Hotel executives share positive outlook on the sector's future

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CEOs discussed the state of the industry at the NYU International Hospitality Industry Investment Conference. From left, AccorHotels' Sebastien Bazin, MGM Resorts' Jim Murren, Hilton's Chris Nassetta and Marriott's Arne Sorenson.
CEOs discussed the state of the industry at the NYU International Hospitality Industry Investment Conference. From left, AccorHotels' Sebastien Bazin, MGM Resorts' Jim Murren, Hilton's Chris Nassetta and Marriott's Arne Sorenson. Photo Credit: Jeri Clausing

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 strong.

"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 customers.

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 us."

 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."

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