HM on Location: CEOs talk challenges, trends at AAHOACON

ORLANDO — C-level representatives from six major hotel companies took to the stage at the 2024 AAHOACON to discuss industry challenges, the need for advocacy and what disruptors are shaking up the industry. 

Moderator Sarah Dandashy, creator of Ask A Concierge, kicked off the conversation by asking the panelists to discuss both the challenges and opportunities facing hoteliers today. Rajiv Trivedi, a member of the board of directors for Red Roof, lamented the tight profit margins hoteliers face after paying for insurance, labor, supplies and construction costs. A brand, he argued, is responsible for finding ways for hoteliers to improve margins for owners. “And that's the difference that our industry needs to make and focus on over the next 10 years.” 

Greg Juceam, president and CEO of Extended Stay America, noted the prohibitive costs of renovating, refinancing or even buying a hotel. High rates and loan-to-value ratios, he said, are keeping deal volume down. While larger banks may be more willing to make deals with hoteliers, regional banks are still cautious. 

“It's really important that we really listen to our owners,” said Julie Arrowsmith, president and CEO of G6 Hospitality, noting that the cost of insurance is a pain point for many of them. Training employees is another challenge for hoteliers, she said, and praised AAHOA for providing training resources to the owners.   

Sonesta International Hotels President and CEO John Murray also praised AAHOA for its efforts in keeping labor costs down when collaborating with lawmakers, particularly those on Capitol Hill. Other panelists agreed. “Why does AAHOA exist?” Geoff Ballotti, president and CEO of Wyndham Hotels & Resorts, asked rhetorically. “Why are we here? Why do we support AAHOA?” The voice of the association and its members, he said, “is so much more impactful and powerful than any of ours in D.C.” Last November, former chairwoman Jagruti Panwala met with representatives from the Department of Labor to argue that overtime regulations were bad for hoteliers and would not only hurt their profits but lower the number of people a hotel could employ. “That advocacy works,” he said.

Trivedi agreed, and said that when associations and brands collaborate, “we can put a strategy together and put it in front of our governments.” Governments, he added, “have no business being in our business, and we need to try our best to keep them away.” 

Disruption and Labor

When Dandashy turned the conversation to industry disruption, the panelists had a range of responses. BWH Hotels CEO Larry Cuculic noted Google’s AI-driven Search Generative Experience as a potential disruptor for the industry. “Google is moving towards knowing you better than your spouse knows you,” he cautioned, noting that the search engine will not only know where travelers stay but how they rate each hotel. “That's scary because they will have that conversation and you can pay for whatever [search] results you want, but they will value the guest [review] on Google, which is going to have a direct impact on your bottom line.”

Trivedi, in turn, saw an upside to the growth of AI: “You will know about your guests up close and personal,” he said. With that information, hoteliers will be able to run better targeted marketing campaigns and provide more personalized service. 

The ongoing labor crisis is another cause for concern among hoteliers. “We are losing talent to other industries,” Ballotti said, noting that applications are down by as much as 50 percent from where they once were. “That's a huge issue for us as an industry.” He recommended visiting college campuses while Murray advised reaching out to high schools and seeking apprentices.

“A brand has to make sure that hoteliers know that they're appreciated,” Cuculic said.