In the lodging and cruise sector, expect the following trends to shape the industry going forward:
- There will be a continued breakdown of the ‘barriers’ between work and life. Mielke believes this will result in more lodging companies developing informal, experience-led hybrid models centred around co-working and co-living (with shared spaces for eating, entertaining/socializing and working out). In other words, “a soft evolution of the harsh revolution we have witnessed in the past few years,” says Mielke.
- There will be an ever-greater divergence of the spectrum – from ultra-high-end-luxury to no thrill back-to-basics concepts. Hotel companies have already been flourishing with the addition of luxury air travel and/or branching-out into the luxury cruise sector, while others have been implementing basic concepts in the motel, budget, and hostel sectors. “This divergence will not result in a considerably widening gap between the ‘haves’ and the ‘have notes,’ but instead cause a severe distinction from the ‘unrestrained’ traveller and the ‘minimalist,” says Mielke
- Two seemingly opposing ideologies and brand concepts will stand out among the rest: Altruism and Hedonism. As a politically, socially and economically ‘restless’ world continues to trouble travellers, these two concepts will, more markedly, influence business practices and consumer behavior during 2018. Altruistic concepts will center around authenticity, community engagement, and ‘giving back’ – such as the sustainability-focused 1Hotel brand and Six Senses, or the greater number of ‘exploration tours’, coupled with ‘social tourism’, which we are starting to see in the cruise sector, says Mielke. Hedonistic concepts, he says, will centre around self-indulgence and pampering of the mind and body, resulting in a significant growth in the Spa sector, private clinics, and wellness services, whilst also encouraging more lodging and cruise companies to ‘go boutique’.
In the Food Beverage sector, AETHOS predicts the following three trends to be points of discussion during 2018:
- Mainstream trends will break away from the norm: With the increasing popularity of vegetarian, vegan, and lactose-intolerant diets, Mielke believes restaurants will continue to focus on specialty items targeting the mass market, while continuing to incorporate new concepts that centre around health and sustainability. On that last note, he adds that it is probably fair to say that 2018 will be the ‘year of the [superfood] avocado’!
- ‘Off-premise consumption’ and ‘going digital’ will continue to be embraced by restaurateurs: As the disruptors, such as UberEats, Deliveroo or JustEat, have established themselves in the consumer mind, Mielke says restaurant owners and operators will increasingly join hands with the delivery companies to give rise to increasing convenience for consumers.
- New competitors enter the market – ones that no one saw coming: With Amazon acquiring Whole Foods, furniture retailer IKEA creating an open-kitchen concept and select clothing retailers, such as HM, launching in-store food concepts, in addition to delivery companies setting up blind-kitchens, Mielke believes that “the restauranteurs of this world will need to ‘buckle-up’ and become more creative and innovative in defending their wallet share in 2018.”
The AETHOS Managing Directors also comment on the broader geographic trends in European, Middle Eastern and Asian regions:
- Brexit will have lasting impacts on the industry and the possibility of a labour government will be a concern for the UK economy, says Mumford. Its effects are also detrimental to the hospitality sector in regard to recruitment and retention rates.
- Mielke and Mumford agree that Germany will continue to be a key player socio-politically in 2018 whilst Spain has become more relevant – although uncertainty remains regarding Catalonia.
- Dubai’s business levels have been 20% off this year due to regional instability, mainly in Qatar and Saudi Arabia, says Mumford. He says “expect 2018 to be a tough year for the region, but it will start to look up in 2019 ahead of Dubai hosting the World Expo in 2020.”
- Hotels in key markets such as Japan, London, Paris, Dubai, New York will need to increasingly adapt to the increase in Chinese travellers, Mumford says. This traveller will become even more sophisticated and discerning. Specifically, the cruise sector is readying itself for an influx of Chinese travellers and has already taken concrete actions to ‘beef-up’ its talent pool that has the know-how and skill set to better cater to this client-base, Mielke adds.
- We expect to see few large transactions such as HNA’s acquisition of stakes or majority interests in the likes of NH, Carlson and Hilton, comments Mumford. Private outbound investment will continue to dominate, especially in markets where high-net worth individuals are driving single asset transactions.
- As the Asia expert, Mumford further comments saying “Japan in particular will continue to be a target for developers and brands with overseas visitor numbers showing a 20% growth year-on-year, plus the Rugby World Cup in 2019 and Olympics in 2020 in addition to the Abenomics effect domestically.
- Overall, Mumford believes that Asia remains a management contract-dominated operating environment. Expect to see white label management companies appearing as local operating expertise improves and the brands start to push their franchise offering.