LOS ANGELES — Hotel industry CEOs said it’s too early to know the full impact of any executive order announced by President Donald Trump, but they’re hopeful he stays focused on the economy.
During the "Boardroom outlook: Roadmap for the future" general session on the first day of the Americas Lodging Investment Summit, the chief executives of major global brand and management companies shared their thoughts and expectations under the second Trump administration.
Everyone is watching the stream of executive orders come out and trying to figure out how they’ll be interpreted, IHG Hotels & Resorts CEO Elie Maalouf said. The American people have routinely switched which party they support after every presidential administration, with a few exceptions.
“We build businesses for much longer term,” he said. “We make decisions for much longer terms. Our owners build hotels for a much longer term. I think we’ve all done well across both parties.”
The next four years will be fine, as were the fours before now and the four years before then, Maalouf said.
If Trump is able to get momentum on the things he’s most focused on, namely the border and immigration as well as the regulatory environment and current tax structure, it would benefit the hotel industry, Hilton President and CEO Chris Nassetta said. While leisure travel and meetings and events have come back significantly, business transient has been slowly picking up.
“Businesses like certainty, and we’ve been living in an environment where the businesses are pretty good, but you don’t know what’s going to happen from a regulatory point of view,” he said. “You don’t know what’s going to happen from a labor point of view. You don’t know what’s going to happen from a tax point of view.
“As a business, when those things are sort of up in the air, you’re going to pull your reins in a little bit. You’re going to spend less.”
The president seems serious about addressing all of these issues, Nassetta said. If Trump does, then everyone should expect that would translate to their business being stronger in the next couple of years than they would have expected six months ago.
Increasing the flow of capital
In looking at the hotel development environment, there’s one factor that could help owners move forward with their new projects, Marriott International President and CEO Tony Capuano said.
“I think all of us sit here with pipelines, with dozens if not hundreds of shovel-ready projects,” he said. “Those aren’t paused because of the current inflationary or interest-rate environment. They’re not paused because we’ve got a little bit of elevated construction costs. It’s just that there’s not the free flow of debt — for existing assets, yes, but for new construction, it’s still a bit constricted.”
That is where the Trump administration can help in a meaningful way, Capuano said. Interest rates will go up and down, and industry partners can navigate that, but there needs to be available capital for new projects.
The deregulation the Trump administration is talking about in the financial sector can help the hotel industry, if done properly, Maalouf said. A handful of major banks have pulled back from real estate in recent years as they have regulators on their cases. Maalouf said he hopes the new administration pushes back on this.
“[The banks] are almost government-run entities, and they’re not really able to invest in the business they want to invest,” he said.
Hotels have shown to provide good return on investment, and they don’t have the same issues office buildings have had, he said.
The level of interest rates is less an issue than the regulation that has limited the availability of capital, Maalouf said. Interest rates won’t come down much further, not only because the economy is strong but because the federal deficit is growing.
“Where rates are today, we’ve had some of the best development environments in the past,” he said.
Deals can move forward at this level of interest rate as long as they’re stable and there’s availability of capital, he said. That availability has been constricted.
“There’s a chance now that that will change,” Maalouf said. “We have new administrators coming in at various regulatory agencies who are not willing to suppress the wall of capital.”
Immigration and labor
At the moment, everyone is looking for some guidance about immigration and labor policy to get a better idea of what’s ahead, Aimbridge Hospitality CEO Craig Smith said.
“There’s still a little bit of confusion,” he said. “There are a lot of executive orders that came out very quickly, and so a lot of us are nervous of what’s going to happen with labor. We have a lot of people that work in our hotels that are nervous, and I think we would just like to have a game plan to see what’s going to happen.”
The need for comprehensive immigration reform has been around for as long as he’s been in the industry, Nassetta said. The U.S. got close under President George W. Bush, but things fell apart and there hasn’t been much of a fighting chance since.
There’s a focus now on the border, stopping illegal immigration and allowing for legal immigration, he said. There may be a once-in-a-generation opportunity for this administration to have comprehensive reform on legal immigration.
About 15 years ago, Canada had a nursing shortage, so the government said if a person has a nursing degree, they move to the top of the list to get in, Smith said. What needs to happen now is a change in the rhetoric, he said. There’s been so much talk about illegal immigration; now there needs to be a focus on legal immigration.
“We have a need for certain jobs,” he said. “If people are skilled in those jobs, can we get them across the border?”
Alongside that, the U.S. needs to take a lesson from Europe and its apprenticeship programs, Smith said. The American Hotel & Lodging Association has started one, and it has graduated 100 to 150 people, but that’s small compared to Europe.
When looking at the labor needs in the industry, there aren’t a lot of options for young adults besides full universities, he said. There’s so much more that could be done in the U.S. for apprenticeship programs and other blue-collar programs.
“If you want to put your money somewhere to help the United States, how can we set up schools to train more chefs, more folks at entry-level jobs and give this opportunity to work on the job?” Smith asked.
The hotel industry needs people who know how to do their job, and there’s a need to step forward and say the U.S. needs targeted immigration and have the administration lean into these programs and build out schools to train people for the skills needed in the future, he said.
Editor’s note: Christopher J. Nassetta serves on the board of directors for Hotel News Now’s parent company, CoStar Group.