NEW YORK — One word dominated the annual New York University International Hospitality Industry Investment Conference last week, and it wasn't "rate" or "occupancy." It was "China."
As growth in North America stagnates, industry executives are looking to China not only to grow their own brands but as a source market for millions of new guests to fill their hotels around the world.
Symbolizing the emphasis on China, Starwood CEO Frits van Paasschen said he would be leaving after the conference to head up a team of 10 Starwood leaders who will run the company from Shanghai for five weeks.
"You can't understand a market unless you buy groceries there," van Paasschen said. "We will be visiting secondary and tertiary markets and seeing if there are places there for our brands."
But China is only part of the globalization of what was once a U.S.-centered business.
When Lalia Rach, a professor at NYU's Tisch Center for Hospitality, Tourism and Sports Management, started to introduce a panel of CEOs as heads of North American companies, they protested in unison, pointing out that the great majority of development is now overseas.
In fact, one CEO pointed out that four of the five CEO panelists themselves were not American.
Hubert Joly, CEO of Carlson, said that a majority of his company's hotels are now outside the U.S.
Hilton CEO Christopher Nassetta said, "I spend most of my life outside the U.S. Seventy-five percent of our new hotels are outside the country."
Kathleen Taylor, CEO of Four Seasons, said, "The inflection point has been passed as far as globalization. We have 60 projects under way, with just two in the U.S."
The challenge for U.S. companies, the CEOs agreed, is to create a presence in China that will generate brand awareness and appeal to the rapidly growing domestic travel market.
"Nobody has done it yet," Nassetta said. "But there is a need to develop a midscale brand that will appeal to the Chinese. There is an opportunity there for thousands of hotels."
On a panel of luxury hotel executives, Richard Baker, executive vice president for Mandarin Oriental, said, "We are based in Hong Kong but had never been in [mainland] China, where we are expanding now. One thing about the market is that they are seeking residential components for luxury development, which is not the case elsewhere and makes development more feasible."
Alan Fuerstman, CEO of Montage Hotels, which has a relatively small number of properties, said China was a priority, adding, "You will see a Montage in China soon."
And Simon Turner, Starwood's president for global development, reported, "We are focusing on 10 cities that might handle one of our luxury brands [which include St. Regis, W and the Luxury Collection]. There are 10 other cities that we have a watch on.