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The Exciting World of Hospitality Giants in 2021

CEO Khai Intela
The hospitality industry has undergone significant changes in recent times, and it's always interesting to delve into the latest trends and insights. In this article, we explore the captivating world of the Hospitality Giants in...

The hospitality industry has undergone significant changes in recent times, and it's always interesting to delve into the latest trends and insights. In this article, we explore the captivating world of the Hospitality Giants in 2021. So, grab a cup of coffee, sit back, and join us on this journey!

Unveiling the Numbers

The Hospitality Giants, as their name suggests, are the powerhouses of the industry. They are the top dogs, the trendsetters, and the ones who make things happen. As we delve into their business numbers, we discover a tale of resilience and adaptability.

The year 2020 brought its fair share of challenges, and the Hospitality Giants felt the impact. However, despite fee totals dropping, the number of jobs held steady, dipping only slightly from the previous year. In 2020, these giants undertook a remarkable 4,742 projects, a decrease of just 150 from 2019. Although the number is expected to decrease further in 2021, it's still a significant testament to their unwavering commitment.

Profits and Square Footage: Shedding Light on the Business

Profit margins vary across different categories, giving us valuable insights into the industry landscape. Hotels, for example, make up 39 percent of job volume and bring in a staggering 58 percent of fees. Restaurants, on the other hand, account for 19 percent of jobs but only 7 percent of fees. These figures shed light on where the money flows within the industry.

Square footage is another essential aspect that reveals the volume of business. In 2019, the Hospitality Giants worked on a total of 263 million square feet. However, due to various circumstances, including the COVID-19 pandemic, that number dropped significantly to 149 million square feet in 2020. This decline is the second-lowest total since the list expanded to include 75 firms in 2007.

Shifting Dynamics: New Projects, Renovations, and Refreshes

The breakdown of projects between new developments, renovations, and refreshes has also seen noticeable changes. In 2020, new projects accounted for 47 percent of work, while renovations and refreshes constituted 46 percent and 7 percent, respectively. Notably, renovations gained more prominence compared to 2019 when they accounted for only 42 percent of the workload.

These shifts reflect the changing needs and priorities of clients. The low consumer numbers allowed for more extensive renovations, which are often challenging to execute without disrupting day-to-day business operations.

Furniture, Fixtures, and Construction Products

One consistent factor in all this flux is the demand for furniture, fixtures, and construction products. With an 11 percent drop to $17.2 billion in 2020, this segment remains resilient. The forecast for 2021 stands at $17.6 billion, showcasing the industry's stability despite external factors.

Over the years, the ratio between construction products and furniture & fixtures (F&F) has remained relatively constant at 62/38. This consistency hints at a solid foundation and a balanced approach within the industry.

The Global Perspective: Shifting Boundaries

When it comes to international projects, the Hospitality Giants have always had a strong presence. In 2020, the percentage of Giants working outside the U.S. increased significantly from 15 percent to 24 percent. Although this seems noteworthy, it's important to note that international work rates have traditionally hovered around the 25 percent mark for the past decade.

The majority of international projects were undertaken in Asia and the Pacific Rim (two-thirds of firms), followed by the Caribbean, Europe, Canada, and Mexico. Looking ahead, more than half of the Giants predict growth in international work, with the Middle East and Asia emerging as potential hotspots.

The U.S. Perspective: Action in the Hardest-Hit Regions

While international projects present exciting opportunities, the Hospitality Giants still believe that the real action lies within the United States. Regions like the Northeast, Southeast, and Southwest hold immense potential, even in the aftermath of the pandemic. It's intriguing to witness their confidence in these areas, which have been hit the hardest by the crisis.

The Crystal Ball: Predicting the Future

As we ponder what the future holds for the hospitality industry, one thing is clear: there won't be a sudden breakthrough in any one sector. The Hospitality Giants foresee no significant changes in the allocation of their business sectors. When it comes to project counts, there is little consensus among firms. Hotels and restaurants/bars/lounges/nightclubs, in particular, have nearly even predictions of more, fewer, or unchanged project numbers. The upheavals of 2020 shattered industry assumptions and expectations, making it challenging to predict with certainty.

However, in the midst of uncertainties, one segment stands out: the multiuse category. It surpassed its 2019 predictions in 2020 and is expected to rise by 10 percent in 2021. This upward trend offers a glimmer of hope and optimism for the future.

A Glimpse Beyond: Signs of Recovery

To find more reasons for optimism, we need to look beyond the data of the Hospitality Giants themselves. Vaccination rates offer hope, with 56 percent of the U.S. population already fully vaccinated. Travel rates are also on the rise, with hotels outside the largest 25 markets in the U.S. approaching pre-pandemic occupancy levels. Even small town and interstate hotels now boast higher occupancy rates compared to 2019.

As we navigate toward a new normal, health and wellness design trends will play a critical role in shaping the future of the industry. Sustainability and wellness are no longer optional but have become essential considerations. Design firms are committed to creating healthy and inclusive environments that prioritize well-being. The crisis has also highlighted the need for resilient solutions that can withstand future challenges.

Cautious Optimism: Embracing the Future

Next year's data will be vital in assessing the longer-term prospects of the hospitality industry. While caution is warranted, there are ample reasons to be optimistic. After all, few people have gone broke by being cautiously optimistic.

So, as we bid farewell to the Hospitality Giants of 2021, we eagerly await what the future holds. Change is inevitable, but with the right mindset, adaptability, and a touch of cautious optimism, the hospitality industry will continue to thrive.

Disclaimer: This article is based on the annual business survey of Interior Design Hospitality Giants and is compiled and analyzed by Interior Design and ThinkLab. The opinions expressed are solely those of the author.