ATLANTA – The hotel industry continues to deal with a host of issues caused by the pandemic—uneven travel patterns and recovery, inflation and staffing issues being just a few. A recent Red Roof roundtable gathered a number of industry leaders to discuss where the industry stands and what to expect going forward, as well as what could derail the continuing recovery.
Participants were George Limbert, Red Roof president; Matt Hostetler, Red Roof chief development officer; Jigar Desai, advisor, NewGen Advisory; Tom Conran, founding principal, Greenwood Hospitality Group; Rupesh Patel, hotel owner and founder of Prefer Partners; Vinay Patel, president of Fairbrook Hotels and past chair of AAHOA; Tom O’Gorman, VP of hospitality business development at Lodging Econometrics; Doug Artusio, chairman and CEO of Dellisart; and Isaac Collazo, VP analytics at STR.
According to Artusio, his company’s success depends on taking matters into its own hands instead of relying out outside events.
“I have never been able to get profitability through cutting the operation or by trying to save my way to profitability,” he said. “We've taken great lengths to take revenue management in house. We manage this in super detail. We have taken a different approach on our social media, on marketing, on sales. We've added remote sales, even to full sales staff that are prospecting, that are calling, not just taking inquiries. I'm not going to let the industry dictate or the demand or the economic moment dictate how I do.”
Greenwood Hospitality’s portfolio consists of full-service hotels—luxury and upper-upscale soft-branded properties—which presents Conran with different issues than the economy-minded members on the roundtable face. While technology such as mobile keys can become an important labor- and cost-saving move at the lower end, it can have different results at the higher level.
“For years we spent all this time educating our clerks at the front desk to engage with the customer. Now we [offer] mobile key and they go right past the front desk,” he said. “The inherent challenge we have is how do we message with our guests? It's incredibly difficult. If they go right to their room, we're not telling them about the restaurant, we're not telling about the meeting space. We're not telling them much. So how do we engage with that from an electronic standpoint and make it seem like it's genuine? I think that's the inherent challenge we all have.”
According to Collazo, this is a great time for the industry to innovate and to see what it can do to both help customers and keep customers.
“We just keep raising the rates—the most incredible thing about this downturn (or, now, the recovery) is how fast rates have risen. But at some point guests are going to be like anyone else and say, ‘Why am I paying this? I can get more space someplace else,’” he said. “It's an interesting conundrum that we find ourselves in. Labor's not going to come back and the prices aren't going to go down. That is a given. So it's how do you innovate? How do you do things differently and how do you keep that satisfaction level as high as it was prior to the pandemic?”
Limbert said he believes brands need to focus more on the owner/operator, which will help improve the guest experience at the same time.
“The way to enhance the guest experience is through technology. We always thought, in the industry, that we can fix everything with a smile and good customer service. But we know that we can't do that,” he said. “We have to supplement with technology [and] at the same time balance the owner/operators’ needs and not sit there and make you buy really expensive tables to put in your lobby because now it's cool to sit together. We can't do those things anymore. We have to focus on the owner/operator.”
Labor costs continue to be a huge challenge for the industry, according to Vinay Patel, and technology needs to be a part of the solution instead of part of the problem.
“In terms of the cost structure, we have to talk about technology being a solution, but it's also a problem because … the lodging industry is so far behind in technology,” he said. “It trickles down to the hotel owner level and makes it a lot more challenging.”
It all comes down to revenue, according to Artusio.
“If you can generate revenue, consistent revenue throughout [a stay], you're far less at the mercy of a buck here, a buck there or your contracts necessarily. We watch everything, we're meticulous, but where we put most of our efforts in generating sales … it's about the top of the funnel for us,” he said. “All the training and everything that we do is about generating sales. There are so many—almost countless—ways to generate revenue if you're willing to work, if you're willing to look at all the different avenues of technology, third party channels, all the aspects. If you own the sales arena in your market, you will be successful.”
Ready for Anything
No matter how the recovery is progressing, there’s always the possibility a roadblock might throw a curve in the industry’s path.
According to Artusio, we can't predict how things are going to work out in Eastern Europe—and the things that we don’t control can be life changing.
“I think America is solid. I think our economic basis is solid,” he said. “The general hotels outlook is terrific. We all kind of got smarter through the pandemic. So we'll take that and whatever that is worth in our own segments and move forward.”
O’Gorman agreed that the U.S. is stable, although that isn’t the case in Asia and Europe, he said.
“One item you can’t tackle is Russia right now; that could definitely change a lot of things,” he said. “One thing that’s going to happen is international travel opens up again. Since last May, the volume here has been really good. But it's been really good because it's been contained inside the country. So now when the country opens up to other countries and traveling internationally, how's that going to change? And what's the effect going to be on U.S. hotels?”
Collazo said the hassle factor of keeping up with various countries’ protocols is protecting domestic travel. And while world events do concern him, he said the next COVID-19 variant and the response to it are another source of worry.
“It's government that I fear the most, the lockdowns and things like that,” he said. “People will decide if they want to travel but if a government makes it impossible or puts restrictions, then what do you do?”
Inflation and its impact on travel is something Limbert said he remains concerned about.
“What do you do to combat inflation? You raise interest rates. Why do you raise interest rates? To stop people from spending,” he said. “That’s the fear. Right now, because [you only live once], because of the resiliency, people want to travel. If we let the government continue to raise rates and continue to stymie spending to combat inflation, that could slow down some of the spending that we see, especially in leisure travel.”
The pick-up in corporate travel is going to continue, according to O’Gorman, providing a lift to the industry.
“We’re to the point where people feel confident now to travel. People are not worried; they know what they're dealing with. They know how to provide safety themselves and so they're moving forward,” he said. “I think corporate travel is going to continue to increase over the next year, followed by group travel right after that. We're in a good position right now.”
Limbert pointed out that the business travel return is by no means universal.
“It depends on what market we're in,” he said. “You look at certain regions, and yes, there's that group travel, the large group movements. We're just not seeing that return just yet. We hope it's there but we haven't seen it yet. Are we seeing glimmers of hope that business travelers coming back? Yes, but it's market-by-market.”
For the final question of the roundtable, participants were asked what they believe the No. 1 issue will be one year from now. The overwhelming response was labor.
“I'm going to throw labor out there—but not just in our industry because the supply chain is sideways,” Hostetler said. “You know, there are no semi drivers out there. You see who's working in retail and is retail going to be around? [I worked from home one day and] everybody except for DHL was at my house. And I just thought, OK, where are all these big boxes going to be? We are changing the world of technology and labor is a big deal.”
Desai concurred on labor.
"Labor is always going to be there next year,” he said. “I feel inflation, rising costs and supply chain management, especially when it's taking much longer to build new product, get products for operations, things like that. And the cost of freight has gone up. Margins are slipping, but how do we pass it on to the consumer?”
Conran pinpointed spending as the issue he believes will be No. 1 in a year.
“Spending went up about 8 percent year over year ’21 versus ’20. I don't know where that spending is going to be in ’22 versus ’21,” he said. “Look at gas prices. The Delta chairman just came out and said that most likely because of fuel pricing, they'll have to go up about 10 percent on average on ticket prices. It just keeps adding up.”
According to Collazo, the pandemic has changed people’s outlook on life—and, by extension, travel.
“Uncertainty is always the killer, but this time, because of our collective experience with COVID, the whole idea of ‘you only live once’ is kind of uprooting that. Yes, there's uncertainty, but I may not be alive tomorrow so let's do something. That's a social change that we as a collective society and world had never been through in modern times. People know now, nothing's guaranteed. Life isn't guaranteed. And I think that's the difference.”