Alta Thoughts (October 2023)
By Rakesh Patel
That HK business buzz has certainly returned to the city after so many years, but are things really back to normal here? From a travel perspective, we still have a ways to go. Latest numbers show that visitors to HK are still 47% below 2019, and anecdotally hotels more exposed to international, non-mainland Chinese arrivals are lagging.
Mainland visitors are making up some of the slack. Golden Week numbers showed arrivals to HK were back to 85% of the peak, though retailers comment that visitors are spending less.
Economic sluggishness has been a challenge, but for HK to return to travel normality, global airlift needs to be ramped-up. Cathay Pacific will only get back to full airline capacity by the end of 2024.
How do Asian hotel operators feel about 2024? Pretty bullish, according to this latest JLL sentiment survey. This is on the back of a strong recovery in 2023.
Over 70% of respondents expect ADRs to rise beyond record levels, with occupancy catching up. The upper-end segment leads the way, with the strongest sub region being SE Asia. The majority now believe that total revenues in 2024 will surpass 2019 levels.
Cost challenges are expected to ease. Labour shortages are being addressed somewhat with digital solutions, redefining roles, lowering standards. And energy efficiency is playing out alongside an emphasis on ESG goals. This leads to 60% of operators believing profitability next year will surpass pre-pandemic levels.
Are you shocked by soaring airfares? Hoping they will fall soon? This make take more time. International Air Transport Association (IATA) forecasts the airline industry to make net profit margins of just 1.2% in 2023 or $2.25 per passenger on average.
Whilst NPM are better than the -11.3% from 2020-22, the airlines still have a long list of items to address: investment in airline capacity, decarbonisation, higher fuel and staff costs, not to mention repairing their balance sheets and delivering a positive return to shareholders.
Given this it does seem that passengers (and cargo users) will continue to have to bear elevated prices, particularly with load factors (81%) and passenger volumes (4.35bn), close to 2019 levels. And in a recent survey, 77% of passengers said “flying was a good value for money price”.
Your built environment has a real impact on your wellness. According to the CDC, 85% of our health outcomes are due to the physical environment, surrounding amenities, and the social connectivity it fosters.
The “America at Home Study” showed that the importance of a wellness environment became more important than ever, but satisfaction levels have plummeted.
For architects and designers, the opportunity is to take wellness seriously in their scope of work. This can take many forms from kitchens that promote healthy and social eating, to homes that allow natural light and ventilation.