5 things to know: 30 December 2016
5 things to know: 30 December 2016
30 DECEMBER 2016 10:09 AM

From the desks of the Hotel News Now editorial staff:

  • Less M&A activity from China expected
  • More hotel rooms coming to Chicago
  • Hoteliers see labor as a challenge in the new year
  • Minimum wage to increase in 20 states in 2017
  • US, Canada weekly hotel performance

Less M&A activity from China expected in 2017: After a big year of buying foreign assets, China could face a few hurdles when it comes to mergers-and-acquisitions activity outside of Chinese companies’ core business, Reuters reports.

Chinese companies closed on several foreign asset deals in 2016, but “the number of deals that stalled was also a record as buyers ran into greater regulatory pushback from the United States and other Western nations,” according to the Reuters story.

Donald Trump’s upcoming presidency and “stronger curbs” on capital outflow from Beijing could lead to more issues for Chinese companies trying to purchase foreign assets in 2017.

“For 2017, right now it looks like it's going to be smaller year than 2016 due to the issues around political uncertainty and capital controls,” Charles Wu, international partner at Lock Lord LLP, told Reuters.

Minimum wage to increase in 20 states in 2017: Millions of American workers will get raises in the new year as minimum wages increase in 20 states, The Wall Street Journal reports. 

About 291,000 workers in Massachusetts will receive a $1 raise to $11 per hour. Minimum wage will hit $10.50 per hour in California in 2017, and wages are even rising in Republican-led states such as Arizona, Michigan and Ohio.

“Some of what Trump tapped into was people wanting to be paid more,” David Cooper, analyst at the Economic Policy Institute, told the newspaper. “Voting for a minimum-wage increase is one of the ways to make that happen for a lot people.”

Hoteliers see labor as a challenge in 2017: In our fourth end-of-year virtual roundtable, hoteliers told HNN’s Robert McCune that labor is a major concern going into 2017.

Five hotel management company executives said there are some challenges heading into next year, but there are also some opportunities.

“We expect we will continue to see an extremely tight labor market in terms of finding applicants, hiring and maintaining employment of line-level employees. Employees have a lot of choices,” said Ben Kinseth, director of operations and asset management at Kinseth Hospitality.

More hotel rooms coming to Chicago: The Chicago area will have 3,000 new guestrooms coming into the hotel market in 2017, which has some hoteliers worried about oversupply, the Chicago Tribune reports.

Ted Mandigo, director of Elmhurst-based hospitality consultant TR Mandigo & Co., told the newspaper that occupancy is expected to hit 74.5% in 2017, which is down from 76% from the previous year. But, he said, “the supply of room has been outpacing demand,” which is a challenge in the market.

Chicago will have a total of 44,000 rooms as the new ones come online in 2017. The city will host 35 meetings in 2017, an increase from 31 in 2016, which could lead to more demand for hotel rooms.

U.S., Canada weekly hotel performance: U.S. hotel industry performance during the week of 18-24 December was negative, according to data from STR, parent company of Hotel News Now.

Occupancy decreased 1.2% to 42.2% year over year, and average daily rate was down 3% to $106.06. Revenue per available room dropped 4.2% to $44.76.

Meanwhile, the Canadian hotel industry reported mixed results for the week.

Canada’s occupancy rose 2.5% to 34.1%. ADR dropped 1.1% to 137.71 Canadian dollars ($102.43). RevPAR increased 1.3% to CA$46.97 ($34.94).

Compiled by Danielle Hess. 

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