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Categories: AGC Partners Insights

AGC PARTNERS INSIGHTS: HOSPITALITY TECH – RISING FROM THE ASHES

COVID-19 hit hospitality harder than any other industry. Overnight nearly all hotels worldwide were shut down or reduced to skeleton staffs with few guests. Revenue per available room (“RevPAR”), the industry’s most watched KPI plummeted by 80% in the US. Faced with an existential crisis, the industry turned to tech to stave off total collapse. As vaccination rates climbed and travelers returned to hotels, demand rebounded at rates that surprised nearly all industry observers, catching hoteliers flat-footed, and leading to a scramble to staff back up to normal operations.

Historically, the industry has relied on cheap labor to keep properties humming. With labor markets tight and wage inflation on the rise, that model no longer works. As the industry quickly transitions from life support to profitability, technology is playing an important role in driving efficiency on two primary fronts: short-term, solutions that enable hotels to do more with less (headcount in particular); and long-term, platforms that help hoteliers recapture distribution from OTAs.

Against this backdrop, PEs and strategics have pre-positioned for the industry’s re-opening with a frenzy in deal making. Hospitality tech M&A hit a record $15.5B in 2021, more than double the prior record in 2019.

Click to download AGC’s report: AGC-Hospitality-Tech-May-2022