‘Do you know analysts with 2 to 3 years of experience?’

NATIONAL REPORT – It’s a popular question every cycle within hotel real estate... usually a couple years after a massive layoff of young analysts. Yet, more than ever, companies’ pressure to grow means more hotels, which requires more owners and developers – but is the industry “future proofing” itself? To ensure long-term industry growth, hospitality needs to nurture young talent by creating awareness of hotel real estate careers, taking the long view on talent, and nurturing paths to success.

HRE career awareness

Of the ~100 U.S. universities with hospitality programs, only a handful offer classes in hotel real estate (HRE). As a result, most hotel school graduates have no real understanding of who builds and/or owns the hotels they work in, nor do they appreciate the sometimes-fraught relationship between owners and brands.

HRE has not historically been a bastion of mentorship, where talent is nurtured with intent. The industry needs more commitment to long-term development of young talent.

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Further, students will be less likely to pursue careers in HRE if only a select few are hired each year from a small handful of universities. More can be done to inspire young people early in their hospitality careers:

Hospitality schools can embed learning about the roles, perspectives, and motivations of brand companies, hotel owners, and hotel management throughout their curriculum. For example, an initiative such as moving from single-use shampoo bottles to on-the-wall dispensers may be required by a brand company, implemented by the operator, and paid for by the owner – all three parties are critical to carrying out the initiative, but they each have different motivations and concerns. Early appreciation of each player’s mindset pays dividends throughout one’s career.

Brand and management companies, and owners can offer many more corporate-level internships to college students. To attract top graduates to hospitality, it’s critical to showcase careers (not just hourly jobs), including exposure to corporate offices and senior leaders. Employers need to move beyond offering students summer jobs they could get without a college degree – or worse, giving them so little to do, they spend the summer surfing online.  How can we amplify the many areas of hospitality that require nuanced knowledge, complexity and creativity to attract talented young people to careers, not jobs, in hospitality?

Taking the long view

Ten years ago, HRE organizations resembled a pyramid: c-suite at the top and a pool of analysts at the bottom. Companies handpicked one or two exceptional analysts to promote into a leadership track, while the very good analysts would become associates at other companies.

If employers find one of those rare 2- to 3-year analysts, pay up: the industry created the current analyst shortage, so compensate them for the time and experience needed.

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Now companies are more like a ladder, putting increased importance on each rung of that ladder, including the bottom. As a result, sharp analysts burn out or leave the industry due to poor onboarding, unreasonable expectations, added pressure, or lack of mentorship.  Exacerbating this, during hospitality’s inevitable cycles, analysts are immediately let go. Over time, it creates a dynamic where analysts job-hop excessively, chasing higher salaries, titles, or promised activity.

To stop this cycle, the hotel industry needs to take the long view on developing HRE talent into the future’s savvy, experienced real estate investors:

To become an industry of choice, young people need to trust employers are looking out for them. HRE has not historically been a bastion of mentorship, where talent is nurtured with intent. The industry needs more commitment to long-term development of young talent.

Invest long term in building a strong pipeline of future senior HRE leaders. Young people are the next generation of developers, owners, and lenders – unless driven into other industries. Keeping junior team members on staff, even during downturns, will create more well-informed future hospitality leaders.

Be open to training students right out of school, especially if you had to let young people go during the pandemic. The hotel industry needs to collectively rebuild the talent pool once again. And if employers find one of those rare 2- to 3-year analysts, pay up: the industry created the current analyst shortage, so compensate them for the time and experience needed.

Nurturing paths to success

Build HRE bench strength by training young people how to think about hotel investments, especially in the age of AI because today’s analysts are tomorrow’s potential owners.

In 2022 and 2023, there was a mad scramble to hire HRE professionals from analysts to vice presidents, and there was insufficient talent to meet those needs.

Today, transaction volume is muted but this cycle will repeat itself - yet deal teams rarely plan for the future. Instead, employers should reconsider the approaches used in the past by:

Training more college graduates as HRE analysts, not less. Too few HRE teams at brands, owners, and management companies are willing to train recent college graduates as analysts. AI will exacerbate this issue as more entry-level analyst tasks become automated, and companies hire fewer analysts. And while this seems like a great money-saving initiative to offer senior leaders and boards today, it will shrink the pool of experienced analysts, limiting the number of experienced future HRE leaders.

Allowing for sufficient coverage to prevent burnout. Fewer analysts mean added pressure and responsibility on the one or two remaining analysts – and with less peer support, this will lead to early burnout, further exacerbating the scarcity of analyst talent over time.

To avoid creating a shortage of HRE analysts, schools, brands, owners, and management companies need to build the analyst pipeline and prioritize long-term development of analysts. Companies can also recruit and train analysts with backgrounds in operations, design, law, etc. to help diversify perspectives.

Somehow the laws of supply and demand that HRE leaders know so well when it comes to their hotels is mysterious when it comes to their young analysts.

The hotel industry needs to break the perpetual cycle of losing young people as it will need them if the future to continue to grow.

As a result, a new approach is needed going forward, one that includes helping create early awareness of hotel investment careers, taking the long view on talent, and nurturing paths to success with intention. By taking these actions collectively, hospitality can build a vibrant pipeline of talent that will futureproof hotel investment for the next generation and beyond.

Contributed by Terry Donovan, Aethos Consulting Group, Brooklyn, New York, and Lan Elliott, Acacia Holdings, Bethesda, Maryland

The views and opinions expressed in this content do not necessarily reflect the opinions of Hotel Investment Today by Northstar or Northstar Travel Group and its affiliated companies.