry.
The Ankura Advantage
HOTEL EXPERTISE
From multi-billion-dollar franchises to startups seeking seed-capital, we understand and solve for the issues hotels are facing at all stages of the business lifecycle. We partner with our clients to unlock value by automating processes, optimizing technology solutions and bringing visibility into hospitality specific financial metrics fast.
ACCOMPLISHED TEAM
We deliver experienced talent to the table – leaders that have sat in the chairs and experienced issues first-hand in the industry. These operational leaders dig in and get their hands dirty to resolve pressing issues, uncover and fix inefficiencies and bring strategic initiatives to the finish line.
RESILIENT AND LASTING SOLUTIONS
We don't just plug holes...but we don't try to boil the ocean either. Our mandate is to deliver rapid, sustainable, and repeatable improvements to support long-term growth.
PEOPLE FIRST
To succeed, the team needs to be deeply involved in the process. Change management, training, and coaching aren't workstreams; it's our philosophy and the key to sustained improvement.
How We Support Travel & Leisure Clients
- Finance Resiliency
Increase efficiency and effectiveness of Finance; improve business partnering; drive initiatives across people, process, and technology; automate key processes; decrease cost of finance - Liquidity Management
Improve working capital and liquidity with dynamic financial models and scenario analyses; dive deep into the cash conversion cycle to minimize impacts of seasonality - FP&A
Provide transparency and visibility; deliver insights into performance and leverage advanced analytics to drive decision-making, particularly as hotel/leisure navigates customer price sensitivity in a high inflationary environment. Creation of dashboards to monitor trends and KPIs related to strategy execution. - Transaction Support
Structured integration and subject-matter expertise to drive process amidst continued industry consolidation - Accounting
Remediate accounting; streamline the close; manage risk profile - People
Fill interim or surge resource needs; align finance organization
Ankura Consulting Group, LLC is an independent global expert services and advisory firm that delivers end-to-end solutions to manage conflict, crisis, performance, risk, strategy, and transformation. Ankura has over 2,000 professionals serving 3,000+ clients across 55 countries. Collaboration and experience drive our multidisciplinary approach to Protect, Create, and Recover Valueᵀᴹ.
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