Talent tops list of challenges for investors

INTERNATIONAL REPORT — For investors in hotel, fitness, and wellness assets, the greatest challenge today is talent, not capital. Simply allocating capital is no longer enough to ensure performance. Investors should prioritize due diligence on operator capabilities, seeking a proven track record of managing complex, multi-layered assets. Ongoing investment in training and career pathways is essential for operators to meet evolving market expectations and protect asset value.

In newly opened or repositioned luxury hotels, the intent is usually clear and loud. Architecture is more ambitious, wellness spaces are larger, fitness areas are more design-focused, and social environments are positioned as key centers for guests and local members.

On paper, the industry is at its peak. However, many of these assets are already underperforming, and the situation is worsening.

Not because the concepts are wrong. Instead, the shortage of qualified personnel has become a critical barrier to effective operations, marking a transition point in understanding workforce dynamics.

A shrinking workforce

The hospitality industry has not fully recovered from the structural change in its workforce.

Although employment numbers have improved over the past few years, the workforce has shifted. The World Travel & Tourism Council reports tens of millions of lost roles globally, with many experienced operators not returning. In Europe and the United States, hospitality vacancy rates remain high, particularly in operational and supervisory positions.

This is more than a labor shortage; it is a capability shortage.

Experienced operators are absent, and their replacements lack the efficiency and skills of their predecessors. This absence of qualified personnel is a critical barrier to effective operations and asset performance.

Replacing experienced operators has not restored efficient management, leading to a decline in the rate and quality of service.

Simultaneously, the product has become more complex. This shift is significant because the product now extends far past traditional hospitality. Hotels are no longer just accommodation with food and beverage attached.

They are now expected to deliver:

• Wellness ecosystems.
• Fitness environments that rival standalone clubs.
• Social wellness spaces combining work, recovery and community.
• Hybrid settings in which guests and local members coexist.

Each of these layers requires a separate operational approach.

A gym is no longer a support function. A spa is no longer a passive service. A lobby is no longer only a transition space.

Each element must be designed to deliver measurable outcomes.

Social wellness

According to a recent ScienceDirect article, social wellness is often overlooked, adding further complexity to hospitality operations.

Guest and member behavior is shifting across markets. They now seek integrated environments where they can train, recover, work, meet, and spend extended periods.

According to McKinsey & Company, hotels are increasingly seen as “third places” where people gather outside home and work. However, while guest demand rises, hotel staffing levels have not returned to previous levels, creating operational challenges.

The industry talks about social wellness fluently. Operationally, the industry seldom fulfills this promise.

Social wellness is not simply a design feature. It is a behavioral system that requires deliberate management.

It requires: 

• Controlled flow between spaces.
• Clear separation between focus, performance, and social interaction.
• Programming that activates the environment throughout the day.

Without these elements, spaces tend to become too social, losing performance credibility or or too functional, failing to create community.

Most assets fall somewhere between these extremes.

The expectation gap

Meanwhile, customer expectations have evolved more rapidly than operator capabilities.

According to the World Travel & Tourism Council, today’s guests and members are more informed, discerning, and demanding. Online platforms now offer them curated wellness concepts, seamless experiences, high-performance environments, and personalized journeys, while their offline experiences often lack cohesion and consistency, including inconsistent service and underutilized environments.

The gap between industry promises and actual delivery is widening rapidly, and the consequences are increasing.

The industry seldom executes consistently at the level it promotes, despite strong intention.

Education has not kept pace

Part of the issue is structural. The industry now develops multi-layered, hybrid environments, but education and training have not kept pace with this complexity.

There is no clear pipeline producing operators who can:

• Understand fitness, wellness, and hospitality simultaneously.
• Manage both service and performance environments.
• Design and execute programming among different user groups.

Instead, the industry continues to rely on traditional hospitality training or fitness-specific pathways, expecting individuals to bridge the gap on their own.

Most don’t.

According to PwC US, while operational challenges persist, supply growth in hospitality is expected to normalize. This will increase demand for professionals who can bridge workforce shortages and operational complexity—and thus are highly valuable in protecting investment performance. For investors, it is crucial to recognize that underutilized assets may signal operational gaps rather than a lack of market demand, which can affect asset evaluation and future returns. 

As investors, we go beyond surface-level metrics and rigorously assess each asset's operational integrity. Key steps include: reviewing staffing models, evaluating training programs, and scrutinizing the operator's track record in complex environments. Following the acquisition, ensure strong oversight of management practices, establish contingency plans for talent shortages, and dedicate resources to operational excellence. Making operational capability a core filter will better position investors to identify assets with sustainable value.

There is ample demand for these offerings. The global wellness economy exceeds $6 trillion, with ongoing growth driven by consumers valuing health, longevity, and lifestyle. However, demand alone does not guarantee utilization.

Similar patterns appear across assets: wellness areas are built at significant cost but see limited use, fitness spaces look impressive but lack consistent engagement, and social areas often lack a clear purpose, resulting in low dwell time. However, some operators have reversed these trends through intentional strategy and operational discipline. For example, The Movement Hotel in Amsterdam achieves high usage of fitness and wellness spaces through robust community programming and targeted member engagement. Brands like Equinox Hotels maintain occupancy and engagement well above industry averages by investing in staff training and specialized programming. These examples demonstrate that focused operational leadership, intentional design, and ongoing investment in talent can overcome underutilization and deliver measurable results.

These reflect execution gaps, not market failures, and the urgent ones jeopardize outcomes.

The cost of adding complexity

Each additional layer, such as wellness, recovery, social space, or hybrid work, increases operational demands. More staff. More training. More coordination. More oversight.

When labor is already limited, added complexity quickly becomes a significant liability.

Efforts to differentiate often result in diluted performance. Operating hours are reduced. Experiences are simplified. Standards are adjusted to match staffing levels rather than the intended positioning. As a result, asset performance quietly declines.

A planning issue 

One of the most consistent structural mistakes is timing.

A common structural mistake is timing. Operators are often engaged after design decisions are finalized, flows are set, and spatial logic is fixed. At that stage, only limited adjustments are possible.

According to a report from HOTREC, European hospitality venues such as hotels, restaurants, and cafés are struggling with workforce shortages and skills gaps, making it challenging to operate even in attractive spaces that lack features such as effective acoustic control. Fitness areas lack clear circulation. Wellness zones disconnected from the wider journey.

These are not minor details but structural issues with serious long-term implications and they cannot be corrected solely through training.

The emerging divide

What is emerging is a clear divide between assets.

On one side are concept-led developments that emphasize design and narrative yet lack operational depth.

Others are well-managed, programmed, and utilized. These consistently outperform over time, and such assets succeed not only because of their effective functionality, but also because they are designed for smooth operation.

Rethinking the investment

For investors, this changes the evaluation entirely.

It is no longer sufficient to ask: Is the concept strong? Is the design competitive? Is the brand aligned?

More relevant questions include: Who will operate this? Can they deliver consistently across all layers? Is the concept aligned with the available talent pool?

Most importantly, investors must ask: Should this level of complexity be built at all, given available operational talent?

To address this, investors should use a decision toolkit to evaluate if added complexity is justified. Key recommendations: assess alignment with guest and member needs, evaluate whether each layer delivers clear value, and determine whether operational capacity matches the planned complexity. These steps ensure that complex investments are supported by the talent required for success.

Considerations include:

• Alignment with core guest and member needs: Does each layer deliver clear value to the target audience?
• Talent and operational capability assessment: Do current or prospective operators have demonstrated success running comparably complex assets?
• Revenue potential versus incremental cost: Are the additional operational, staffing, and training requirements offset by expected increases in utilization and financial returns?
• Flexibility of design: Can spaces be efficiently adapted to changing patterns of use without costly reconfiguration?
• Scalability and replicability: Is the model sustainable across multiple assets, or does it rely on unique circumstances?

Applying these criteria early in the planning process enables investors to determine whether complexity supports long-term asset value or introduces avoidable risk.

The next cycle

Hospitality, fitness, and wellness are combining into a single operating system.

The ambition is clear. The demand is real. However, the system is only as strong as its operators and the system is only as strong as the people who operate it.

Right now, this is the primary and urgent constraint. Not ideas, not investment and not demand.

In the next cycle, value will not come from those who simply build the most assets. Instead, value will be created by those who operate effectively and address these urgent gaps.

For investors, three priorities are essential:

• Select experienced operators with proven capability across hospitality, wellness, and fitness.
• Support the ongoing development of a strong talent pipeline.
• Regularly conduct operational audits to ensure alignment between concept and delivery. Focusing on these actions will help assets reach their full potential and remain competitive. That is the true competitive advantage of the next cycle.

Contributed by Yves Preissler, Yves Preissler Business Consulting, Kuwait

Note: The following contributed perspective was submitted through ISHC.

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