News Briefs

The NYU School of Professional Studies Jonathan M. Tisch Center of Hospitality and Boston Consulting Group (BCG), one of the world's leading management consulting firms, recently collaborated on a survey of hotel owners, management companies, and other industry stakeholders to gauge their sentiment and prospects for the hospitality industry.

The resulting white paper, titled “Hotel Borrowing Costs are Rising – But So Are Occupancy Rates,” projects positive outcomes based upon rising demand that will bolster key industry metrics, such as occupancy rates, average daily room rates (ADRs), and revenue per available room (RevPAR), while new construction is down to 2015 levels.

For the past three years, the Tisch Center of Hospitality and BCG have collaborated on critical research on the latest industry challenges and opportunities. Leading hospitality brands and organizations have come to rely on the insights from NYU SPS/BCG collaboration to help better inform their current and future business decisions.

“We expect this year’s report will arm industry stakeholders with valuable information to help move their businesses forward,” said Sean Hennessey, associate professor at the NYU SPS Tisch Center of Hospitality and contributor to this white paper. “While inflation increases operating costs, it can also help accelerate room rate growth. Further, interest rates rise in an inflationary environment, which affects the feasibility of new construction. On balance, the profitability outlook is attractive,” added Hennessey about the survey findings.

“Uncertainty, inflationary fears, and elevated interest rates will likely be with us for a while,” said Tom McCaleb, managing director and partner at BCG “All can have a chilling effect on hospitality investment. Despite these concerns, our latest work with the Tisch Center shows that strong room demand will keep the hospitality industry an attractive investment for the foreseeable future.”

Survey Highlights

While the NYU SPS/BCG analysis is far from gloom and doom for the hospitality industry, here are a few top-line results from the survey:

Guest Demand: A Major Source of Optimism

• More than 70% of survey respondents anticipate demand will at least somewhat increase by the end of 2023, and 42% expect significant increases in 2024.
• Hoteliers are looking for nominal revenue increases of 4.6% to 5.1% in 2023. Those expecting a significant increase in demand anticipate revenues to rise by about 12%.
• Real growth rates seem likely to exceed the rate of inflation. The revenue increases will be driven by both volume and price.
• Hoteliers expect room rates to rise by 8.3% to 8.8% over the next 18 months, expanding gross margins by about six percentage points.

 Interest Rates: The Biggest Threat for Investors

• Even though hotel industry participants expect the inflation rate to drop below 5% by the end of 2024, they are nonetheless wary.
• High-interest rates spook investors in hotels as in other commercial property sectors. In the current environment, 82% of hotel owners view the hotel industry as less attractive than other investment classes.
• The industry is approaching a trigger point. A summary of recent hotel financings shows spreads topping out at 400 basis points above the secured overnight financing rate (SOFR), which itself is approaching 5%. When borrowing costs exceed 8%.
• In this survey, 89% of hoteliers consider rates above 8% unacceptable for taking out a loan.

Persistent Labor Challenges Add to Investor Reticence

• Prolonged staffing shortages add to investor concerns; 70% of hotel owners view the hotel industry less attractive if labor problems persist.
• More than 60% of respondents reported that they are somewhat or severely short-staffed, which NYU SPS/BCG estimate costs hoteliers about seven percentage points of revenue and two points of operating margin.
• More than 75% of respondents experienced modest or better labor productivity gains in the last three years and are optimistic about improving employment going forward. More than 60% expect continued improvements in 2023, and 100% expect significant improvements in 2024.
• Two challenges still need to be solved in this area: the number of job openings and decreases in real earning potential for industry workers.

 

View the complete NYU SPS Tisch Center/Boston Consulting Group Survey.

For electric vehicle owners in British Columbia, Tim Hortons is now fueling road trips in more ways than one.  The company has announced the expansion of its electric vehicle charging station pilot launched earlier this year in Oakville, Ontario, by unveiling six new charging stations at restaurants throughout  British Columbia.

Tim Hortons announced the pilot in February in an effort to study the technology, its usage and opportunities.

"We have been thrilled with the results of the pilot so far.  Usage of the charging station in Oakville has surpassed our expectations and we received many calls with requests to expand the pilot," said Paulo Ferreira, Senior Director, International Strategic Restaurant Design and Building Standards, Tim Hortons. "With more than 3,300 eligible restaurants across the country, we continue to look for opportunities to expand the pilot and contribute to the EV infrastructure."

The BC expansion, supported by the Province of BC's Community Charging Infrastructure Fund and Koben Systems Inc. (KSI), placed charging stations strategically in Nanaimo, Langford, North Vancouver, Burnaby, Abbotsford and Coquitlam to create paths within the province, allowing guests to travel from restaurant to restaurant strictly on electric power.

Tim Hortons offers charging stations as a courtesy to guests at six locations.  As of March 31st, 2013, Tim Hortons had 4,288 system-wide restaurants, including 3,453 in Canada, 808 in the United States and 27 in the Gulf Cooperation Council. 

Panda Express announces the launch of Panda Rewards, its first points-based national rewards program.

It utilizes a personalized points-based system that rewards members with ten Panda Points  for every dollar spent on qualifying purchases. Once 200 Panda Points have been accumulated, guests can start redeeming their favorite Panda menu items. Each month, guests' first qualified purchase will unlock a surprise Good Fortune Gift ranging from bonus points to special discounts or even free food, along with a unique digital fortune cookie message to be collected. Panda Rewards members will also receive a birthday gift of their choice.

"Sharing good fortune is an important value at Panda, and we are delighted to launch our first rewards program nationwide as a heartfelt expression of gratitude towards our loyal guests for their continued support throughout the years," said Andrea Cherng, Chief Brand Officer at Panda Express. "We look forward to engaging our guests in a playful and meaningful journey of good fortune as they collect unique prizes offering exceptional value every time they dine at Panda."  

The more Panda Points members accrue, the better the rewards options. The rewards range from a free upgrade to a premium entrée, a free drink of choice to even a free Family Meal. Guests have a personalized experience to choose their preferred reward from multiple options. What's more, Panda Points do not expire unless there are no qualifying purchases in 12 months.

Panda Rewards members can earn and redeem Panda Points when ordering through the Panda Express mobile app or the PandaExpress.com website, in-store, or the drive-thru. Those ordering online that have logged in as a Panda Rewards member will automatically receive Panda Points for their purchase. For in-store and drive-thru orders, guests can easily access and present a QR code in the mobile app for a Panda associate to scan. Alternatively, guests can also enter a unique rewards code found on their receipt from an in-store order that can be entered in their account up to seven days from purchase in the app or online to earn Panda Points on that purchase.

Wendy's and Google Cloud announced an expanded partnership to pilot an artificial intelligence (AI) solution, Wendy's FreshAI. The technology has the potential to transform Wendy's drive-thru food ordering experience with Google Cloud's generative AI and large language models (LLMs) technology.

Demand for Drive-Thru

With 75 to 80 percent of Wendy's customers choosing the drive-thru as their preferred ordering channel, delivering a seamless ordering experience using AI automation can be difficult due to the complexities of menu options, special requests, and ambient noise. For example, because customers can fully customize their orders and food is prepared when ordered at Wendy's, this presents billions of possible order combinations available on the Wendy's menu, leaving room for miscommunication or incorrect orders. Google Cloud's generative AI capabilities can now bring a new automated ordering experience to the drive-thru that is intended to enhance the experience that customers, employees and franchisees expect from Wendy's. As HT reported last month, one Wendy's franchise, Wenspoke, is expanding its use of AI in the drive-thrus.

"Wendy's introduced the first modern pick-up window in the industry more than 50 years ago, and we're thrilled to continue our work with Google Cloud to bring a new wave of innovation to the drive-thru experience," said Todd Penegor, President and CEO of the Dublin, Ohio-based QSR. "Google Cloud's generative AI technology creates a huge opportunity for us to deliver a truly differentiated, faster and frictionless experience for our customers, and allows our employees to continue focusing on making great food and building relationships with fans that keep them coming back time and again."

Pilot Near HQ

In June, Wendy's plans to launch its first pilot of Google Cloud's AI technology in a Columbus, Ohio-area, Company-operated restaurant, using those learnings to inform future expansions to more Wendy's drive-thrus. The pilot will include new generative AI offerings, such as Vertex AI and more, to have conversations with customers, the ability to understand made-to-order requests and generate responses to frequently asked questions. 

This will all be powered by Google's foundational LLMs that have the data from Wendy's menu, established business rules and logic for conversation guardrails, and integration with restaurant hardware and the Point of Sale system. By leveraging generative AI, Wendy's seeks to take the complexity out of the ordering process so employees can focus on serving up fast, fresh-made, quality food and exceptional service.

Today's update builds upon Google Cloud's and Wendy's long standing partnership to enhance the Wendy's restaurant experience. Since 2021, Wendy's has leveraged Google Cloud's data analytics, AI, machine learning (ML), and hybrid cloud tools to make it faster, easier, and more convenient for customers to access the brand.

Hooters of America is launching a new virtual food court with multi-concept ordering functionality.

The virtual food hall is now live for customers in 196 markets nationwide. At launch, the first three virtual concepts being offered include Chase Elliott’s Chicken Tenders, Hootie’s Burger Bar with a full line of cheeseburgers and hamburgers with all the toppings and Hootie’s Bait & Tackle, a seafood eatery. 

Powered by Olo, customers can order from a variety of meal options in one basket, one transaction at checkout through a single delivery service. The new on-demand technology solution also allows cost and efficiency controls that the restaurant concepts can pass along to customers.

• 71% say the ability to integrate with other systems is driving their POS purchase decisions, according to HT’s2 2023 POS Software Trends Report.

 

“Partnering with Olo means we can offer our customers a quicker, easier and cost-saving virtual experience – plus it’s something for everyone in a family or friend group,” said Marc Butler, senior vice president of strategic planning / off premise, Hooters of America. “Building a digital marketplace is essential in today's restaurant world. This new platform allows us to give our virtual concepts life beyond the delivery apps. Customers can directly place online orders for carryout, or if they want the convenience of delivery, we can provide that without the hassle and added cost of going through the delivery apps.”

In the coming months, the portal will expand with the launch of a mobile app and additional concepts and more meal options.

Thanx expands its partnership with Olo Inc., an open SaaS platform for restaurants, and its debut of Olo Connect. Olo Connect is a growing ecosystem of integrated technology and service partners that are primed to deliver a best-in-class dining experience powered by the Olo platform. The program will allow mutual Thanx customers to benefit from an even deeper technology integration and enhanced partnership.

When Thanx and Olo partner together, restaurants can take advantage of Olo's Order, Pay, and Engage solutions, and can also gain access to Thanx’s guest engagement platform, mobile apps and front end web design for ordering, which are purpose-built for driving customer loyalty and retention. Thanx and Olo’s joint solution allows restaurants to drive more direct orders and maintain the critical ownership of guest data and relationships in the fight against third-party channel convenience.

• 71% say the ability to integrate with other systems is driving their POS purchase decisions, according to HT’s2 2023 POS Software Trends Report.

The Olo Connect program partnership formalizes the relationship Thanx and Olo built through the year. Shared customers enjoy many benefits from the seamless integration, including 40% faster launch timelines and 10x more loyalty sign ups. Many brands that optimize with Thanx’s front-end ordering solution, powered by Olo digital ordering on the back-end, see 85% cart conversion from ordering landing pages while first-party digital revenue outpaces third party revenue 2:1.

Some current shared customers include Union Square Hospitality Group, Velvet Taco, and Kneaders Bakery and Cafe.

With broader access to Olo resources and support as an Olo Connect Gold Partner, shared customers will have the ability to adopt Thanx innovations that span non-discount rewards to proprietary credit card tokenization to automatic enrollment of 100% of digital customers into loyalty. The Olo Connect partnership also reinforces Thanx’s commitment to their focus on building the most robust technology integration ecosystem in the loyalty space.