ALIS: CEOs talk uneven recovery, economic trends and those pesky OTAs

26 Jan, 2012 By: Stephanie Ricca

The Carlson Rezidor Hotel Group's Hubert Joly (left) and Choice Hotels International's Steve Joyce

Los Angeles—“Rebound” was the buzz word tossed around at the Americas Lodging Investment Summit in Los Angeles this week, but some in the industry are likening the industry’s recovery scenario to more of a slow hustle back up the court, scouting more shot opportunities than actually taking them.

Still, hoteliers are optimistic that while 2012 may not be a breakout year in terms of full-on recovery, the industry is well on its way, thanks to improved fundamentals and a transactions environment that still is chugging away.

Tuesday’s CEO panel featured InterContinental Hotels Group CEO Richard Solomons, KSL Capital Partners managing director Michael Shannon, Choice Hotels International’s CEO Steve Joyce and The Carlson Rezidor Hotel Group’s CEO Hubert Joly.

Shannon got the group talking about what he called “an uneven recovery, but a recovery nonetheless,” pointing out that companies and properties recover at different paces.

Above all, he said, industry recovery ultimately depends on consumer sentiment.

“Look at grocery shopping as an example,” he said. “Grocery store spending is an indicator of how people feel about the economy. We look at personal spending habits—where people are loosening up their wallets—in places like Austin, Texas; and San Francisco. Job growth is there and incomes are growing. What people spend in the grocery story shows what they’ll spend later on in travel.”

Solomons agreed that recovery is most evident among people who can afford it, and that means it’s happening at the upper end.

“We’re starting to see the benefits of the optimistic American culture,” he said. “A lot of business here is based on how confident you feel.”

Joyce noted an uptick in business travel. “Companies are putting their folks back on the road,” he said. “That’s why the summer was good and why the fall got even stronger and it’s carrying us into 2012. If we get any help at all from the economy, it’ll be a great year.”

Speaking about the U.S. economy, the CEOs were quick to distance themselves from too much of a relationship between economic health and the health of their business.

“There’s a lot of uncertaintly, and we just focus on what we can control,” Joly said.

Joyce agreed. “We’re going to have a really good run [in 2012] regardless of the economy, and if we have a better economy, then we’ll have a really great run.”

Brand leaders can afford to be on the optimistic side because they’ve seen fundamentals like rate and occupancy improve, and the current supply-demand imbalance only helps the picture.

FOCUS ON INNOVATION
Still, CEOs recognized that recovery is only as good as property-level performance, which always comes down to revenue optimization and distribution channel costs.

“People are spending more and more money on technology and mobile,” Joly said. “As an industry, I think an important focus is innovation, from both a product standpoint and a service standpoint.”

Solomons tied that sentiment back to booking behavior, pointing to the recent launch of RoomKey.com as an innovation that addresses both those points.

“Where you start with innovation is trying to do better at delivering to the guest what they want,” he said. “It’s about recognizing that customers want to book easily on a platform where they know what they’re looking at. We look at it as another channel.”

Shannon alone raised some concern about the RoomKey model. “I applaud the effort,” he said, “but I just think it’s going to be difficult to compete at this point in the game when the customer is so used to [third-party sites like Travelocity and Expedia].”

Also on the distribution front, the American Hotel & Lodging Assn. and STR released the findings from their joint distribution channel analysis. Visit HotelNewsNow.com (requires login) or www.ahla.com to download the full report.