This is part 1 of the tPH 2027 prediction series, where I place my bets on macro and micro phenomena in the hospitality industry for the year ahead.
Dear guest,
It’s November, meaning that the year of the horse is galloping towards its end.
As the Chinese astrological energies had it, this year has been one of full speed, no looking back, releasing old shackles, and pushing limits we didn’t know existed. This was not only true for myself on a personal level (case in point: starting this newsletter that in 8 months has been embraced by almost 1,000 of you), but for the hospitality industry (which anyway feels like very much of an extension of myself at this point).
I would not want to kick off tPH’s 2027 prediction series with anything less than tapping into the energies (I can practically feel you finance bros moving your cursors to close the tab…) of this past year. But I promise, we always bring it back to the concrete here.
Enjoy!
My source? Trust me bro
First, what this prediction series is not: a roundup of what industry reports are saying next year will look like, or what anyone else except for ME thinks, for that matter. It’s also not strictly data-driven (in fact, there may be very few numbers in some pieces), nor is it purely gut feel either, as at the end of the day, the signals from my day-to-day work in the industry do always inform my thinking. Most importantly, no AI data crawl whatsoever was involved in the writing of this series.
What this prediction series is: a sequence of distilled thoughts of an industry thinker who has touched base with almost every facet possible in the industry in the past year, from development to operations to research. You will read my self-sourced thoughts1 and existential dreads.
Now that we have cleared that up, I hope you join me for this ride into the future. But first things first, we must lay the context in which all these changes are taking place.
How hospitality got hot
Investors and lenders who used to be wary of hospitality are now keen to get their slice of the sexy hotel cake 🍰
The hospitality industry has gained loads of momentum in the past years, after the shock to its system delivered by covid. Investment is rolling in (volume is up 22% from a couple of years ago), and hospitality is proving to be resilient in its capability to attract funding, even when other sectors stagnate.
In my opinion, what has made the hospitality industry more approachable in recent years are the different hybrid models of building and operating hotel assets that, while more niche before, are now becoming the default for developments, e.g., mixed-use projects that incorporate retail and branded residences.
Furthermore, the standard operating models of management, franchise, and lease agreements are finding new manifestations that give owners varying degrees of control over the value chain (here’s a blog discussing operating models from PwC Middle East, a topic my EHL colleagues and I did research on for them).
More tailwinds propelling the growth of hospitality are coming from macro consumer trends, like the rising demand for experiences over goods, or in more recent news, transformation over experiences. The biggest beneficiary has arguably been luxury hospitality, whereas budget and midscale are becoming more automated by the day (but their stories could be more interlinked than you think, more on that below 🫧).
I won’t go into too much jargon here, but these new formats have stripped away many of the risks that have pushed away more conservative investors from hospitality and hospitality-adjacent fields. This is all conjuring up the most interesting and expansive landscape in the history of the industry.
Very apparent bubbles are forming
The result is a monstrous hotel pipeline (there are 2.4 million rooms planned, of which over a million are under construction at this very moment2) and dizzying premiums in some sectors, specifically luxury hospitality ($2k+ room rates are already commonplace) and branded residences.
