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PRAGUE, Czech Republic — How do luxury hotels and hoteliers “humanize” themselves yet at the same time “bedazzle” guests who don't flinch at high nightly room rates?
Bedazzlement might come at a cost to a luxury hotel's ability to deliver humanization or personalization, according to a panel at the Inspire: Luxury Hospitality Conference.
Sonia Santana Cerpa, CEO of Montreux, Switzerland-based advisory S Strategic Services, said placemaking and design are the first steps to providing something extra that can wow high-end guests who cannot be wowed by luxury add-ons and personalized gifts.
“They still want standards and personalization, but if you’re paying $3,000 a night, then that is a given. What they want is the human touch and an emotional bond. [Humans are] not rational. Ninety percent of our consumer decisions are based on emotions, so for a hotel, it all comes down to the people, and people who care,” she said.
Stellar employees could make the difference of separating one luxury hotel from another, said Abdul Baaghil, the Lisbon-based co-founder and principal of Harvest Cotton Tale Hospitality Group. Baaghil is also a former general manager of the Fairmont Nile City, Cairo, among other hotels.
“Everyone must make the destination better, its character, its humanization and its soul. We need to find aspiring storytellers, musicians, chefs, who can tell their stories. Soul and product need to marry as one. Luxury is intention and presence, not about the marble,” Baaghil said.
Santana Cerpa said there some guests may stop going to their favorite luxury hotels because of staff turnover, leaving no one who remembers their specific stay preferences.
But not enough hoteliers understand what guests want from personalization, Baaghil said.
“General manager sometimes are too busy crunching numbers,” he said.
Panelists cited examples of “luxury” gone wrong, such as neglecting to ensure guest bathrobes are the right sizes or providing things that might be thought of as adding value but don't, according to the guest's perspective.
“Every brand looks the same, and you cannot tell the difference between luxury and lifestyle. If you live in a luxury-branded residence, the blur is more,” Baaghil said.
And in some cases, hoteliers in the luxury segment can overthink the experiences and amenities guests are looking for, said Sofia Rodrigues, founder and CEO of The-Guest Club and based in Brig, Switzerland. Her company is a membership club for high-end guests and travelers that store and distribute their tastes, preferences and requirements.
“iPads!” she exclaimed. “I am [at your hotel] for two days, and you want me to learn this new, complicated system?”
Sometimes a city or destination goes through changes that undercut a luxury hotel's vision and appeal. Anna Domingo, founder of New York City-based consultancy Padzzle, said Prague — although largely a marvel — suffers from an overabundance of Thai massage parlors, cannabis shops and restaurants selling food that has nothing to do with Prague or the Czech Republic.
“I’m from Barcelona, and parts of the old city have been destroyed. I, we, have a responsibility to correct this,” she said.
Building emotion and legacy through a luxury hotel must be in cooperation with guests, a journey that starts with a hotel’s conceptual master planning, Domingo said.
“That is where it starts. How to purpose and add value to a heritage building, as an example. … ‘If you build it, they will come,’ I believe is not the right concept right now,” she said. “As the saying goes, numbers do not lie, and liars do not use numbers. [The hotel industry does] not want community pushback; [it wants] community ideas, ideas you would never have thought about on your own.”
Data dilemma for luxury hotels
IT and AI have major roles to play in the humanization of hotel stays and the bedazzlement of guests, Rodrigues said. However, luxury hotel guests seek out the segment for wellness and rest, which might lead some customers to withhold the amount of data the share.
“IT can enhance and humanize the personal touches. … What data does the guest want to give to the hotel? This is what should be listened to,” she said.
Not all panelists agreed on the importance of data.
“Data is not the solution to provide ethos and soul. A huge amount of instinct has to be involved,” Baaghil said.
Where data falls is when it is siloed data within a hotel or brand, Rodrigues said.
“That is the enemy of the push to humanization, as are excessive or incorrect information,” she said, adding that abiding by Europe's General Data Protection Regulation can also muddy the waters of how useful guest data can be.
Baaghil said IT needs to be balanced against “soul.” He added he is worried many luxury hotels have lost that soul.
“Data is important, but the right data,” he said, adding soul and legacy can be difficult to notions to transfer from their originators to those who take over from them.
“Data is the facilitator. It will never replace the human,” Domingo added.
Private equity firm KSL Capital Partners has secured $553 million in financing for a 23-property hotel portfolio, marking its second major hospitality refinancing this fall.
The transaction includes a $440 million senior mortgage loan and $113 million in mezzanine debt. Wells Fargo and Bank of Montreal originated the deal through commercial mortgage-backed securities offering KSL 2025-MH, according to Moody’s Investors Service analysis.
The deal demonstrates continued investor appetite for select-service hotel debt, despite volatility in the asset class.
U.S. hotel revenue per available room dropped 2.1% in September, the sharpest monthly deceleration since 2022, CoStar data shows. It also marked the second consecutive quarter of declines.
The outlook for the fourth quarter is also muted. The hotel industry is experiencing malaise, as monthly room demand has barely surpassed last year’s results, according to a CoStar analysis. The lack of healthy demand growth does not give operators pricing power, so room rates declined by 0.1% in September and have only grown 0.9% year to date.
However, KSL's ability to secure two refinancings totaling more than $1 billion within three months signals some confidence in the lodging sector's fundamentals.
In September, KSL closed a $480 million refinancing package for two luxury Hawaii resorts through Wells Fargo Commercial Mortgage Trust 2025-HI. That transaction extracted nearly $148 million in equity from the Outrigger Reef Waikiki Beach Resort and Sheraton Kauai Coconut Beach Resort.
KSL declined to comment to CoStar News.
The latest refinanced portfolio spans 3,028 guest rooms across 13 states. Properties operate under Marriott, Hilton and Hyatt brands as select-service and extended-stay hotels.
Georgia represents the largest concentration with four properties totaling 554 guest rooms.
The portfolio's largest asset is the 230-room Hampton Inn & Suites Myrtle Beach Oceanfront in Myrtle Beach, South Carolina, accounting for 9.6% of cash flow and 12% of the allocated loan amount.
KSL will maintain about $184 million in equity following the refinancing, according to Moody’s.
The firm acquired the properties between 2021 and 2023, investing $45.2 million in capital improvements. An additional $31.4 million in brand-mandated upgrades are planned during the loan term, Moody’s said.
Newmark's Valuation & Advisory group prepared individual appraisals for each property this past September. Newmark concluded an “as-is” market value of the individual properties in the portfolio totaling $741.8 million.
Hoteliers budget for rising costs in labor, renovations and food and beverage
As hoteliers prepare their budgets for 2026, the road ahead is filled with cost increases.
While increasing revenue would be a welcome way to address rising expenses, that’s not necessarily the case for many hotel owners and operators. Instead, they are trying to reduce expenses where they can and otherwise adapt to a more expensive operating environment.
Among the multiple areas where hoteliers expect expenses to increase, the cost of labor, renovations and food and beverage are among the highest.
Higher labor costs
Hospitality is a service industry, and as such, the largest ongoing cost will always be labor.
The big and continuous or multiple wage increases seen in recent years have passed, said Chad Sorensen, managing director and CEO of hotel asset management firm CHMWarnick.
“But the damage has already been done, right?” he added.
Now it’s a matter of competing within the marketplace, he said. Growth in wages isn’t coming from having to give bumps in pay for certain positions. Instead, it’s keeping up with the cost of living and inflation.
Looking at it from a macro level, the second half of 2025 will show year-over-years savings related to labor increase compared to the first half, he said.
“As we think about 2026, you really do need to look at it on a granular basis, quarter by quarter, especially what you’re compared to year over year because the metrics are different depending on which quarter you’re looking at,” he said.
Along with state and local minimum wage increases each year, hotel companies need to retain their current employees, said Greg Presnol, vice president of operations at third-party manager Palette Hotels.
“It’s definitely more expensive for us to be able to back fill an employee or lose someone than it would be to keep great people, so our budget assumes higher hourly rates pretty much on the average,” he said. “More structured with incentive pay, stronger benefit contributions, and we treat labor at Palette as an investment in service consistency, not just a line item where we try to squeeze it out.”
Wage increases have been stabilizing, but hotel companies are inviting new people into the industry, said Nick Johnson, senior vice president of full-service and lifestyle hotels at hotel investment and management company First Hospitality.
“We’re still kind of in that rebuild or building back our labor base in hospitality, so that’s certainly a component,” he said, adding there are many factors at play. “It’s certainly where our focus really remains, on how to manage that.”
To adapt to all expected cost increases, First Hospitality worked up a 2026 readiness plan, he said. The company established a new commercial strategy that focuses on all areas of revenue, such as room upgrades and connecting room premiums and outside sources of revenue. On the expense side, they engaged in early conversations with vendors to try to maintain cost levels heading into next year.
“We’ve had some great relationships with partners on our ability to stop, to mute the expense side of the [profit and loss] growth,” he said.
As part of this readiness plan, there’s a financial vertical that focuses on activities on the forecasting side that it pulls into its daily operations, he said. It occurs in daily, weekly and monthly cadences, allowing general managers, regional operations managers and the finance team to get close to each hotel and each hotel’s strategy to ensure they don’t have any surprise expense increases.
“We’ve gotten to a five-day financial close at the end of each month that’s really done through being proactive in the current month with how much we are building for the financial close,” he said.
That has allowed them to react more quickly to the P&L after it’s been produced, he said.
The hotel brands have been pushing for renovations to take place and stay on top of brand standards, Sorensen said. Generally, ownership groups are adhering to that and reinvesting in their properties.
“There is just, again, more scrutiny around the actual physical product and making sure that if they’re putting dollars in certain areas, that they’re truly needed,” he said.
Owners and asset managers are looking through the lens of a hotel’s current condition and whether it would be acceptable in five or six years, he said. If the answer is yes, then it becomes a qualified discussion with the brand that brings all parties together to make logical decisions.
“It's always complicated, but it's probably more complicated now than ever because you do throw in the uncertainty with the tariffs, and that uncertainty is continuing to keep costs elevated and rising,” he said.
On the construction side, there’s been no relief on that front, and most aren’t holding out hope that costs will get better, he said. Construction costs have stabilized, but they’re at a level significantly higher than they were a few years ago. Availability is better now, but construction labor wages are higher.
“You do get a little more negotiating power from an owner’s perspective, but it’s not significant,” he said. “The wage rates are still high, and you’re still paying to have quality partners on renovation jobs.”
There will be higher repair and replacement costs through the furniture, fixtures and equipment piece of the budget, Presnol said. Basic maintenance is more expensive than it was 12 months ago. There’s a higher cost for materials, contracted labor and most anything else in that space.
“Owners are definitely feeling that,” he said. “We can’t just defer maintenance forever without it showing up in our guest scores or rate resistance for a hotel.”
For 2026, Palette proactively increased its property-level repairs and maintenance and capital expenditures assumptions instead of pretending last year’s numbers will somehow hold up, he said.
“We’re definitely budgeting more on realism and not on hope,” he said.
Food and beverage costs
Increases for food and beverage items doesn’t have a clear culprit to point to, Sorensen said.
“I don’t feel there’s the egg situation going on as much in this environment,” he said.
There’s a general instability in a lot of different products, and that goes along with the overall instability, particularly as it relates to tariffs, he said. Managing that requires a lot more time, energy and analysis while also being more flexible with menus at outlets as well as in banquets and catering.
In the food and beverage space, the cost of ingredients, disposables and third-party service contracts all came in higher this year, Presnol said.
“We do not see that rolling back, obviously, with tariffs and other things going on out there, but we’ve responded to that by tightening and engineering and simplifying and pushing contribution margin instead of just top line F&B revenue,” he said.
At some select-service hotels, the company has shaken things up a bit to protect flow through without hurting any of the guest experiences. They’ve looked at how they can change the footprint but still deliver on the service component, which remains an important factor today.
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