You can learn a lot from an industry conference. Here are my takeaways

PHOENIX—The Lodging Conference in Phoenix is a festive and frank affair: the one conference in the hospitality segment where attendees meet and broker deals on a lazy river and attend evening receptions in Bermuda shorts. Questex’s own hospitality investment events in Europe are equally jovial, but I wince at the thought of anyone showing up in a Grateful Dead T-shirt at the Annual Hotel Conference, in Manchester, UK, next week.  

Psychedelic rock bands aside, The Lodging Conference is a unique bellwether of the state of the U.S hotel sector, due to both its timing—at the height of when the sector is budgeting for 2023—as well as its perch on the calendar, allowing for a review of nearly three quarters of performance. Therefore, I made haste to the Valley of the Sun to gauge and engage. This is what I came away with.

This Is a (Good) Recession

That depends not so much on who you ask, but how long you listen. Everyone at The Lodging Conference inevitably contradicted themselves as they oscillated from waxing whimsically about recovery while bemoaning the recession, a recovery amid a recession—it sounds like some newfangled cocktail. The headwinds are a blowin’ against the greater economy and, by extension, the hotel industry. They are real and are impacting operating performance, most notably, gross operating profit or GOP. 

Operating performance might have its challenges ahead but there remains a wall of money chasing hotel assets in spite of rising interest rates, and there is no indication that cap rates are softening. Though investors are doleful that the era of “free money” is over, it doesn’t mean that the cost of debt is out of control. Interest rates in the U.S averaged 5.43 percent from 1971 until 2022, even factoring in the 0.25 percent rates we saw a few times over that period. I think it’s the pace at which the Fed is increasing rates that is making investors skittish, another 75 basis points announced during the conference, in fact. Fluctuating rates are forcing buyers to underwrite deals with premiums of 500 to 600 basis points at current yields and some sellers are simply not that desperate to sell.

Where Have All The People Gone? 

I’ve always been an optimist about one thing: As long as there is demand, we’re going to be fine. That’s remained true particularly in the leisure segment: Just try to book a trip to Las Vegas, Los Cabos or even Athens. Here’s the rub: Though there’s plenty of customers at the airports and hotels, there’s still not enough pilots, front-desk managers and housekeeping to service them, which is why, for example, driving more contactless check-ins and adding more specialized property-management systems and other innovations is vital. 

Fortunately, the hotel sector has landed on a unified and clear message that the only thing that can fix our labor issues is immigration. Unfortunately, it still requires smart bipartisan politics to come up with practical solutions to fix these challenges. Your flight to Atlanta is canceled, but hey-ho here’s a robot to speak to.

Federalism Is Our Friend

There’s a lot of talk about state versus federal powers on the news networks these days and that debate was also evident on several panels at The Lodging Conference. Investing in hotels is a street-corner-by-street-corner business. so it’s only fitting that the hotel sector remain educated on what and how to work with local governments. 

However, rules and regulations are hyper-localized to the point that hotel investing and operations are becoming byzantine and complex, eroding profitability. When Los Angeles wants to mandate hotels offer unoccupied rooms to the homeless, I begin to wonder when Nurse Ratched (rest in peace) is coming to give me my meds. 

My home state of California isn’t the only state in the nation with dumb laws. Having lived and worked in Europe and Latin America for nearly 18 years of my adult life, I love the big-market dynamics of the U.S. What other country affords you a market of 330 million citizens under one currency, one official language and, until recently, one largely uniform business operating environment? Let’s stay united, folks. 

What Will It Take To Improve Diversity at Conferences?

Too many speakers at business events and conferences are white men. And though many organizers, including The Lodging Conference and, I humbly add, Questex, are doing a good job of bringing in more diversity, we still have a long way to go. 

We know that speaking at a conference is an important and essential milestone in career and professional advancement. However, many organizers still struggle to fill their speaking slots with diverse perspective and panelists. The truth is, we can’t do this alone. Therefore, what if we all agreed to pursue the following guidelines to improve gender and racial diversity at our industry’s events:

  1. Publish our goals for number or ratio of gender and racial speakers. Share those goals with the industry, our sponsors, partners and advisory boards and collectively work on the goal together. 
  2. Ask for speaker recommendations from a diverse group of people. Dare I admit that asking a group of white men for speaker recommendations will likely lead us right back to the same speakers we’ve always had. 
  3. Pass the baton. Great speakers are hard to find and we tend to go back to the same well based off performance and seniority. We would all benefit by sharing the stage. 
  4. Stop putting women and people of color on the DE&I panels. A professional woman, LGBTQ or person of color should be given the opportunity to speak about their craft and their expertise. I don’t get asked to speak about what it’s like being a man and frankly we should stop asking others to only speak about their identity at the expense of their expertise. 

Finally, thanks to Harry Javer and the entire Lodging Conference team, as well as the staff at the JW Marriott Desert Ridge, for an incredible stay and impeccable service. We’ve come a long way and through a pandemic. Let’s keep the momentum going.

Alexi Khajavi is group president, travel and hospitality, at Questex.