ATLANTA—Day two of the 31st annual Hunter Hotel Investment Conference here found executives focused on hospitality’s economic future, hotel technology, work culture and other industry concerns. Among the issues recurring at several sessions were the nation's low unemployment rate and the increased labor costs that the business is experiencing as a direct result.
The Numbers Game
Jan Freitag, SVP/lodging insights for STR, and R. Mark Woodworth, senior managing director at CBRE Hotels Americas Research, presented a data-driven look at the industry's future. Apparently riffing off the "cautious optimism" being expressed at the conference, Freitag predicted slow and continued growth in the future, but took the time to point out some figures indicating less-rosy possibilities.
With supply and demand at record highs, Freitag saw no issue with the industry’s ability to plan, finance and build hotels. Instead, he saw the greatest challenge rising from the 1 million open positions in accommodations and foodservice. With employers competing to fill these vacancies, wages will increase, he said.
While the conference thus far mostly has associated low unemployment with high wage costs, Woodworth identified the dynamic as a possible signal of a downturn. He categorized the current economy as in a high-pressure period, which historically has been followed by a recession, offering the possibility that a downturn could be around the corner.
Still, Woodworth did not forecast impending disaster. He cautioned there’s no way of knowing how far into the high-pressure period the economy is right now and acknowledged the possibility the similarities between the current period and historical ones may be caused by nothing more than a coincidence.
Overall, the analysts generally predicted slow and steady growth in the near term, with a small blip of a downtick in 2021. “It just means that we’re in a plateau; we’re not going to fall down the mountain on the other side,” said Freitag.
A View From the Top
The conference's "A View from the Top" panel of leading hospitality executives was moderated by Panther Ridge Partners principal Kirk Kinsell, who wrangled a wide-ranging discussion on topics that included staff turnover, brand saturation, franchising, artificial intelligence and competition with online travel agencies.
While much of the discussion about the low unemployment rate previously had revolved around the increasing cost of labor, IHG's CEO for the Americas, Elie Maalouf, saw another, more positive, consequence. “We should want low unemployment forever,” he said. “That means people have jobs. When people have jobs, they travel, they spend.” The important thing, he explained, is to manage the short-term effects of low unemployment, like rising wages, so that in the longer term the hotel industry can reap the benefits of a larger traveling base.
Looking ahead five to 10 years, Maalouf defined the most enduring challenge as: “How do you develop a culture and a purpose at your organization so people will come to work for you because of your brand, because of your culture, because of your purpose, not just because of your paycheck?”
John Murray, president/CEO and managing trustee of Hospitality Properties Trust, emphasized the high cost of turnover. To combat this, he recommended “programs not just to bring in new talent and to train new talent, but to establish that culture [so] that they want to stay.”
Robert Burg, president/COO of Aimbridge Hospitality, felt the best way to limit the effects of low unemployment is to reduce turnover and keep passionate, motivated employees working with the company. “That does come from having a culture. A culture being diverse, a culture being a great place to work, but most importantly, really, a path within the organization. We’re not going to fix this by raising wages.”
Choice Hotels International's President/CEO Pat Pacious agreed culture and talent retention are essential. To demonstrate this point, he described a visit he made to a Comfort Inn where the owner had had the property for 32 years and whose staff included employees who had worked there for more than 10, in some cases 20, years. “That’s a hotel that’s outperforming brands that are at the next chain-scale level up. But it’s all because he, as an owner, is taking care of his people and retaining them long term.”
Thomas J. Baltimore Jr., the president/CEO and chairman of the board for Park Hotels & Resorts, received the 10th Annual Hunter Conference Award for Excellence and Inspiration and delivered the conference’s keynote address.
Echoing other executives at the conference, he said he believes the next few years look good despite the current elongated business cycle, while acknowledging the concerns around rising labor costs, property taxes and insurance prices.
Baltimore added he welcomes the challenge that Airbnb presents, but emphasized the need for a level playing field. He also keyed in on sustainability, asking what it would look like within the industry, what changes would it involve and does it increase efficiency?
His also issued a call to action centered around the hotel industry’s need to include more women in positions of senior and executive-level management, as well as hopes for more female executives at the C-suite level. He noted more women would be likely to join a company with a female leader. “Women will want to join, to say: ‘She’s there, she’s a great role model, she’s somebody I can aspire to be,’” suggested Baltimore.
Flying the Flag
“I do believe, and if you ask owners across this conference, what’s one of the biggest issues of operating a hotel today, I guarantee you, in the first two or three comments it’s going to be labor,” said Jacobs. “We are struggling in this industry [to find] the labor to operate these hotels today. That will drive technology, that will drive innovation, that will drive robotics.”