HOSPITALITY CADENCE NEWS

"Managing and Securing Data in the Hospitality Industry: An Ever-Evolving Challenge"

In today's digital age, ensuring the security of guest data is paramount for maintaining trust and fostering long-term relationships in the hospitality industry. David Clifton, senior vice-president of Oracle Retail and Hospitality Technology, emphasizes the critical nature of this responsibility: "Guests entrust hospitality brands with their data every time they engage with different brands and their various properties. This makes it crucial for those brands to make every effort to identify risks and keep that valuable data secure." This highlights the dual necessity of managing access to personal information and guarding against malicious activities.

Key strategies include training staff comprehensively on data privacy policies and limiting data access strictly to what is necessary for job functions. Grant McKegney, director of Technology for Coast Hotels Ltd., stresses the importance of the principle of least privilege (PoLP), which ensures that individuals only access data essential to their roles. This approach minimizes the risk of data breaches by reducing the number of potential access points.

The complexity of data management in the hospitality sector cannot be understated. Hotels now use a vast array of technologies and platforms, creating numerous potential vulnerabilities. Clifton notes, “It can be very complicated for hospitality brands to have a full view of their data journey, such as where their data is stored, how and where it’s transmitted and how the operations of the hotel impact the use of that data.” This complexity increases the 'attack surface,' necessitating robust and adaptive security measures.

The rise of digital ecosystems and cloud adoption has further complicated cybersecurity efforts. The Gartner 2024 trends report highlights the shift towards identity-first security, which prioritizes the security of user identities and access management over traditional network security methods. This evolution is driven by the increasing frequency of attacks targeting identity infrastructure and the need for more advanced identity hygiene practices.

Moreover, the integration of artificial intelligence (AI) and Internet of Things (IoT) technologies into hotel operations offers both opportunities and challenges. AI-driven tools can enhance guest experiences through personalized services, while IoT devices can automate room settings based on guest preferences. However, these technologies also introduce new security vulnerabilities that must be managed diligently. The industry's move towards more contactless and automated systems, such as virtual check-ins and mobile room keys, further underscores the need for robust cybersecurity frameworks.

In the face of these evolving threats, continuous threat exposure management programs are essential. These programs focus on identifying and mitigating potential vulnerabilities across the entire digital ecosystem of a hotel. Regular updates and patches to software systems, along with comprehensive risk assessments, are crucial practices in maintaining a secure environment.

Additionally, as data privacy regulations become more stringent worldwide, hotels must ensure compliance with local laws regarding data protection and localization. This involves rethinking data storage and processing practices to align with regulatory requirements, which can vary significantly across different jurisdictions.

Overall, the secure management of guest data in the hospitality industry requires an ever-evolving approach that encompasses staff training, robust access controls, continuous threat management, and compliance with data privacy regulations. By implementing comprehensive cybersecurity measures and staying abreast of technological advancements, hotels can protect sensitive information, thereby enhancing their reputation and fostering guest loyalty. As the landscape of digital threats continues to change, hotels must remain vigilant and proactive in their cybersecurity efforts to ensure a safe and secure environment for all guests.

Sources:

"Hotel Cybersecurity in 2024: The latest threats and best practices" (Shiji Group)

"5 Tech-Driven Hospitality Trends to Expect in 2024 and Beyond" (HFTP)

"Top Cybersecurity Trends and Strategies for Securing the Future" (Gartner)

"Hotel Industry Insights: Key Takeaways from the 2024 NYU Hospitality Conference"

Amidst ongoing concerns about the future trajectory of hotel industry growth, leading executives expressed a strong sense of optimism during recent interviews with Hotel News Now. These conversations, held at the 2024 NYU International Hospitality Industry Investment Conference, revealed critical insights and emerging trends that are shaping the sector. Here are the key highlights from these discussions.

IHG Hotels & Resorts: Expansion of Luxury Brands

Jolyon Bulley, CEO of IHG Hotels & Resorts Americas, emphasized the company's strategic focus on expanding its luxury segment, particularly within the United States. Brands like Six Senses have already established a strong international presence, and IHG aims to replicate this success domestically. Bulley’s remarks underscore the growing demand for high-end hospitality experiences and IHG's commitment to capturing this market segment in the U.S.

Transactional Trends: The Perfect Storm for Deals

Zach DeMuth, global head of hotels research at JLL Hotels & Hospitality, highlighted the impending wave of transactions driven by loan maturities. DeMuth noted that properties with maturing loans might be forced into the market, potentially at discounted prices. This situation creates a "perfect storm" for deals, as owners seek to avoid financial strain by selling assets to meet loan obligations. This trend is likely to result in increased market activity and opportunities for savvy investors.

Challenges for Extended Stay Brands

Greg Juceam, President and CEO of Extended Stay America, discussed the rapid proliferation of extended stay brands. Despite this growth, Juceam predicts that many new entrants will struggle with the operational complexities of the segment. Extended Stay America's longstanding experience and proven model give it a competitive edge, particularly as newer brands face higher construction and operational costs. Juceam’s insights point to the importance of operational efficiency and market experience in the extended stay segment.

Regional Recovery in Hawaii

Jeff Wagoner, President and CEO of Outrigger Hospitality Group, provided an update on Hawaii’s recovery following the West Maui wildfires. He reported a strong rebound in the region, which is crucial for the state's economic recovery. Efforts are being made in collaboration with the Hawaii Tourism Authority and Hawaii Visitors & Convention Bureau to drive business back to West Maui. This regional focus highlights the resilience of local markets and the critical role of coordinated efforts in post-crisis recovery.

Flexibility in Brand Management

Paul Daly, global head of franchise and owner relations at Hyatt Hotels Corp., addressed concerns about the increasing inflexibility of hotel brands. Daly emphasized Hyatt’s commitment to balancing brand consistency with owner flexibility. This approach aims to maintain guest expectations while accommodating the needs of franchisees, positioning Hyatt as a more owner-friendly brand. Daly's comments reflect a broader industry trend towards greater adaptability and responsiveness to owner feedback.

Labor Market Pressures

Len Wolman, Chairman and CEO of Waterford Hotel Group, identified labor pressures as a continuing challenge for hotel operators. Wolman stressed the importance of proactive recruitment and retention strategies to build a strong organizational culture. Creating opportunities for professional, personal, and financial growth within the company is key to attracting and retaining talent. Wolman’s perspective underscores the critical role of human capital management in maintaining operational excellence.

Sustained Growth Amid Low Supply

David Duncan, President and CEO of First Hospitality, shared an optimistic outlook based on low supply growth and strong top-line performance. He suggested that the current market conditions, characterized by stable economic factors and limited new supply, create a favorable environment for sustained growth. Duncan’s comments indicate a potential “golden era” for the hotel industry, with many markets returning to pre-COVID performance levels.

Diverse Demand Mitigates Leisure Slowdown

Ben Perelmuter, President and COO of TPG Hotels & Resorts, noted a slight pullback in leisure demand but highlighted the benefits of a diverse demand mix. Properties that cater to both leisure and business travelers, particularly those with meeting spaces, are better positioned to thrive. Perelmuter’s insights suggest that diversification in demand sources is crucial for achieving strong performance across different market conditions.

These insights from industry leaders reflect a dynamic and evolving landscape in the hotel sector. Despite challenges, there is a clear sense of optimism and strategic focus on key areas such as luxury expansion, transaction opportunities, operational efficiency, regional recovery, brand flexibility, labor management, and market diversity. Hotel executives are navigating these trends with a forward-thinking approach, aiming to capitalize on current opportunities while preparing for future growth.

"Growth in Hotel Pipeline Activity in the Americas and Asia Pacific"

The hotel industry is experiencing notable growth in the Americas and Asia Pacific regions, according to CoStar's June 2024 data. These regions have shown significant year-over-year increases in hotel pipeline activity by the end of the second quarter, reflecting robust development dynamics amid global economic uncertainties.

Detailed Insights

Americas:

The Americas recorded a substantial increase in hotel pipeline activity. The number of rooms in construction rose by 8.3% to 208,718 rooms. The final planning phase saw a 6.9% increase, reaching 299,153 rooms, while the planning phase experienced the most dramatic growth, surging by 34.6% to 385,945 rooms. Overall, the total number of rooms under contract increased by 17.8%, totaling 893,816 rooms. The United States leads this surge with 157,713 rooms in construction, followed by Mexico, Canada, and Brazil with 13,301, 8,686, and 5,948 rooms respectively.

Asia Pacific:

In Asia Pacific, the growth is equally impressive. The region saw a 4.4% increase in rooms under construction, totaling 503,770 rooms. The planning phase experienced a significant 16.5% increase to 323,931 rooms, though the final planning phase declined by 22.9% to 91,282 rooms. The total number of rooms under contract rose by 4.5% to 918,983 rooms. China is the primary driver in this region, with 319,012 rooms in construction, followed by Vietnam with 36,521 rooms.

Comparative Analysis

Europe:

Contrary to the growth seen in the Americas and Asia Pacific, Europe experienced a decline in hotel pipeline activity. The number of rooms in construction decreased by 2.4% to 165,858 rooms. The final planning phase saw a significant drop of 20.9% to 93,241 rooms, while the planning phase grew modestly by 8.0% to 160,651 rooms. Overall, the total number of rooms under contract fell by 3.8% to 419,750 rooms. Germany and the UK lead the construction activity in Europe with 27,302 and 25,312 rooms, respectively.

Middle East & Africa:

The Middle East & Africa region also showed mixed results. The number of rooms in construction decreased by 5.6% to 109,005 rooms. The final planning phase dropped sharply by 23.8% to 33,040 rooms, while the planning phase saw a 9.2% increase to 83,020 rooms. The total number of rooms under contract declined by 4.2% to 225,065 rooms. Within this region, Saudi Arabia and the UAE are the major contributors, with 42,786 and 18,933 rooms in construction, respectively.

Strategic Implications

For hoteliers and investors, these trends highlight critical regional opportunities and risks. The Americas and Asia Pacific regions' growth indicates strong market confidence and potential for new developments. This growth can be attributed to factors such as economic recovery, increased tourism, and significant investment in infrastructure and hotel development projects.

In contrast, the decline in Europe and mixed results in the Middle East & Africa suggest a more cautious approach. Factors such as economic slowdowns, geopolitical tensions, and regulatory challenges might be influencing these trends. Hoteliers in these regions may need to focus on strategic refurbishments, enhancing service quality, and optimizing operational efficiencies to stay competitive.

Future Outlook

The future outlook for hotel pipeline activity remains optimistic, particularly in the Americas and Asia Pacific regions. Continued economic recovery, coupled with increasing travel demand, is expected to drive further growth. For hoteliers, staying abreast of these trends and strategically aligning development and investment plans with regional dynamics will be crucial for sustained success.

The hotel industry is witnessing dynamic changes, with the Americas and Asia Pacific regions leading in pipeline activity. Strategic investments, coupled with a keen understanding of regional market conditions, will be essential for hoteliers to capitalize on these growth opportunities.