5 lessons learned from hotel industry leaders

Lessons Learned

Last week, the industry’s dealmakers, bankers and executive elite came to New York to do what they do best: make money. And they did it against the backdrop of one of the industry’s biggest fiscally focused events of the year, the NYU International Hospitality Industry Investment Conference.

I chatted it up with attendees, listened to expert panelists and came to some conclusions about the state of hospitality. Here are some of my observations affecting the hotel business and travel economies both positively and negatively.

1. Slow Doesn’t Mean Stop

People tend to have an unquenchable thirst to drink in the negative. Though lodging industry fundamentals continue to propel many hotel owners to record earnings, many are not enjoying the experience. Revenue-per-available-room growth may have slowed to 4 percent and is no longer 8 percent, but that doesn’t mean imminent danger. The reality of mathematics dictates that after a certain period of time, percentage growth must slow down, even as dollar increases remain pretty decent.

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2. No More Megamergers

In a special invitation-only session geared toward us writer types, we heard some major CEOs declare that the age of the megamerger for this cycle is probably over. Both Chris Nassetta, president and CEO of Hilton Worldwide, and Arne Sorenson, president and CEO of Marriott International, say another megadeal is highly unlikely.

Both explained that for a large-scale merger to happen, a big company must be for sale. Neither expects another company the size and scale of Starwood Hotels & Resorts Worldwide or Carlson Rezidor to be up for bidding in the near future. Carlson was recently sold to the Chinese company HNA, while Starwood has of course been sold to Marriott. Sorenson said Marriott is very close to having completed receiving merger approvals from nearly all applicable governments and expects the ‘Marwood’ deal to close very shortly. My guess is early to mid-July.

3. Real and Political Walls are Bad For Tourism

Though a particular presidential candidate’s name wasn’t mentioned, Jonathan Tisch, chairman of Loews Hotels & Resorts, did call out isolationist policies as bad business for the entire travel sector and greater economy. He warned it’s critical to continue welcoming international visitors to the United States through smart initiatives such as visa waiver programs. If we build a physical wall or make it increasingly difficult for people to enter the country, it will be a bitter financial pill, he explained. International visitors typically stay longer and spend more money per day, and our economy is not fully maximizing the potential of incredibly valuable export business. (note: travel to the U.S. is considered an export because foreigners are giving money to Americans.)

“Travel is a perception-driven business. If they think it will be a hassle, they simply won't make the trip,” said Tisch. “The rise of political turbulence and political rhetoric is creating the misguided idea the fortress America is on the rise. Pulling back from the rest of the world is simply not an option.”

4. Disruption is Ever Present

Airbnb isn’t the only disruptor. Technology is doing its fair share of causing industry upheaval, too. Yet, it’s the former, not that latter, that continues to be the most-talked-about topic. Many hoteliers are continuing to dispel Airbnb as any sort of competition while simultaneously demanding the organization follow the same rules the hotel industry must. Fair enough. If Airbnb hosts are renting beds, then they must be treated as all companies doing that very same thing.

Choice Hotels International sees opportunity here, which is why it launched Vacation Rentals by Choice, but hoteliers should be more focused than ever on technology. We’re firmly entrenched in the experience economy and those companies leveraging techno tools to enhance guest experience in a natural and organic way are the ones who are going to be future leaders.

5. The Elephant in the Room

With Donald Trump’s candidacy front and center on the national consciousness, there was suspiciously little chatter regarding this incendiary figure. Whether you consider him your candidate or a societal scourge, people essentially ignored the entire election season. In a business where politics is always front and center, Trump is such a polarizing figure people simply pretended a presidential vote wasn’t happening. I suspect most people realize that supporting or slamming this man simply isn’t good for business.

In fact, I hosted a panel featuring someone from Trump Hotels and feared I’d be playing comment cop trying to regulate a political free for all. It turned out not to be the case at all, much to my relief.

What were your observations at NYU? Drop me a line here at [email protected] Or find me on 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.

 

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