NEW YORK — The mood among hoteliers at the NYU International Hospitality Industry Investment Conference was positive while acknowledging that things aren't perfect.
The supercharged recovery from the pandemic and easier year-over-year comparisons have mostly passed, and hoteliers are feeling mostly OK with that. Deals are getting done, and while they aren't exactly easy, they are possible even if they are more expensive than in recent years.
The first quarter of the year was rougher than hoteliers expected, but they got through it and have an optimistic outlook for the remainder of 2024 as they see further demand recovery in just about every segment.
Photos of the Day
Slide of the Day
STR and Tourism Economics downgraded their U.S. hotel industry forecast for 2024 to reflect a "pretty significant downgrade of revenue per available room growth" this year, STR President Amanda Hite said at the conference. While overall RevPAR is projected to be down, the upper-upscale and upscale chain scales still show positive year-over-year growth this year.
Quotes of the Day
"How many times do you go to a fitness room in a hotel and there's one machine, one bench and a pool with nobody in it? Stop building pools. People will book hotels based on the wellness facilities they're looking for. I encourage you all to be rethinking wellness."
— Rod Clough, president of HVS Americas, on the Data Insights panel. He cited a hotel that converted its pool to a golf simulator.
"Put aside technology a minute. You don't need technology to provide service — just do it with your heart. Eighty percent of the time, you're going to handle things right. Don't hide yourself behind technology. Just go with your stomach and your heart. That's good enough."
— Sébastien Bazin, chairman and CEO of Accor, on providing personal service in a tech-minded world.
Editors' Takeaways
With new builds still a challenge, hotel brands have increasingly turned to conversions as a way to grow their portfolio, or at least to keep a property in their system. We've seen numerous brand launches within the past year or so of new flags that are conversion-friendly.
Marriott International gave attendees a sneak peak at what it's calling Project Mid-T, an upcoming conversion-friendly midscale brand aimed at transient guests. It's Marriott's fourth midscale brand offering, a big jump for a hotel company that didn't operate in this space before the end of 2022.
Speaking of conversions, during the CEOs panel at the end of the day, IHG Hotels & Resorts' Elie Maalouf and Hyatt Hotels Corp.'s Mark Hoplamazian both spoke about the practice of converting office space to hotels — not an easy project by any means — because in certain markets, there's far more demand for hotels than office space.
— Bryan Wroten, senior reporter
@HNN_Bryan
Friction between brands and owners isn’t anything particularly new for hotel investment conferences, but based on commentary from many at this year’s NYU conference, it seems like things are really coming to a head. The conflict seems to be relatively simple and straight forward: After years of allowing franchisees to defer on capital expenditures and regularly scheduling property investments, brands have run out of patience and want to see investments that result in superior guest experience. At the same time, owners are more than reluctant to invest money without a clear return on investment, especially at a point where demand is plateauing.
The silver lining to this particular cloud is the idea that — much like lenders losing patience — brands' strict guidelines on property improvements could be an impetus for some owners to sell at a point when transactions are muted. This represents a big opportunity for the massive amounts of capital that has been waiting on the sidelines of the industry. That, combined with the various new conversion brands being launched, represents a big opportunity for some creative hotel investors.
— Sean McCracken, news editor
@HNN_Sean
The hotel industry is in the midst of an atypical cycle, but what do we expect, following such an atypical past few years? Travel and hotel demand expanded at such a breakneck pace, there was nowhere for it to go but down, which is where the industry sits now. But down is definitely not out, not by a long shot. Ellen Zentner, managing director and chief U.S. economist for Morgan Stanley, reminded conference attendees this morning that “broadly speaking, the country is still in expansion.”
“Conditions across the country are slowing, but not falling off a cliff,” she said. Inflation and overall high costs are driving travelers at the lower-income end of the spectrum to slow travel down, and middle-income Americans are starting to trade down, she said. But the group that continues to spend, spend, spend? “The wealthy are just not slowing down,” she said, citing high spending across all goods and service classes.
And just as high prices are having an impact on consumer spending on travel, those high prices are hitting hotel owners in their wallets as well. Rather than pay high loan-servicing costs, high capital-expenditure bills and high performance-improvement-plan requirements from brands, hotel owners are getting more anxious to sell hotels now, many experts said at the conference today. Could this signal more sales? Many think so.
— Stephanie Ricca, editorial director
@HNN_Steph
Editor’s note: Chris Nassetta serves on the board of directors for Hotel News Now’s parent company, CoStar Group.