NEW YORK -- Despite the onslaught of disrupters and new
threats from tech giants like Google, Facebook and Amazon, hotel executives
were upbeat at the 40th annual NYU International Hospitality Industry
Investment Conference last week, noting that all signs point to a continuation
of what has been one of the industry's longest up cycles.
"Breaking records is starting to sound like a broken
record," Amanda Hite, president and CEO of hotel research firm STR, told
the audience. The U.S. hotel industry, she said, has seen 98 months of
consecutive gains in revenue per available room [RevPAR]."
What is more, Hite said, "I think that continues for
the foreseeable future if there is not a black swan event."
She said demand is outpacing supply in every segment, and
RevPAR gains, which had slowed a bit in 2016 and 2017, are picking up again.
Adam Weissenberg, global leader of the Travel, Hospitality
& Leisure division of Deloitte Touche Tohmatsu, said the uncertainty that
hung over the conference last year had faded, and the fundamentals are all
"I think it was still some hangover from the change in
government," he said. "There was a lot of uncertainty about what was
going to happen politically with the new administration. I think, ignoring
where you sit politically, the economy is doing well. A lot of companies are
reporting strong earnings ... and supply seems not to be crazy."
While international visitation numbers have dropped since
President Trump took office, Patrick Denihan, co-CEO of Denihan Hospitality,
which owns and operates boutique hotels, said business travel has picked up and
is helping fill the gap.
Even in New York, which has seen a lot of new supply,
Denihan said, the "rate is finally coming back," with average daily
rates increasing 6%.
One area of concern, however, is the labor market,
particularly for select service and economy brands, Weissenberg said.
Katherine Lugar, president and CEO of the American Hotel
& Lodging Association, estimated that the industry currently has 600,000
unfilled jobs open.
"It's getting tougher and tougher to hire people,"
Weissenberg said. "It's really hard to attract top talent."
There was also a lot of talk about new threats to
traditional business models. While in recent years much of that attention has
focused on the competitive threat from the sharing economy, one of the biggest
concerns is the entrance of tech giants into the travel space and their ability
as intermediaries to gather and adeptly use so much personal information about
Marriott Hotels CEO Arne Sorenson said, "I think we are
in an absolute war for who owns the customer, and it's a long-term war. ...
They want to own our customers."
He said the hotel industry will be competing with Airbnb for
years. But Hilton Worldwide CEO Christopher Nassetta said the "world is
taking care of that" as governments continue to adopt rules to level the
competitive playing field between home-sharing companies and traditional
hospitality companies. In fact, some major brands, including AccorHotels and
Marriott, have invested in their own sharing-economy platforms.
AccorHotels CEO Sebastien Bazin said that to win the battle
of customer ownership, hoteliers need to take advantage of every opportunity to
interface directly with their customers.
"They have all the information on me, but they have
never met me," he said of the online giants. "We just have to take
advantage of that moment. ... That moment of interface is very valuable."
Nassetta agreed: "In a sense, it's shame on us if we
don't own the customer. They sleep with us. They eat with us. They shower with
David Kong, CEO of
Best Western, said the industry needs to welcome change, "because change
already is the fastest that we have ever seen in our lifetime."