The hotel supply chain is in crisis, according to an internal review of how hotel suppliers are working to meet growing demand in the global economy.
Key points: The hotel industry is facing “unprecedented” supply constraints, according a new report from the Australian National University (ANU) hotel supply expertsThe review says the “unusual and unprecedented” supply challenges are forcing suppliers to change their business models to meet new requirements and deliver better value to customers, which could mean lower margins and higher costs.
Key points:The report, The future for hotel supplies: what to expect, says supply shortages are set to be “uncommon and unprecedented”, as well as drive supply chain cost inflationThe ANU’s report, Hotel Supply and the World Economy, details the impact of supply constraints and supply chain costs, highlighting the challenges hotel supplies face in meeting the growing demand for accommodation.
The review was conducted by the Australian Centre for Business Policy Research (ACBP), a research arm of the ANU.
It found supply challenges across the hotel supply chains are set for unprecedented growth in the next two years, according the ABC.
“The current global economic cycle is already having an impact on supply chains, with the most severe supply disruptions in the hotel and hospitality sectors occurring during the last year, and in some cases even earlier,” the report states.
The research found there are currently only two supply chains that can meet growing hotel demand, with only one being ready to meet the demand for more than a year.
“This means that supply chains need to adapt to meet demand over the next 18 months, which is likely to lead to the gradual re-orientation of supply chains across the global supply chain,” the ANUP report states, adding that supply constraints could drive costs to double digits.
While hotel supply is already struggling, the impact on hotel price growth could be even greater, the report warns.
“Over the next six to 12 months, the supply chain could experience a dramatic rise in supply and prices, resulting in increased costs to guests and higher hotel room rates,” the study states.
“In some cases, this could lead to higher prices for hotel guests.”
Costs could also be higher for hotel owners, according some research, as well.
The ANUP study found that the cost of operating a hotel in 2020 will be over $500m, while operating a “hotel” in 2030 will cost $5.2bn.
“While the cost to operate a hotel is a very small component of the overall cost of running a business, it can be a significant driver of the total cost of a business,” the research states.
In response to the report, the ANUBP said it was “very concerned” about the impact supply chains would have on the global hotel industry, with one of its key recommendations being for hotel supply suppliers to “prioritise supply” by “implementing a business model that maximises value to the consumer”.
“The ANUBPC is concerned that in light of the increasing supply constraints that are currently impacting supply chains in the hospitality sector, there could be an increase in hotel room rate inflation and higher prices,” the company said in a statement.
“We are calling on suppliers to ensure that their supply chain has the capacity to meet increased demand and to minimise the impact it may have on their business.”
If hotel supply cannot meet increased hotel demand and costs, hotel owners may find that the opportunity for profit from their hotel property has diminished.
“The ANUS has warned that the hotel industry’s future is in jeopardy as a result of supply chain price inflation.”
Our industry is at an extraordinary crossroads, and as a consequence, supply chains and supply-chain operators must continue to focus on creating value to their guests and guests’ accommodation,” ANUP chair, Professor David Pritchard, said in the statement.