NEW YORK — Hoteliers embodied a wide range of emotions about the state of the industry during the first day of the 45th annual NYU International Hospitality Industry Investment Conference.

Many conference attendees at the New York Marriott Marquis remained optimistic about the operating environment with continued strong travel demand heading into the busy summer season. But some cited early signs of a slowdown in future bookings as cause for concern.

And even more were openly worried about the financing environment, with banking upheaval drastically reducing the available capital for transactions, refinancing and —most dramatically — new construction. Every cloud has a silver lining, though, as the possibility of a long-term slowdown in supply growth could help buoy the operating environment even if demand growth starts to moderate.

“I think Taylor Swift is going to increase RevPAR in the United States by 1%."
— Tyler Morse, chairman and CEO of MCR, discussing the outsize impact Taylor Swift's tour is having on hotel performance this year.

"We don't want African Americans to cancel their conventions [in Florida] so our goal is to find a workaround. We say 'Hey, come to Florida, and do business with an African American business.' It's working, and we're pitching the concept that this is a great industry even if we might have dumb people that make dumb decisions."
— Andy Ingraham, CEO of the National Association of Black Hotel Owners, Operators and Developers, speaking on recent motions by the NAACP to advise Black groups to avoid traveling to Florida. He said that's not the right approach to take, and instead those groups should direct their business in Florida to Black-owned businesses.  

The latest U.S. hotel industry forecast by STR and Tourism Economics shows the luxury and upper-upscale segments leading the recovery in revenue per available room growth.  

As the U.S. hotel industry settles into recovery despite a still-uncertain economic backdrop, hoteliers are finding plenty of bright spots of optimism.

First and foremost is the nearly nonexistent new hotel supply in the ground and on the horizon. With zero capacity issues, CEOs on the morning general session panel agreed that low supply, coupled with debt-market constrictions for new construction, will help the U.S. sit pretty for a few years without worrying about excess supply.

One word of caution on the horizon, however, is that the breakneck pace of leisure travel demand and corresponding high pricing should finally begin to cool off this year. Hoteliers prefer the term "normalize" to "slow down," and in fact that normalization is what most predict.

The conversation around AI definitely is picking up at industry conferences, and for now, most executives seem united on the idea that it'll best be used in streamlining operations before and after the stay, essentially freeing up employees to deal with guests face to face while they're on-property.

One fun note: Accor CEO Sébastien Bazin broke into the conversation about AI and ChatGPT during the CEO panel to ask the moderator, CNBC anchor Sara Eisen, to ask ChatGPT who the best hospitality industry CEO is.

The result — apparently — was the chatbot very diplomatically saying the conversation was highly subjective.

— Stephanie Ricca, editorial director
@HNN_Steph
 

A pair of wildly different news items managed to set the tone for the first day of the conference, hours before many attendees had managed to step foot on the conference floor.

In the early morning hours Monday, Marriott International sent out a news release sharing new details on its planned midscale, extended-stay brand, tentatively called Project MidX Studios. The brand is clearly a bet on longer-term stays by more frugal travelers, and coincides with similar brand launches from Hilton and Hyatt. While one could make an argument that it reflects an expectation that travelers will soon begin trading downward to cheaper stays, it's also reflective of what are arguably the three most important hotel companies — at least within the U.S. — all collectively deciding to seize on a massive growth opportunity. This is a completely pointless aside, but Marriott will get bonus points in my book if they have the guts to do what the Washington Football Team didn't and permanently adopt their temporary branding — even if it sounds like the name for some video editing software.

On the other end of the spectrum, in more ways than one, was Park Hotels & Resorts executives announcing their decision to walk away from two massive hotels in San Francisco — the Hilton San Francisco Union Square and Parc 55 San Francisco — along with the $725 million in maturing debt attached to them. Park officials have spoken glowingly about the long-term prospects of San Francisco, so this could be read as pretty damning commentary for that market along with being a possible sign that long-awaited distress could soon hit the market.
— Sean McCracken, news editor
@HNN_Sean

CoStar's hospitality analytics firm STR and Tourism Economics revised upward their 2023 U.S. forecast for average daily rate and revenue per available room, lifting them 1.5% and 1.3%, respectively, from the previous forecast.

During her presentation at the conference, STR President Amanda Hite noted that while 3.5% ADR growth over 2022 is good, it won't keep up with the rate of inflation, meaning hoteliers will continue to struggle to see real rates grow past 2019 levels.

Still, there's another positive here.

"As the overall economy continues to slow, we will have growth, which I think is remarkable and what we don't normally see," she said, adding that in prior recessions, every 4% decrease in gross domestic product resulted in a 1% decrease in hotel demand.

The companies expect a mild recession in the second half of the year, but it sounded like the executives at the opening CEOs panel for the conference are pretty optimistic for their hotels’ performance this year. Many of them spoke about the strength of business on the books as well as further recovery in group and corporate demand. They also pointed to the recent strong jobs report, contrasting it to relatively isolated layoffs, as a significant driver for travel demand.

— Bryan Wroten, senior reporter
@HNN_Bryan

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