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Hospitality Net
2 days ago
- Business
- Hospitality Net
Managing Hotel Labor Costs Today
Managing labor costs in a hotel operation is crucial to maintaining a profitable business while delivering the service level that is commensurate with the scale of hotel. Finding this balance has been especially difficult in a post-COVID-19 environment, when inflationary challenges coupled with labor supply shortages have put further pressures on hotel operations. Labor is one of the most significant expenses a hotel faces, accounting for 30–45% of total operating costs. Managing these costs takes creativity, innovation, organization, and diligence. Adjustments must be carefully considered because making too many staffing cuts can lower profitability and negatively affect the hotel's reputation and guest satisfaction. In the following article, we will describe some of the challenges surrounding labor management and explore innovative ways to manage these costs effectively. Understanding Hotel Labor Costs Unlike many other commercial real estate investments, hotel operating costs can vary substantially with occupancy rates, meaning that a certain portion of costs can be controlled with changes in occupancy. Occupancy levels can fluctuate by week, by season, or with economic changes. The higher a hotel's occupancy is, the more cost-management opportunities exist. During periods of lower demand, profitability is more difficult to maintain, and the expense that is most closely tied to a hotel's usage is labor. Labor costs include wages paid to hourly employees, overtime costs, training expenses, payroll taxes, health insurance benefits, and bonuses. Once you have determined your fixed payroll and benefit costs, which typically comprise the management team and minimum non-management staffing levels, you need to identify your flexible labor costs. Successful management of this expense requires an understanding of daily usage patterns, labor dynamics, local laws, and technology. The Right Number of Employees at the Right Time Instead of maintaining a fixed number of employees, the most prudent hotel operators utilize a variety of tools to access and retain talent. Flexible staffing models allow hotel operators to adjust their workforce needs based on real-time occupancy data and demand forecasts. One of the best and easiest ways to enhance workforce flexibility is to cross-train staff within a variety of departments. For example, front desk staff can assist in the restaurant or valet operation during slower periods, while maintenance staff can help the housekeeping team when the hotel sells out. I remember nights working as a hotel night auditor/front desk agent and folding laundry for the housekeeping department. Cross-training not only provides managers access to a wider in-house talent pool but also provides staff with transferrable skills across a variety of departments, which can lead to greater job satisfaction and even promotions for employees. Another way to scale workforce needs in response to occupancy forecasts is by utilizing part-time and on-call staff. With fluctuating demand, hiring staff members on a part-time or on-call basis provides flexibility, adaptability, and specialized skillsets while reducing overhead by limiting the number of full-time employees and their associated costs, such as benefits. It is important to carefully investigate the pricing for on-call staffing solutions, as many types come at a significant cost. Nonetheless, depending on a hotel's specific needs, utilizing on-call staff may still be the most beneficial solution. One of the most exciting recent innovations in hotel operations has been the implementation of scheduling technology. Scheduling software can help managers predict staffing needs more accurately based on information such as historical data analysis and real-time data integration. Artificial intelligence tools are now modeling labor demand forecasts according to factors like weather patterns, local events, and even traffic patterns. Shift optimization is helping to automate scheduling based on an employee's skills and experience, ensuring that the most qualified person completes each task. And finally, employee availability tracking allows staff to input shift availability and preferences, incorporating the staff members' own inclinations and considering their other obligations. This technology has a strong return on investment; in addition to the scheduling model, it provides management with real-time productivity data, such as work-hours per occupied room for housekeeping. This feature assists managers with training, disciplinary, and reward opportunities to maximize the efficiency of their team. Adopting Today's Advanced Technology and Tools Integrating technology and robotics into the hotel management process might seem like the antithesis of 'hospitality.' However, it is essential to recognize that application of the right methods at the appropriate time can optimize outcomes. When executed with thought and care, technology integration can not only reduce costs, but it can also enhance guests' experience, saving them time and energy during some of the more cumbersome or frustrating aspects of a hotel stay. Digital check-in and check-out processes, either through mobile apps or physical kiosks, can reduce the need for front desk staff, decrease wait times, and improve efficiency. Guests have the opportunity to communicate guestroom preferences, request additional services or supplies, and address other needs before even arriving at the hotel. This allows staff to focus on more meaningful, high-touch guest interactions. It was not long ago that I regularly faced a line of guests patiently waiting to check in to the hotel where I worked, while I simultaneously fielded phone calls from prospective guests hoping to book a room for the night. Today, nearly all hotel bookings are done online. Enhancements in property management systems have automated the booking process and allowed guests to make reservations on the Internet. Gone (mostly) are the days of manual bookings, saving labor time and costs as well as enhancing the overall guest experience. Property management systems also maintain a plethora of data, including guest information, financial transactions, inventory tracking, and revenue management, which helps to reduce the overall administrative burden of the business. Robotics is another potential innovative approach to managing labor costs; however, the upfront cost today is still quite high, making this an unrealistic option. Many anticipated advancements in technology and artificial intelligence will make the implementation of robots in the hotel space more affordable and practical in the near future. Taking It Out-of-House—Streamlining Operations Some components of labor-intensive hotel operations, such as laundry, valet parking, and/or landscaping services, can be far more cost effective if outsourced to a third party. This option is not necessarily always more cost effective, as much depends on the market and property type; however, it is an option that should be evaluated by hotel management. Careful consideration must also be given to the quality and reliability of the outsourced service, as disruptions or inconsistencies in quality can challenge the flow of existing operations. Hiring a third-party consultant to conduct an operational audit is another way to gain insight into operational and, specifically, labor inefficiencies that are negatively affecting the hotel's profitability. By reviewing operational processes on a regular basis, operators can work to eliminate redundancy, assess workflow patterns, and manage staffing levels more precisely. Similar assessments can be made in the maintenance, food and beverage, accounting, and marketing departments, ensuring that teams are working to the best of their abilities, with the right resources at hand and through processes that maximize outputs. Keeping the Team Happy One of the most overlooked and misunderstood aspects of labor management costs is employee satisfaction and retention. Numerous studies have shown that the cost to hire, onboard, and train new staff far outweighs the cost of retaining and rewarding existing team members. Recruiting and training is not only expensive, but it also takes time, which puts a strain on existing team members, the hotel's operations, and the overall guest experience. There are several new and innovative ways hoteliers are responding to challenges in hiring and employee retention. From a recruitment perspective, management companies are offering flexible schedules, daily pay, free meals, subsidized housing and/or public transportation, and robust healthcare benefits. Other opportunities for employee engagement and satisfaction include family-friendly policies, such as childcare support and parental leave; team retreats; wellness programs; and mental health days. Providing career development opportunities through mentorship programs, training, or educational opportunities can be a significant incentive. There are also many low-cost or free ways to create a sense of community and belonging at work, including recognition programs, themed workdays, social events, and cultural celebrations. Creating fun environment where employees look forward to coming to work is sometimes as important as other incentives. Furthermore, going beyond the typical hiring methods by developing partnerships with local colleges and universities or leaning on international visa opportunities can allow hoteliers to establish their property as a dynamic and exciting place to work, while prioritizing the profitability of the asset. Persistent Challenges There are certain assets and markets where labor cost management will remain difficult despite the implementation of the aforementioned solutions. Chronic labor shortages, collective bargaining agreements, regulatory laws, and high-wage markets are only a few of the challenges hoteliers may face that are harder to overcome via internal changes. Externalities such as economic downturns, which can affect hotel revenues, can also make it more difficult to maintain leaner costs while still providing competitive employee compensation packages. The complexity of hotel operations cannot be overstated; however, for nearly all hotels, the labor department presents the greatest area of opportunity for efficiency. Conclusion Prioritizing employee satisfaction and retention, incorporating technology and robotics, enhancing workflow processes and systems, and implementing flexible staffing solutions are some meaningful measures to creatively manage a hotel's labor costs. This holistic approach to labor-cost management, when implemented correctly and thoughtfully, ensures the viability of the operation from an investment perspective while enhancing the guest experience. Reprinted from the Hotel Business Review with permission from View source
Forbes
3 days ago
- Business
- Forbes
A Conversation With Hilton CMO Mark Weinstein On Building Brand Platforms, Cultural Relevance + Using Attitudinal Data To Future Proof Audience Understanding
With culture moving at the speed of light, identifying trends versus fads has becoming increasingly difficult. Consequently, aligning brands to be at the forefront of culture can be extremely complex, and the need to identify the right platforms and tools to gather the correct consumer intelligence to do so has never been more important. To wit, as brands move away from being campaign driven, to platform led, in order to not only be ahead of trend, but also differentiate within category, organizations need to crisply define who a brand is and what it stands for with clarity. Success here will also involve not only looking at the brand more from a lens of the WHO, but also doing the same for customers with more attitudinal or emotional data to get to the WHY. Mark Weinstein On Building Brand Platforms, Cultural Relevance + Using Attitudinal Data To Future ... More Proof Audience Understanding For all these reasons, I wanted to speak to a CMO who has successfully transformed the brand he leads to be at the forefront of both culture as well as audience understanding. Mark Weinstein has been at Hilton for the past fifteen years and is currently CMO. He has worked to continue to take the brand to new heights over and over again by a relentless commitment to never being complacent. Following is a recap of our conversation: Billee Howard: Hilton has gained a tremendous amount of brand momentum the last few years. Can you talk to me about your post COVID transformation around 'Hiton. For the Stay.' and the thinking behind it? Mark Weinstein: Hilton is a brand that was built in culture. From hosting the first-ever GRAMMY Awards at The Beverly Hilton in 1959 to our 20 years of partnership with McLaren Racing, Hilton has long been at the center of culture-defining moments. But somewhere along the way, as we focused on operational excellence and growth, we realized our role in culture wasn't as visible as it once was. During the pandemic, we experienced a unique halt in momentum, which served as a pivotal gift in disguise. We saw 90% of our business disappear; not because the brand was damaged, but because it wasn't safe to travel. This pause allowed us to think about how we wanted to reemerge as a brand and redefine our narrative. Hotel advertising had fallen into a 'sea of sameness.' We were playing into the tropes – showcasing cliché white empty beaches and sunsets – and, in turn, had written ourselves out of the story. This prompted us to look inward and find what sets Hilton apart from our competitors, and the answer was simple: The Stay. "For the Stay" was born out of the realization that travel had fundamentally changed. People were no longer just looking for a place to sleep; they were seeking meaningful experiences and moments that would stay with them long after their trip ended. We saw an opportunity not just to reposition Hilton, but to redefine how we engage with our guests. That led to the development of our first-ever global marketing platform, 'Hilton. For the Stay.' Howard: How should brands think about becoming more tribal and culturally relevant today with so many things happening and changing in what feels like real time? You mentioned something critical to your success was finding the attitudinal factors that drive audiences as they can provide a roadmap to understanding a segment not just for now but for life. Can you explain more about what you mean? Weinstein: Staying relevant in today's fast-moving world requires a balance between responding to the now and anticipating the next. Brands must be agile and deeply attuned to cultural shifts to remain relevant. At Hilton, we achieve this by actively listening to our guests and engaging with them through various channels. We leverage social media listening, customer feedback, and market research to identify emerging trends and understand the cultural nuances that resonate with different demographics. We also take a long-term view by focusing on macro trends that align with our brand values rather than fleeting micro trends. For our go-to-market strategy, we focus on trends that enhance the guest experience and align with our commitment to sustainability, inclusivity, and innovation. The bigger picture for us is understanding the attitudinal shifts that will define lifelong behaviors. A 20-something prioritizing wellness or experiential travel isn't doing so just to follow a trend; there is an underlying personal value that they are identifying with that could stay with them well into their 50s, 60s and beyond. By identifying these motivations early, we can meet these travelers today with relevant messages while also building a roadmap for the future. If we listen closely, we can determine what products to develop and how to design experiences that evolve with our guests – and where and how to ultimately invest. By staying true to our core values, while adapting to the changing landscape, we can create authentic connections with our guests and drive long-term brand loyalty. Howard: You've really put a fine point on better understanding Gen Z and done a great job of downageing the brand. That is often a big challenge for marketers. What are some best practices you employ here? Weinstein: We understand that for many travelers – especially Gen Z – their journey starts on the couch with their loved ones, scrolling on social media and dreaming about their next adventure. Our goal is to understand how they get their information, show up in all the places where they choose to spend their time and inspire them with stay experiences that feel aspirational, yet attainable. Today's young travelers aren't waiting for 'someday.' They've shifted from bucket lists to 'go do it now' lists, prioritizing unique, shareable and culturally immersive experiences. Hilton is tapping into this experience economy by making travel more engaging and rewarding. A great example is our 20 year partnership with McLaren Racing. Together, we've partnered to provide exclusive experiences and perks for Hilton Honors members and McLaren Racing fans, while offering the McLaren F1 Team a home away from home in Hilton hotels at race locations around the world. In fact, over 4.6 million Hilton Honors Points were redeemed for the McLaren Ultimate package for Las Vegas in 2024, the most Points redeemed for any package in the history of the site. We've done everything we can to help these athletes perform at their best, flipping hotel schedules to match time zones and tailoring stays to fit their fast-paced lifestyles. This commitment to personalized care extends to every Hilton guest. Howard: There has been a tremendous pivot in how organizations think about brand, moving it away from visual identity and campaign after campaign to a platform that identifies who an organization is with clarity. Talk to me about your thinking here and how you have employed it at Hilton. Weinstein: 'Hilton. For the Stay' is more than just a tagline and is instead a long-term commitment that puts the stay at the heart of everything we do. It serves as our North star, guiding how we evaluate new opportunities, partnerships and experiences. When my team brings an idea to me, my filter is simple: Does it align with our brand platform? Is it meeting customers where they are and where they are going? Does it feel relevant? Having this grounding gives us the confidence to take daring, calculated risks while ensuring Hilton stays culturally relevant. It allows us to look at trends differently and adapt in ways that feel authentic. For example, we recently launched 'Hilton Saved My Stay,' a long-form content series inspired by our social engagement strategy that gives back to real travelers when they need it most through our signature hospitality. Created in partnership with TBWA\Chiat Day\NY, global production company 1stAveMachine and the director of our 10-Minute TikTok, David Ebert, the three-part comedic content series is part of our bold and differentiated approach centered around actual stay stories. Rather than just running ads, we often insert "Hilton as the Hero" by jumping in and saving travelers who share their vacation nightmares online, turning potential customers into Hilton guests. These creators then organically shared their Hilton stay experiences with their audiences, reinforcing that Hilton is there when it matters most. By staying true to who we are while strategically embracing current trends, we are maintaining Hilton's place as a dependable, relevant leader in global hospitality for generations to come.
Forbes
6 days ago
- Business
- Forbes
Could Live AI Video Become The Next Zoom?
Could AI video conferencing replace Zoom? Akool AI Camera, with its digital avatars and real-time ... More translation, aims to transform enterprise communication. Video conferencing has become a mainstay of remote work in the post-COVID era. As businesses sought ways to communicate virtually, solutions like Zoom stepped up their game and became a go-to tool for many companies. It's no longer impossible to hold a digital business meeting with participants from different cities and time zones. Examining the impact of video calls in enterprise growth, Zoom released a report in 2021 which revealed some interesting insights. Company executives in industries such as Healthcare (67% of respondents) and Technology (84% of respondents) reported massive successes following their decisions to adopt Zoom calls in lieu of physical gatherings. While the ease of using video conferencing solutions like Zoom have boosted calls for the implementation of remote work or, at least, a hybrid working structure, there have been some concerns. A major limitation to the widespread adoption of video calls in the workplace is the absence of non-verbal signals, a feature that can easily be found in a personal interaction. During a typical check-in virtual call, the participants can see themselves and speak in real time. However, Zoom calls are not designed for speakers to maintain eye contact with their audience or for their body language to be easily interpreted. Essentially, it's one face speaking to many other faces across the world, and that can be less engaging as a study has shown. But what if there's a way for teams across time zones to communicate without worrying about things such as body language or language barriers? AI is leading the way in the live generative video game, and the AI-powered Live Camera tool by Akool is not to be underestimated. With exciting use cases ranging from digital avatar-based communication to live multilingual translations, virtual meetings can feel more natural now. Developed using modern AI technologies including on-device 4D facial mapping, neural voice engines, and a context-aware rendering that can modify an avatar's body language based on audience feedback, Akool Live Camera treats viewers to hyper-realistic video content that is neither pre-recorded or scripted. Beyond digital check-ins in a company, video conferencing can also be applied in some other cases. For instance, a C-level executive can lead a company-wide training session from their home office or even a coffee shop. Unlike the regular virtual meetings that are held over Zoom or Microsoft Teams, AI-powered live videos seek to transform video conferencing. In cases where an American CEO on a Zoom call may rely on closed captions on Zoom to understand a Romanian client, Akool Live Camera simplifies things for everyone. It simply needs to adopt a life-like avatar of the Romanian and adjust their language to English. Additionally, the avatar can pass the human test by using gestures, body language, and other elements of human interaction. Commenting on his company's latest AI-driven product, Dr Jiajun Lu, founder and CEO of Akool believes that they're doing more than just improving the way video calls are done. 'With Akool Live Camera, we're transforming how it's made,' he said in an interview. In today's world of corporate communications, team members can no longer see video conferencing as solely a means of catching up on current projects or for strategizing new steps. AI has long been touted as a catalyst for significant change as exemplified in healthcare and manufacturing. It's time company-wide meetings get a taste of what AI is cooking. AI Live Video technology can make it possible for a guest speaker to not only be heard by viewers across different time zones, but in their respective languages. Through AI-generated avatars, a speaker can share insights in English while the avatars immediately tweak the language to match viewers' diverse needs. Beyond real-time translation, the avatars can sync their lip movements at the right moment, making it difficult to tell that a human isn't speaking. 'This isn't just pre-recorded AI. It's responsive, expressive, and disrupts how humans show up in the real world,' Lu noted. According to Grandview Research, the global AI video market size was estimated at $5.53 billion in 2023 and is projected to grow at a CAGR of 35.3% from 2024 to 2030, reaching $42.29 billion by 2030. The research firm also estimates the global digital avatar market size at $18.19 billion in 2023, with a projected CAGR of 49.8% from 2024 to 2030. This surge is being driven by demand for scalable communication tools that reduce localization costs, increase reach and personalize interactions. For the Harvard Business Review, Dash Bibhudatta notes that as AI usage in the workplace continues to expand, team meetings will no longer be the same. He adds that AI can 'unlock infinite possibilities for team and organisation.' And that's what Akool's AI Camera is built on — expanding the possibilities of collaborations for employees. Another interesting use case of AI Live Camera as demonstrated by Akool's newest tool is in company-wide training. Training sessions are crucial to business growth as they provide workers the opportunity to acquire new skills which can enhance their operations. Employee satisfaction and increased productivity are some of the obtainable benefits of workplace training. Interestingly, more companies now prefer to deliver training using computer-based methods like videoconferencing. A recent Statista research found that the majority of US-based company-wide training sessions in 2024 were held online, with large corporations preferring a virtual classroom or webcast as a means of instruction. Instead of a multinational company stretching its budget by scouting for multiple speakers fluent in different languages, an AI-led avatar of an instructor can deliver lectures to team members in Beijing, Paris, London and Montevideo using each region's most spoken language. All of this is done in real-time, ensuring that no region feels left out. By eliminating the need for pre-recorded content, interpreters, or travel coordination, companies stand to save tens of thousands of dollars annually, especially when applied at scale across global teams. This means there's no need to spend time on pre-production or rehearsals, saving companies valuable time and money. Of course, not all companies are ready to swap out human presence for digital avatars. Some worry about trust, emotional authenticity, or whether avatars might create an uncanny experience in high-stakes meetings. Others raise regulatory questions around disclosure and digital identity. These concerns are valid and may slow adoption in industries where personalization and nuance are critical. But for anyone who doubts the ability of digital avatars to successfully handle discussions or training sessions, it's worth mentioning that Akool Live Camera reduces the likelihood of human error. While an AI avatar of a company executive speaks to employees across the world, said avatar will not succumb to human mistakes such as failing to unmute themselves, not being able to share screens, or maintaining eye contact. And though AI technology has not yet been perfected, it has proven to be a reliable alternative to humans in some instances. This is one of such scenarios. Beyond the corporate landscape, AI digital avatars could become the next big thing in a field like customer experience. Imagine a digital avatar of a customer support worker attending to a client's complaint while delivering the non-verbal cues of a human being such as smiles and gestures. By personalizing interactions with customers, businesses are more likely to enjoy increased client satisfaction, among other returns on their investment. These outcomes are also possible in fields like sales and online learning. Consider the experience of NongHyup Bank, one of South Korea's biggest financial institutions. In 2022, it added two AI avatars to its customer support team and tasked them with helping customers to find specific banking services that were right for them. The Korean bank's use case demonstrates the far-reaching potentials of AI avatars as a digital identity for every industry player. Workplace communication has evolved from physical meetings to emails to Zoom calls and now AI-powered video calls. Akool Live Camera and other AI tools can serve as the next foundational layer for corporate communications, and Lu agrees with this assertion. He noted that 'the future of AI video generation isn't just digital — it's dynamic, avatar-driven, and universally accessible in real time.' And that's what matters. Global teams should be able to hold strategy sessions, partake in employee training, and other affairs without worrying about network delays, language barriers, and the lack of non-verbal signals. Whether this becomes the next Zoom or the next enterprise add-on remains to be seen, but the economics of AI-powered avatars are beginning to shift the conversation from novelty to necessity. But the message from industry leaders like Lu is that what a human speaker can do on Zoom, a digital avatar can do three times more without the need for pre-production or a script. The tides of videoconferencing are changing and steering companies into the next phase of communication is no other innovation than AI. As these AI-powered avatars become more lifelike, the real question isn't just about what they can do, but whether companies are ready to rethink who gets to speak, in what voice and for whom.
CNA
10-05-2025
- Entertainment
- CNA
The rules for office fashion aren't dead. They've just changed
Her question came like a bolt from the blue: 'Kelvin, do you really think that shirt is appropriate for a client meeting?' I looked sheepishly down at my baggy, preloved tee – a style that predates our current enlightened era, where oversized second-hand clothes are not only accepted but applauded. On the front, in bold, bubble-like letters: 'Who farted?' Suddenly, I realised how out of place I was, standing in the lobby of a glamorous-looking financial centre, surrounded by glamorous-looking people in tailored suits and designer dresses. 'I … uh … I was in a rush. Sorry, boss.' She sighed, muttered something under her breath, then said: 'Why don't you grab a coffee and wait at the food court? We'll catch you up after.' And that, my friends, was how I got red-carded from a meeting for the first – and thankfully last – time. I deserved it. I had spent three nights working on that deck, only to blow the final five minutes by dressing like a 17-year-old on a break from school. But in that moment, I was indignant. I'd done the work, hadn't I? Wasn't that what counted most? I can't help but wonder – if that incident were to happen today, in our post-COVID age of 'elevated comfort', would I still be sent away? Or just met with a bemused shrug, before I headed up for the meeting with my colleagues, dressed to the nines in Lululemon athleisure and New Balance sneakers? THE BYGONE RULES OF WORK WEAR I'm exaggerating, of course. But then again, just the other day, someone in my own office showed up in slippers. Not slides. Not loafers with irony. Literally, cheap Tat Sing lookalike slippers. And to her credit, she walked in with the confidence of someone who'd slept eight hours and had eight slides of great ideas. Honestly, I wasn't offended. If anything, I was impressed, most because she still managed to look more put-together than I did. Once upon a time, office fashion had rules. A dress shirt meant effort. A blazer meant intent. A tie meant something big, like a pitch presentation. No junior executive would be caught dead without patent leather shoes so shiny they could double as mirrors. For women, heels weren't optional. Everyone was bound by the same unspoken code: Dress up to move up. But somewhere between the Great Resignation, remote work, and that weird season when everyone was baking sourdough in pajamas, the idea of dressing for work collapsed. It started with Casual Fridays, rolled on with hybrid Wednesdays, and the coffin seemed to be sealed by the silent acceptance of hotpants at team meetings – and I'm not talking about Zoom calls. NOT JUST WHAT WE WEAR, BUT WHY Look, I get it. The pandemic rewired everything. We learnt that comfort and productivity weren't mutually exclusive. You can write strategy decks in a bathing suit as well as you can in a power suit. But here's the thing: The erosion of dress codes hasn't just changed what we wear; it's changed why. It's blurred the signals we once sent without saying a word. Like it or not, our attire says something about who we are – inside and out. Take the intern who wears a blazer over a crop top. Or the copywriter in normcore minimalism with an Aesop scent trail. These aren't just outfits. They're PowerPoints in cotton. Brand positioning – for people. With no clear corporate uniform, we've entered the age of 'vibe-based' dressing. We no longer dress for the job we want, but for the mood we're in. 'Main character energy' now trumps 'management-track polish'. On any given Monday, the odds that someone might show up channelling Kendall Roy from Succession or Portia from The White Lotus are pretty much even. Instead of official dress codes, we now have aesthetic lanes: 'quiet luxury', 'clean girl', 'bloke-core', 'I-don't-care-but-I-do'. If the typical office of old looked like a law firm, today's looks more like a fashion-week reel. In a way, I'm here for it. But I wonder: Is there still room for dressing to impress? Not in a Mad Men cosplay way – in a quiet, intentional way. A crisp shirt, not for the client but for yourself. Trousers with seams, because the day deserves them. There's dignity in effort, even in something as trivial as hems. In a previous job, I had a colleague who wore button-downs every day. Not out of vanity (okay, not just out of vanity), but to flip the switch from 'home self' to 'work self' – his own personal Severance ritual. And when he walked into a room, you could feel it. Meetings felt sharper. People sat up – not because he commanded authority, but because he carried presence. And it definitely stuck with me. So a few weeks ago, I did something small. I pulled out trousers with seams. Picked a shirt with buttons and a collar. Reached past my Homer Simpson 'Bush Meme' Stan Smiths and – cautiously – grabbed a pair of real shoes. Actual shoes. Of course, no one noticed, but that's the point. It really is about noticing yourself, and showing up accordingly. Showing up with intention isn't performative. It's grounding. A way of saying: I'm here. I'm locked in. Let's go.
Hospitality Net
09-05-2025
- Business
- Hospitality Net
Intangible assets in hotel property tax assessments
Hotels are complex assets that blend real estate with business value. For property tax purposes, only the real estate is taxable – yet all too often, assessors inadvertently include the hotel's intangible business assets in the assessed value. Brand value, management contracts, franchise affiliations, and customer relationships can inflate taxable value if not properly removed. On the majority of occasions, upscale, select-service, and extended-stay hotels – particularly those transacted in portfolios – are assessed at values that fail to extract these intangibles. This article outlines how intangible assets should be removed from hotel property tax assessments, why post-COVID performance data may overstate future income potential, and how the U.S. personal savings rate provides additional insight into broader economic travel behaviour. It also discusses growing momentum in the courts and appraisal community to require more rigorous removal of intangible value for taxation purposes. Intangible Assets and Hotel Taxable Value Standards By appraisal standards and law, intangible assets should be excluded from a hotel's taxable property value. A hotel's income derives from a going concern that includes real property, tangible personal property (FF&E), and intangible personal property. Tax assessors, however, are charged with valuing only the real estate component. Accepted practice therefore requires deducting or otherwise isolating the non-taxable intangibles so that only the real estate's value is assessed. Intangible assets commonly found in hotel valuations include: Brand and franchise affiliation (e.g., reservation systems, loyalty programs, trademarks) Management and operating agreements Assembled workforce and customer relationships Licenses, websites, and goodwill Under professional appraisal guidelines, only the tangible property—land and improvements (and in some circumstances, personal property)—should remain in the taxable value after intangible assets are removed. This principle is echoed in law: for instance, California law expressly exempts intangible assets from property tax. If an assessor values a hotel by capitalizing the business income or using sales of whole hotel enterprises without adjustments, the result includes non-taxable intangibles and inflates the assessment. In fact, failing to remove intangible value can render an assessment unlawful or subject to reversal on appeal. KC Conway's Retail Analysis Offers a Blueprint for Hotel Tax Appeal Recent commentary from economist and valuation expert KC Conway further validates the growing consensus that intangible value must be carefully separated from real estate in property tax assessments. In the drugstore and small-box retail sectors—segments undergoing a structural transformation driven by e-commerce, shrinkage, and rising operating costs—the presence of significant intangible assets has become increasingly evident. Walgreens, for example, reported a $2.0 billion goodwill impairment in 2025, underscoring the extent to which brand value and pharmacy fulfilment contracts drive enterprise value. These same dynamics are mirrored in the hospitality sector, where brand affiliation, management contracts, and franchise systems often contribute substantial intangible value that is unrelated to the underlying real estate. Yet, such intangibles are frequently embedded in assessed values, inflating tax burdens. Conway's analysis also highlights the importance of lease chronology and investor sentiment; as long-term leases approach expiration or become economically obsolete, the market often reverts to a fee simple valuation approach. Similarly, in the hotel sector, as brand agreements near renewal or termination, investors often reevaluate asset value independent of the brand's influence. This parallels evolving judicial perspectives in tax appeal forums, where courts are showing greater willingness to scrutinize intangible-laden properties—particularly when deferred maintenance, lack of capital expenditures, or declining revenue streams signal an overstated taxable value. Assessors and appraisers, Conway notes, frequently overlook critical market indicators such as store closing ratios, lease structures, and tenant credit profiles—factors equally relevant to hotels operating under franchise or management agreements. The failure to distinguish between leased-fee and fee simple interests, or to recognize that franchise affiliation and goodwill are non-taxable assets, has led to material overassessments in both retail and hospitality sectors. USPAP and the Appraisal of Real Estate (15th Edition) provide clear guidance on the competency required to analyze these distinctions, yet many assessments rely on investor surveys and leased-fee comparables without proper adjustment. For hotel portfolios, particularly those transacted as part of REIT acquisitions or brand rollups, this lack of valuation discipline can significantly distort the taxable base. Conway's work reinforces the need for rigorous appraisal methodologies that isolate real property from enterprise value—an approach increasingly echoed by courts and Boards of Assessment Appeals across the country. Judicial Momentum Toward Comprehensive Intangible Asset Analysis There is growing momentum within the courts affirming that a complete and deliberate analysis of intangible assets is not only appropriate but required. Historically, many hotel valuations used in tax assessments or appeals have leaned on simplified deductions—typically a franchise fee and a management fee—under the assumption that these adjustments sufficiently remove the business enterprise component of value. However, as the hospitality industry has grown more complex and intangible drivers of hotel performance have become more prominent, courts have begun to push back on this oversimplification. Recent rulings, particularly in states like California and Florida, demonstrate a clear judicial expectation: assessors and appraisers must undertake a thorough and specific allocation of intangible assets, rather than relying on industry rules of thumb. The courts have recognized that a hotel's flag, reputation, digital infrastructure, workforce, customer relationships, and operational systems all contribute significantly to income—and that failing to isolate and remove the value of these elements results in overassessment. Decisions such as SHC Half Moon Bay v. County of San Mateo underscore that the legal system is becoming more sophisticated in its understanding of hotel economics. The court in that case criticized the use of formulaic deductions as insufficient, noting that they did not meet the statutory requirement to exclude intangibles. The implication is clear: appraisal reports used for tax purposes must demonstrate a defensible, segmented approach. This evolving judicial stance reflects a broader shift in how tax tribunals and assessors evaluate hospitality assets. As hospitality continues to evolve and brand power, asset-light strategies, and technology platforms become increasingly central to hotel operations, valuation methods must adapt to extract non-taxable value accordingly. Post-COVID 'Revenge Travel' and Inflated Performance Bounces In the wake of COVID-19, hotel operating performance has swung dramatically. After travel demand collapsed in 2020, many markets saw an aggressive rebound in 2021–2022 driven by 'revenge travel'—a surge of pent-up demand as soon as vaccines and lifted restrictions enabled people to take the trips they had deferred. Occupancy levels and average daily rates (ADR) in 2021–2022 often jumped well above the prior year's figures, and in some cases even surpassed 2019 levels on a nominal basis. On the surface, these rebounding metrics paint a picture of robust growth. But current performance must be approached with caution. High occupancy and revenue figures are being measured off abnormally depressed base-year comparables. When 2020 is the benchmark, even a partial recovery yields eye-popping growth rates. For example, U.S. RevPAR plummeted nearly 85% year-over-year at the worst point of the pandemic, and a year later showed a 250%+ increase—driven largely by the low starting point. 'Revenge travel' was a temporary boost fueled in part by unusual consumer savings and stimulus. Households emerged from lockdowns with excess savings and a yearning to spend on travel. That led to a transient period in 2021–2022 where hotel demand outpaced normal economic growth. However, by 2023 those trends began to ebb. As excess savings dwindled and broader economic softening took hold, travel demand growth moderated. For tax valuation, this context is critical. Assessors who capitalize a single year of inflated post-COVID income or use recent growth rates in their projections risk overestimating a hotel's long-term sustainable value. A proper appraisal should consider normalized occupancy and earnings over a multi-year period, adjusted to account for the temporary nature of pandemic recovery. Hotel Recovery vs. U.S. Personal Savings Trends The U.S. personal saving rate offers a macroeconomic lens to evaluate hotel demand. In April 2020, the personal saving rate hit a historic high of ~32% as consumers stayed home and curtailed spending. That same month, national hotel occupancy fell to around 24.5%. As travel resumed, Americans drew down their savings and spent on travel at extraordinary levels. By March 2022, the saving rate had dropped to just 2.7%, a multi-decade low. This inverse relationship—between saving and hotel spending—highlights how excess liquidity drove much of the hotel industry's short-term performance gains. Today, however, the trend is normalizing. Personal savings have returned to mid-single digits, and discretionary travel spend is starting to reflect broader economic conditions, including inflation, credit tightening, and income pressure. Hotel valuation should incorporate this broader context. If recent performance is artificially high due to one-time economic behaviours, it should not serve as the sole basis for capitalized income or forecasted growth. Legal Precedent: Intangibles in Hotel Tax Appeals (California Example) Courts have reinforced the principle that intangible assets must be excluded from property tax assessments. A landmark example is SHC Half Moon Bay v. County of San Mateo (2014), which involved the Ritz-Carlton Half Moon Bay. The court rejected the county's use of the Rushmore Method, finding that deducting management and franchise fees alone failed to adequately remove intangible value. The decision emphasized that brand, customer relationships, workforce, and other business components are not part of the real estate and must be addressed separately. The result was a significant downward revision in the hotel's assessed value and a strong precedent for future tax appeals. Similar rulings have followed in Florida and other jurisdictions. Similarly, in Olympic and Georgia Partners, LLC v. County of Los Angeles, the California Supreme Court explicitly held that 'intangible assets like the goodwill of a business, customer base, and favourable franchise terms or operating contracts all make a direct contribution to the going concern value of the business,' which is necessarily reflected in the property's income stream. Hence, to comply with Section 110(d)(1)'s mandate that 'intangible assets and rights relating to the going concern value… shall not enhance or be reflected in the value of the taxable property,' the portion of the income stream directly attributable to these intangible enterprise assets must be quantified and deducted. Failure to quantify the fair market value of intangibles that directly enhance that income stream, and to exclude this value prior to assessment, results in those enterprise assets being 'improperly subsumed' in the valuation, in violation of Sections 110(d)(1) and 212(c). Upscale, Luxury, and Portfolio-Traded Select-Service and Extended-Stay Hotels Hotels in the upscale, upper-upscale, and luxury classes—as well as select-service and extended-stay hotels that are commonly transacted in portfolios—are particularly susceptible to the inclusion of intangible assets in property tax assessments. These assets often derive significant value from brand affiliation, loyalty programs, centralized reservation systems, and the operational efficiencies of national management platforms. This exposure is especially evident in portfolio transactions, where properties are sold as part of a larger, branded group. In such deals, buyers are not just acquiring physical real estate—they are investing in the enterprise value of the portfolio, including intangible elements such as brand strength, bundled services, and multi-property synergies. These hotel types have become favoured by REITs and institutional investors due to their consistent cash flows and lean operating models. However, because a material portion of their value is tied to franchise systems and broader brand infrastructure, they present a heightened risk of overassessment if those non-taxable components are not properly identified and removed in the appraisal process. The Appraisal Advantage in Tax Appeals In tax appeals, properly prepared hotel appraisals that isolate real estate value from intangibles offer one of the most compelling tools available. They combine legal precedent with rigorous valuation analysis and can often reveal 15–30% overstatement in assessed value. A segmented valuation identifies the income attributable to real estate only, subtracts intangible components like franchise and management systems, and presents a stabilized, market-supported estimate. These reports often carry significant weight before tribunals and can drive meaningful tax reductions. Conclusion Hotels are frequently over-assessed for property tax because assessors and mass appraisal models often overlook the intangible components of value. The post-COVID volatility in hotel financials further complicates matters, as unusually high recent incomes may overstate a property's long-term capacity. By removing the pent-up-demand effect through income stabilization and subtracting intangible business assets, a credible appraisal can present a more accurate value for the taxable real estate. This approach is backed by case law, appraisal theory, and macroeconomic trends—a compelling combination for effective tax appeals. The hospitality and valuation industries increasingly agree: hotels must be assessed like real estate, not operating businesses. Only then can assessments be fair, defensible, and in line with statutory intent. Bibliography Olympic and Georgia Partners, LLC. Application for Leave to File Amicus Curiae Brief and Amicus Curiae Brief of Council on State Taxation in Support of Olympic and Georgia Partners, LLC, Supreme Court of the State of California, Case No. S280000. SHC Half Moon Bay, LLC v. County of San Mateo, 226 Cal. App. 4th 471 (Cal. Ct. App. 2014). Appraisal Institute. Valuation of Hotels and Motels, 2nd Edition. Chicago: Appraisal Institute, 2010. Rushmore, Stephen. 'Hotel Value and Property Tax Assessments: The Rushmore Approach.' The Appraisal Journal, Summer 2002. California Revenue and Taxation Code § 110 and § 212(c) – Intangible Assets and Rights Exemption. Florida Department of Revenue v. Singh, 65 So.3d 61 (Fla. Dist. Ct. App. 2011). Federal Reserve Bank of St. Louis (FRED). Personal Saving Rate [PSAVERT]. U.S. Bureau of Economic Analysis. Accessed 2025. STR, Inc. Hotel Industry Performance Reports, 2020–2024. CoStar Group, Inc. JLL Hotels & Hospitality Group. Select-Service and Extended-Stay Hotel Outlook, Q1 2025. Choice Hotels International. Investor Presentations and SEC Filings, 2023–2024. Skift Research. 'The End of Revenge Travel?' Skift Megatrends 2024. KC Conway. 'The Impact of Capital Markets and Economic Conditions on Hospitality Real Estate.' Presentation at the Appraisers' Summit, March 2025. S. Bureau of Labor Statistics. Consumer Expenditure Surveys and CPI-U, 2020–2024. Moody's Analytics. U.S. Economic Outlook: Consumer Spending Trends, February 2025. Hotel Investment and Capital Markets Mid-Year Update, 2024. Bryan Younge Managing Partner +1-888-800-7258 Horwath View source
