After bottoming out in early April, the U.S. hospitality
industry is starting to see signs of recovery. STR reports that RevPAR levels
across the U.S. have climbed steadily in recent weeks, with leisure markets
across Florida, Texas and South Carolina seeing solid occupancy levels of late.
Hotels editor Christina Jelski spoke with Elie Maalouf, CEO of InterContinental
Hotels Group’s Americas region, to get his take on which sectors of the market
might bounce back sooner than others.
Q: With the summer travel season in full swing, can you
provide an update on the hotel industry’s recovery status?
A: The drop in the industry was historic, profound and very
quick, [but] we’ve fared relatively well throughout this. In the Americas, at
the end of the first quarter, 10% of our hotels were closed across North and
South America. But since then, every week we’ve been reopening more hotels, and
I expect almost all to reopen in the near future. So that trajectory has been
Anecdotally, in some parts of the country, whether it’s Florida,
Southern California or some of our other resort locations, we’ve been at full
or nearly full for the last several weekends. Now, that’s not a national
phenomenon. Those aren’t national occupancy levels, of course, but in pockets,
you’re seeing people moving as the lockdowns and travel restrictions have
lifted. And we do believe the industry will [recover]. Whether it’s 2022 or
2023, I think time will tell and others will prognosticate, but we’ll return.
Q: How well positioned is IHG when it comes to tapping into
these turnaround trends?
A: I think we’re well positioned going in. Within this
domestic market, we have a very large, mainstream-brand business, not just an
urban, upper, upscale and luxury business, [though we do have] a strong
business there, too. But we’re heavier in mainstream, limited-service brands
like Holiday Inn, Holiday Inn Express, Staybridge, Candlewood, Avid,
distributed in drive-to locations across all 50 states. And the most resilient
business today has been domestic, mainstream business and drive-to business. So
our strength in mainstream brands and drive-to markets is helping us, I think,
perform better than the industry at this point.
Q: With urban areas being more heavily impacted by Covid-19,
do you think cities will struggle to rebound as quickly as smaller, drive-to
A: It’ll come back. I mean, people’s desire to congregate,
to travel, to visit a gateway location and beautiful cities, experience their
vitality, their culture, their restaurants and bars, their events and sports
teams, that will all come back. People are craving for those moments to return.
It’s just going to return a bit later, because you’ve got restrictions on group
meetings of more than 50 people in some places, or more than 100 in others, and
certainly over 1,000. Those restrictions have to lift. People have to feel
comfortable getting into those groups.
And then those groups have to be booked
because they’re usually booked two or three years in advance. If you canceled
it, now you’re not going to have it in the fall. It’s probably a year or two
before you have it. So that’s why we and others in the industry believe that
large, urban group and meeting convention business will be the last to come
back, but it will come back.
Q: Many U.S. cities have seen widespread protests and
civil unrest in the wake of George Floyd’s death. Could this affect comeback
efforts in those markets?
A: First of all, we’re very saddened, shocked and alarmed by
the loss of life of George Floyd, Ahmaud Arbery and others who have lost their
lives in unjust situations. We clearly need [to address] it. The violence that
has followed, unlike the peaceful and rightful protest, has been equally
distressing at a time where we’re all dealing with a pandemic that’s cost the
lives of 120,000 Americans. It’s just a difficult time to absorb it all.
then unfortunately, some business owners in various cities, not just New York
City but Atlanta and Philadelphia, who were starting to reopen their businesses,
may now be delayed from that. And we recognize that it’s just another element
of what’s been a very distressing year for many small-business owners, retail
operations, restaurants and hotels. We also believe in strength and resilience
of not just our industry, but of these cities, of the people in these cities,
of the entrepreneurs in those cities, and of their customers. And yes, it’s one
more challenge, but it’s one more challenge that they will overcome.
Q: Covid-19 has certainly brought cleanliness to the
forefront. Can you talk about IHG’s strategy on this front and how much
investment properties will need to make to achieve enhanced standards in today’s
A: We actually introduced our trademarked IHG Way of Clean
five years ago, in 2015. We have enhanced it during this coronavirus crisis,
adding social-distancing signage and floor markers and protective barriers at
the front desk, hand-sanitizer stations in high-traffic guest and colleague
areas, masks worn by all hotel colleagues, gloves in certain high-touch
interactions, cleaning [during your stay] performed only upon request, and we’re
rolling out mobile check-in and checkout through our app.
[We’ll also have] a “Clean
Champion” [to oversee the culture of clean] in every hotel. In terms of
additional labor, it shouldn’t require any. In fact, having stay-over cleanings
only upon guest request probably reduces labor. And the Clean Champion is
somebody designated on property already, not a new position. There could be
some additional expense for the distancing elements, masks for the colleagues
or the availability of masks or disinfectant wipes for the guests. However,
with the reduced housekeeping and reduced food and beverage protocols -- because in many hotels, we’ve gone from
buffets to grab and go -- we’ve also balanced cost reduction. We’re very
cognizant that our hotel owners are in a difficult situation today, with low
occupancies and still having their debt service and needing to keep their
staff. So we’re not looking at incremental costs.