Smart airports: Clearing the runway for digital takeoff
Smart airports: Clearing the runway for digital takeoff
https://www.mckinsey.com/industries/travel/our-insights/smart-airports-clearing-the-runway-for-digital-takeoff
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Many airports are overdue for a digital transformation. Adopting cutting-edge infrastructure technology could improve traveler experiences, streamline operations, and create substantial value.
Today’s airports can look sleek and modern, with convenient self-check-in kiosks and eye-catching digital signage. But that traveler-facing technology doesn’t always tell the whole story. Behind the scenes, airport infrastructure technology (infratech) is often outdated. It might be hampered by legacy software systems, scattered data, and stalled infratech projects that seem forever stuck in pilot mode. While many airports harbor grand ambitions for digital transformation, few are capturing measurable results.
McKinsey conducted individual interviews about digital transformation efforts with more than 20 senior executives at airports across the Asia–Pacific, Europe, the Middle East, and North America—ranging from regional hubs to global destinations—to better understand what’s working, what’s not, and how infratech is getting used on the ground. This research informed the creation of a maturity benchmark that assesses airports’ progress in implementing important core technologies, including AI, digital twins, and predictive maintenance. The resulting findings suggest that when it comes to airport infratech, there’s much enthusiasm for experimentation, coupled with much untapped potential. Exhibit 1
Exhibit 1
Which tech use cases are showing the most promise for airports? What headwinds can hold back progress? What are pioneering airports doing better than others? This article endeavors to answer these questions and provide any airport operator with a preflight checklist that can help prepare the way for digital takeoff.
Updating airport infrastructure technology can help returns soar
Exhibit 2
McKinsey analysis indicates that airports using the right technologies in the right way can boost EBITDA by 6 to 8 percent, with a considerable portion of this gain achievable within just a few years (Exhibit 2). Many of the initiatives that can help produce these results aren’t moonshots. They’re practical, tested solutions that are already making a difference in some advanced air hubs:
*- AI to plan capacity and manage flows in real time: When planning is left to legacy software systems that rely on isolated data, the results can be bottlenecks at boarding and security checkpoints, inefficient deployment of staff to the wrong areas at the wrong times, and long passenger lines. Improved infratech powered by AI algorithms that rely on comprehensive data sets can execute real-time reallocation of check-in counters, gates, and workforces based on actual passenger flows, thereby minimizing delays and improving traveler experiences.
*- Predictive maintenance to cut costs and avoid disruptions: A reactive maintenance strategy in which repairs come only in response to breakdowns can lead to more frequent (and more expensive) equipment failures. This sometimes results in unplanned downtime of critical infrastructure. Digital updates can enable predictive-maintenance systems that use sensors placed on high-use components—such as baggage belts, escalators, and parts in heating, ventilation, and air-conditioning (HVAC) systems—to anticipate impending equipment issues in advance of failure, create more efficient maintenance schedules, and minimize disruptions to operations.
*- Automated gates and smart baggage systems to speed traveler journeys: Manual processes at bag check stations and boarding gates can lead to lost bags, missed connections, and staff overload during peak hours. Switching to automated bag tracking and self-service gates can help enable faster boarding, fewer errors, shorter queues, and smoother handoffs.
*- Digital twins to coordinate operations and reduce energy use: With no clear overview of how systems are interacting, airports can suffer from siloed operations, unpredictable effects from disruptions, and inefficient energy use across terminals. Digital twins are virtual replicas that use sensor data to monitor conditions and provide real-time simulations. They can enable smarter decisions—on issues from gate allocations to HVAC adjustments—that flow from a high-level, holistic approach. A unified view provided by a digital twin could, for instance, automatically trigger the opening of overflow security lanes or boarding areas based on passenger flows.
These aren’t “nice to have” features. They’re becoming the baseline for competitiveness in an industry where margins are tight and expectations are high.
Common challenges leave some airports stuck at the gate
The potential for digital transformation is evident, and enthusiasm for experimentation is widespread. But scaling such a transformation across an airport is rarely straightforward. Some frequently present challenges often need to be overcome:
*- Fragmented data: Most airports still operate with disconnected systems across airlines, baggage handling, operations, and passenger services. Data gets trapped in silos or isn’t easily translated from one system to another. Without shared, real-time data, teams are left reacting instead of anticipating. But when data flows smoothly across systems, airports can forecast demand spikes, adjust staffing in real time, and reroute passenger flows before congestion happens.
*- Constrained budgets: Many airports, especially in smaller municipalities or regional hubs, simply don’t have the resources to roll out large-scale tech programs. When budgets are stretched, even proven solutions can get postponed in favor of urgent maintenance or compliance investments. By starting with low-cost initiatives (such as adding Internet of Things sensors that detect anomalies in baggage and HVAC systems), even if a full predictive-maintenance platform hasn’t yet been implemented, airports can offer proof of concept. The resulting reductions in downtime and maintenance costs can help build business cases for later, more ambitious upgrades.
*- Complex stakeholder coordination: Airports are complicated ecosystems. Any reactive change often requires alignment across airlines, airport staff, handlers, and regulators. Shared data platforms and collaborative decision-making tools can align actions in real time. This can accelerate operations, reduce miscommunication, and allow faster recoveries from disruptions. For example, an update about a delayed aircraft arrival that’s simultaneously shared with all stakeholders could trigger synchronized changes to baggage routing, gate allocation, and staffing—avoiding the inefficient ripple effect that can occur when reactions to disruption are uncoordinated.
*- Unclear path from pilot project to scaled solution: Many airports run interesting pilot projects, but few manage to turn these experiments into operational standards. Without a focused digital strategy, initiatives can remain isolated and short lived. A plan that includes clear investment thresholds and scaling criteria can help quickly identify what works and replicate it with confidence. Instead of testing five different AI tools, for instance, an airport can define a short list of must-have use cases for AI and then scale the best-performing tool (based on those criteria) across all terminals within 12 months.
These barriers can prevent experimentation from evolving into transformation. In a competitive environment, staying in pilot mode means falling behind.
Leading airports are already moving down the runway
Some airports have gone beyond trying out new technology and have transitioned to using it to solve real problems. They tend to share a few common approaches:
*- Begin the process by focusing on outcomes (such as capacity, costs, and passenger satisfaction) instead of getting lost in the tech weeds.
*- Identify a few crucial priorities, address them effectively, then scale. For instance, one European hub focused narrowly on predictive maintenance and was thereby able to achieve measurable reductions in downtime across key infrastructure assets.
*- Partner wisely with other airports, start-ups, or suppliers that can accelerate the process (such as by sharing needed expertise). For example, one regional airport partnered with a tech start-up to scale biometric boarding in fewer than 12 months, compressing what could have been a much longer procurement cycle.
*- Put the right teams—those that include proper capabilities and competencies and combine both consumer and tech experience—in place to manage change, with the understanding that people, not tools, must lead the way. For instance, one Middle Eastern airport built a cross-functional mission team that combined customer experience, operations, and tech experts to focus on managing flows and shortening queues in terminals.
These airports haven’t perfected every detail of a transformation. But making sure to take such steps as they undertake their transformation journeys is already setting them apart.
Airports can prepare now for transformation takeoff
For anyone leading an airport or working with one, this is a moment of opportunity. Necessary technologies are in place. Important use cases have been proved. The main things needed now are clarity and focus. Here’s a preflight checklist of questions that airport leaders can ask themselves as they build their digital flight plans:
*- What’s one digital initiative that could be realistically scaled in the next six to 12 months? Is it baggage automation, gate reallocation, predictive asset monitoring, or something else?
*- Which two or three technologies should be the top priorities over the next two to three years? How will they link to core business goals, such as improving experiences, increasing capacity, and lowering costs?
*- Where’s performance most limited by fragmented or incomplete data? Is it in disruption management, passenger flow, resource planning, or somewhere else?
*- Who are the right copilots for this journey? Could infrastructure investors, OEMs, start-ups, or even other airports help accelerate the digital transformation?
Modern airports aren’t just transit hubs; they’re complex ecosystems. They sit at the intersection of experience, mobility, and technology. Their ability to embrace digital transformation will shape the future of air travel.
Host Hotels & Resorts raises full-year 2025 outlook citing improved demand
REIT continues Hyatt renovation program, starts Marriott projects
Host Hotels & Resorts closed on its sale of the Washington Marriott at Metro Center for $177 million during the third quarter. (CoStar)
https://www.costar.com/article/2116245141/host-hotels-resorts-raises-full-year-2025-outlook-citing-improved-demand?
By Bryan Wroten
With Host Hotels & Resorts’ portfolio focused on higher-end hotels, the ongoing bifurcation of travel demand has allowed the company to raise its full-year outlook.
During the hotel real estate investment trust’s third-quarter earnings call, Host President and CEO James Risoleo said the company's hotel portfolio outperformed expectations again. The strong year-to-date performance and improved expectations for the fourth quarter have allowed Host to increase its comparable hotel revenue per available room and total RevPAR guidance estimates to approximately 3% and 3.4%, respectively.
Since laying out its initial full-year 2025 guidance in February, Host has increased its RevPAR expectations by 150 basis points and its adjusted earnings before interest, taxes, depreciation and amortization expectations by $110 million, he said.
“The bifurcation of the consumer is likely to lead to continued outperformance for upper-upscale and luxury hotels, and we believe Host will be a beneficiary, given our higher-end properties, our size and scale, our diversified business and geographic mix, and our continued reinvestment in our portfolio,” Risoleo said.
Host expects low single-digit RevPAR growth in the fourth quarter, an improvement over its prior guidance driven in part by strong estimated RevPAR growth of 5.5% in October, said Sourav Ghosh, executive vice president and chief financial officer. The outlook assumes continued recovery in Maui, no improvement in the U.S. international hotel demand imbalance and steady demand trends in the fourth quarter.
The outlook also takes into account the limited impact Host has felt from the government shutdown in October, primarily in Washington, D.C., and San Diego, Ghosh said.
“If the government shutdown continues to the end of the year, full-year RevPAR growth could be negatively impacted,” he added.
Performance update
Comparable hotel TRevPAR improved by 80 basis points compared to the third quarter of 2024, and comparable hotel RevPAR improved by 20 basis points, due to better than expected short-term transient demand pickup and higher rates across Host's portfolio, Risoleo said. Comparable hotel EBITDA margin for the quarter fell by 50 basis points year over year to 23.9% due to increases in wages and benefits.
RevPAR growth in the third quarter exceeded expectations at Host’s resort properties, driven by short-term leisure transient demand pickup and rate growth despite transformational renovations, the Jewish holiday shift and lingering impacts from macroeconomic uncertainty, he said.
Transient revenue grew by 2%, driven by double-digit growth at resorts, he said. Host's hotel portfolio saw particularly strong performance in Maui, San Francisco, New York and Miami. In Maui, leisure transient demand continued to recover, and Host’s hotels there saw 20% RevPAR growth and 19% TRevPAR growth, driven by “substantial increases” in occupancy and strong out of room spending on food and beverage and spa services.
“Looking forward, total group revenue pace in Maui is up 13% for 2026, reflecting continued momentum behind the recovery,” Risoleo said.
Business transient revenue was down 2% in the third quarter due to the continued reduction in government room nights, he said. Group room revenue was down about 5% year over year driven primarily by planned renovation disruption, the Jewish holiday calendar shift and reduced short-term group pickup.
Definite group room nights on the books increased to 4 million for 2025, he said. Full-year 2025 total group revenue pace is up 1.2% compared to the same period in 2024.
Portfolio management
Host completed the final phase of the reconstruction of The Don CeSar following damage from Hurricane Helene and Hurricane Milton in 2024, Risoleo said.
In August, Host sold the Washington Marriott at Metro Center for $177 million. The REIT provided $114 million of seller financing at a 6.5% interest rate to facilitate a 1031 exchange for the buyer, Risoleo said. Since 2018, Host has sold about $5.2 billion in hotels and has spent $4.9 billion on hotel acquisitions for the same period.
The Hyatt Transformational Capital Program is about 65% complete and tracking on time and under budget, Risoleo said. Renovations at the Hyatt Regency Capitol Hill are complete, and renovations for the Hyatt Regency Austin are substantially complete. Work is underway at several of Host's other Hyatt-branded properties.
Host is beginning a second transformation program from its Marriott International-branded properties, Risoleo said. The four properties included are the Ritz-Carlton Marina Del Rey; the Ritz-Carlon Naples, Tiburon; the Westin Kierland Resort & Spa; and the New Orleans Marriott.
“We believe these reinvestments will position the hotels to outperform competitors in their respective markets, while enhancing long-term performance,” he said.
Marriott has agreed to provide $22 million in operating profit guarantees to cover the anticipated disruption associated with the investment projects, which is expected to be between $300 million and $350 million over the next four years, he said. Host is targeting stabilized annual cash-on-cash returns in the mid-teens through a combination of RevPAR index share gains and enhanced owner priority returns.
“Similar to the first Marriott transformational capital program, we are targeting average RevPAR index share games of 3 to 5 points,” he said.
By the numbers
Host reported total revenue of $1.33 billion during the third quarter, up from nearly $1.32 billion in the year before, according to its earnings release. It reported net income of $163 million, up from $84 million in 2024.
The REIT reported comparable hotel earnings before interest, taxes, depreciation and amortization was $309 million, a 1.3% year-over-year decrease with a 50 basis point decrease in comparable hotel EBITDA margin to 23.9%. Adjusted EBITDA for real estate was $319 million, a decrease of 3.3%.
Comparable hotel total RevPAR was $335.42, a 0.8% year-over-year increase. Comparable hotel RevPAR was $208.07, a 0.2% year-over-year increase.
As of Sept. 30, Host had $13 billion in total assets with a portfolio of 79 hotels and resorts. Its debt balance was $5.1 billion with a weighted average maturity of 5.2 years, a weighted average interest rate of 4.9% and a balanced maturity schedule. Its total liquidity was about $2.2 billion, including furniture, fixtures and equipment reserves of $205 million and $1.5 billion under the revolver portion of its credit facility.
Moody’s upgraded Host’s credit rating to Baa2 with a stable outlook citing its operating performance and maintenance of a conservative financial profile along with its high-quality portfolio.
As of press time, Host's stock was trading at $17.04 per share, down 2.8% year to date. The NASDAQ Composite was up 19.8% for the same period.
Here’s the Preliminary List of Airports Impacted by Flight Reductions
Song_about_summer/Shutterstock
https://www.fodors.com/news/news/dot-orders-10-cut-in-u-s-air-traffic-as-shutdown-strains-air-traffic-controllers
Transportation Secretary Sean Duffy announced a 10% reduction in flights at America’s 40 busiest airports due to the ongoing government shutdown, warning of major travel disruptions and flight cancellations starting Friday.
Transportation Secretary Sean Duffy announced Wednesday that the Department of Transportation would require airlines to cut 10% of air traffic at the country’s 40 busiest airports in an attempt to “alleviate the pressure” on air traffic controllers, who have been working without pay since the federal government shutdown last month.
The cuts, Duffy said, would start on Friday and increase to the full 10% over the next several days, which could force airlines to cancel flights with little notice, disrupting travel for thousands of passengers, and potentially also delaying critical cargo shipments that travel by air. Little detail was immediately available late Thursday, and most airlines had posted notices on their websites alerting travelers to keep an eye on their flight status and keep their contact information updated in their reservation if they’re planning to travel in the next few weeks.
A preliminary list of airports impacted was released by the Federal Aviation Administration:
– Boston Logan International Airport
– Baltimore-Washington International Airport
– Charlotte Douglas International Airport
– Denver International Airport
– Dallas-Fort Worth International Airport
– Detroit Metropolitan Wayne County Airport
– Newark Liberty International Airport
– Fort Lauderdale- Hollywood International Airport
– Honolulu International Airport
– Washington Dulles International Airport
– George Bush Houston Intercontinental Airport
– New York John F. Kennedy International Airport
– Las Vegas Harry Reid International Airport
– Los Angeles International Airport
– New York LaGuardia Airport
– Orlando International Airport
– Chicago Midway Airport
– Memphis International Airport
– Miami International Airport
– Minneapolis-St. Paul International Airport
– Chicago O’Hare International Airport
– Philadelphia International Airport
– Phoenix Sky Harbor International Airport
– San Diego International Airport
– Seattle-Tacoma International Airport
– San Francisco International Airport
– Salt Lake City International Airport
– Tampa International Airport
Secretary Duffy had been sounding the alarm about controller staffing since the government shutdown on October 1, but the country’s air transportation system has largely held up without any widespread delays or cancellations. Duffy has also been clear to assign blame to Democrats for the shutdown and any fallout it might have on the performance of the nation’s air transportation system. By restricting airspace under the aegis of preserving safety, the chaos Duffy has been warning about is now all but guaranteed.
The New York Times reports that Duffy’s messaging had been “infused with distinctly political messages” in the days leading up to Wednesday’s announcement, but during that statement, both he and FAA Administrator Bryan Bedford said the planned restrictions were data-driven.
Washington Senator Maria Cantwell, the top Democrat on the Senate Commerce committee, which oversees the FAA, said the data behind that decision hasn’t been shared. “[The DOT is] the one’s with the data, so we don’t know,” she responded when asked by Politico whether she felt the restrictions were warranted.
Washington Representative Rick Larsen, the top Democrat on the House Transportation and Infrastructure Committee, called for more information from the agencies involved. “Shutting down parts of our national airspace system is a dramatic and unprecedented step that demands more transparency,” he told the New York Times. “The FAA must immediately share any safety risk assessment and related data that this decision is predicated on with Congress.”
In a statement to employees shared with the media, United Airlines CEO Scott Kirby said the airline would attempt to minimize disruptions, saying that long-haul international flying and hub-to-hub flying would not be included in the cuts to the airline’s flights, saying that the reductions would be focused on regional flying and domestic mainline United flights that do not travel between hubs. He also promised refunds for all United customers on all ticket types who elect not to fly during this period—even if their flight isn’t delayed or cancelled.
Travelers anticipating travel this weekend or early next week should keep an eye on their airline’s app for flight updates, and check their airline’s website to see if United’s policy of refunding tickets even for unaffected fliers is being matched if they elect not to travel. En route delays, which incur passenger expenses, are unlikely to be covered by most airlines, as government-mandated flight cancellations are generally regarded as beyond airlines’ control/ Travelers facing expenses because of flight cancellations or delays should check with their credit card issuer if they provide travel insurance for air ticket purchases on that card.
Secretary Duffy said the DOT would announce the 40 affected airports on Thursday. Air traffic is currently at a low ebb, but typically picks up from mid-November through the end of the year as travelers take to the skies for the winter holiday season.
The future of airports: Seamless, automated, and personalized
https://www.mckinsey.com/featured-insights/the-next-normal/airports
Airports have existed for more than a century. New technology could help revitalize their infrastructure—for both air travelers and airport staff. In this edition of The Next Normal, we examine how innovations such as AI, biometrics, and flying taxis could transform the airport experience.
The view to 2040 and beyond
‘Your face is your new ID’
Future airports could feature less stress, shorter lines, and no more fumbling with tickets and passports. Watch as five McKinsey experts—Alastair Green, Alex Dichter, Kelly Ungerman, Steve Saxon, and Vik Krishnan—describe the airport of tomorrow.
Seamless check-in
AI and biometrics could make long airport lines a thing of the past—allowing travelers to stroll smoothly through ticketing, bag check, and security without any need for physical documents.
Personalized terminals
Imagine an airport concourse full of departure boards and wayfinding signs that recognize who you are—and can speak to you in your own language, no matter where you are in the world.
Automation ‘below the wing’
Autonomous vehicles and robotics could transform the behind-the-scenes airport operations that most travelers never see. A more efficient airport could mean better on-time performance.
More sustainable air travel
Airports are looking to reduce their environmental footprints. New infrastructure could be needed to enable more sustainable future aircraft models.
Accommodating larger passenger flows
Projections indicate that an increasing share of the world’s population will soon be able to afford air travel. Airports can prepare themselves now for heavier traffic.
An airport full of flying cars?
What if your journey began with a flying taxi picking you up in your backyard—and dropping you off on an airport runway, right next to your plane?
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