There's an opinion schism forming in the hotel industry, and it's coming from the most unlikely of places.
Hotel brand company CEOs and the companies that franchise their products are seeing the health of the hotel industry in very different ways here at the NYU International Hospitality Industry Investment Conference.
Most surprising is the apparent role reversal. Megabrand leaders are taking a longer-term approach and feel we are entering the ‘golden age of travel,’ whereas owners and developers are starting to get antsy at the state of the business.
Of course the most logical explanation is the global hospitality business is soaring, which is not nearly as relevant to the bottom line of the individual hotel portfolio owner. It makes for a more complicating, but more interesting, assessment of where things stand in this incredible business.
In speaking with owners and developers, however, I’m starting to see a crack in confidence. Whether legitimate or perceived I am not quite yet sure, but I do know from being in this business for nearly 20 years that part is irrelevant. The psychology of how we feel is many times more important than what people are seeing in the ledgers.
The industry has been breaking records for literally years now, but so many owners, developers and management company executives are still emotionally damaged by the Great Recession. Its caused many to be fearful, constantly burdened by feelings of concern about when the clichéd ‘other shoe’ will drop. They’re operating from a defensive posture in a market where it should be all offense. Too much opportunity is being lost by skittish folks who haven’t fully embraced incredible market conditions.
Now, as the market is steeped in peak opportunity, many are shrugging, fearful of a downturn. That’s a massive mistake that winds up undermining all aspects of the business.
Meanwhile, leaders of the major publicly trading companies are thinking in decidedly unpublic ways. Rather than fret over quarterly results, these executives are preaching a long-term bullish view based on macro trends, rather than the next 90 days. At least publicly. I am sure it’s different at the boardroom table.
They were also preaching a less is more attitude. Take Steve Joyce, CEO of Choice Hotels International. “[Revenue per available room] growth may not be 7 to 8 percent, but 4 percent is a pretty good year. Plus, we haven't had a shut-off from the banks. Sure, individual markets will have to absorb some product, but the next several years should be positive,’ he said.
Marriott International’s CEO Arne Sorenson summed it up best: “If you define the golden age of travel as current RevPAR data points, it feels like a disconnect. The long-term demographic trends are exciting. They are very strong today and we will build from that.”
How do you see the state of the industry? Do you agree with the apparent disconnect or perhaps you see it differently? Drop me a note at [email protected] or on Instagram and Twitter @TravelingGlenn.
Glenn Haussman is editor-at-large for HOTEL MANAGEMENT. His views expressed are not necessarily those of HOTEL MANAGEMENT, its parent company Questex Media Group, and/or its subsidiaries.