What the World Economic Forum means for the hotel industry

Each year, the World Economic Forum opens in Davos, Switzerland, and each year I watch it from afar in New York. I really should get over there; someone (me) can interview Marriott International CEO Arne Sorenson better than this

The World Economic Forum is like an All-Star game—all the big names, from all the big companies are there and they all want a piece of the spotlight. It's why CNBC's Squawk Box posts up in Davos each gathering to interview everyone from JPMorgan Chase CEO Jamie Dimon to Salesforce CEO Marc Benioff. 

And while the WEF is not (obviously) specific to the hospitality industry, the hospitality industry is a big part of global business; therefore, there are many implications that emit from the conversations and goings-on at the Davos conclave that are relevant to the hotel industry. 

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Brexit Blues

This year's WEF is in perfect symmetry with geopolitical events. The day it opened was the same day British Prime Minister Theresa May outlined her plan for Britain's departure from the EU. May said she wants to trigger Article 50 by the end of March, citing the will of the majority. "I am sure the British Parliament will want to deliver the views of the British people and respect the democratic decision that was taken," she said.

She ratcheted the rhetoric up further: "The message from the public before and during the referendum campaign was clear: Brexit must mean control of the number of people who come to Britain from Europe. And that is what we will deliver."

The language sure sounds like Britain will be exiting stage left from the EU, a move that could create more uncertainty across a continent that is already awash in volatility. 

Now, after her speech, she is doing Davos. Word is she is there to meet with heads of Wall Street banks that threatened to move jobs out of the UK "amid a so-called hard Brexit."

We've written about the banking backlash to Brexit before. Goldman Sachs, which has 6,000 employees, reportedly spent half-a-million dollars helping to fund the "remain" campaign.

Post-Brexit reports said that London could lose as many as 40,000 workers in the wake of Brexit.

We've covered the impact of Brexit on the hospitality industry extensively: here, here, here and, oh yeah, here

Trump In

Then, the same day the WEF closes, Donald J. Trump will be sworn in as the 45th President of the United States of America. What January 21 will look like is still anyone's guess, but, to be sure, Trump's initial indication of his policies has many of the top titans in business, well, pleased. 

Trade and other policies could be taking a backseat to the holy grail of business and affluence: taxes and regulation. “Tax and regulatory reform are so significant, I think they will outweigh any other things that may be done,” AT&T CEO Randall Stephenson told The Wall Street Journal, in Davos. Stephenson said a drop in the corporate tax rate "could goose economic growth in 2018."  

The U.S. corporate tax rate is currently set at 35 percent, well higher than countries like Ireland (12.5 percent) and Russia (20 percent). This is reason why many U.S. companies and hospitality-related investors invest in and set up business units in countries like Ireland

And while Trump isn't in Davos this week (he's hard at work on his inaugural address, as evidenced below), he has an envoy there in the form of one Anthony "The Mooch" Scaramucci, the founder of SkyBridge Capital, who is now an assistant to the incoming president. 

Here is in Davos to respond to some of Chinese President Xi Jinping's comments regarding trade and globalization. If you recall, at one point during Trump's campaign, he intimated at implementing a 35-percent tariff on Chinese imported goods—which would have major ramifications on the global supply chain and, consequently, hotel procurement. 

As The Washington Post pointed out, "Without mentioning Trump by name, Xi offered an opposing viewpoint. 'Countries, he said, 'should view their own interests in their broader context and refrain from pursuing their own interests at the expense of others.'" He added one more slight: "As the Chinese saying goes: People with petty shrewdness attend to trivial matters, while people with vision attend to governance of institutions.”

Scaramucci responded. “The United States and the new administration does not want to have a trade war,” he said, adding that what Trump wants is trade that has more “symmetry.” 

(You've read this far, so here is a handy "Trump FAQ for American business leaders in Davos.")

Davos Debriefed

Yes, the World Economic Forum may be more of a scene than anything else. But it comes at a pivotal moment in the history of global politics, economics and social movement. The UK leaving the EU has consequences; Donald Trump as president has consequences; the rise in nationalism and populism has consequences. And all these events reverberate through the hospitality industry. We still don't know how it will all shake out, but one thing is for certain: Changes are coming and the collective hospitality industry—all its stakeholders, from owners to operators and lenders—will need to implement strategies to ride this roller coaster. 

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