The Lodging Conference Day One: Treats, Not Tricks

PHOENIX—The Lodging Conference kicked off on Halloween at the Arizona Biltmore in Phoenix, and the mood was all treats, with very few tricks in the bag.

Conference co-founder and producer Harry Javer started the event with a call for the audience to raise hands if they feel optimistic, and nearly every arm was in the air.

Economists and industry forecasters kept the good mood going. Bernard Baumohl, chief global economist for The Economic Outlook Group, said the U.S. economy will continue to grow, even if Trump administration tax cuts don’t pass.

“I see this (economic growth of 2.5% to 3%) continuing whether or not we have a tax cut,” he said.

The main engine of that growth, according to Baumohl, is consumers who not only will spend on goods, but also on services—namely, experiential services like travel.

Speakers on the “View from the top” panel echoed that sentiment, largely agreeing that demand for hotel experiences is continuing to grow across all segments.

Here are more highlights from Day One of The Lodging Conference.

Day One recap video

Photos of the day

(At left): Sheila Wright of MyDigitalOffice; Dane Knudson of MyDigitalOffice; and Caz Walker of Harbour Outdoor. (At right): Roger Bloss of RLHC and Dawnel Bloss. (Photos: Jeff Higley)

(At left): Travis Timian and Jessica Koch, both of Corning Optical Communications. (At right): Kevin McGrath of Kenemco Aquatics Group; Wine Mansfield of Contract Partners of North America; and H. David Murray of MGroup. (Photos: Jeff Higley)

Quotes of the day
“You give me an A-player GM, he or she is going to make my hotel successful.”
—Dave Johnson, president and CEO, Aimbridge Hospitality, on the value of good GMs on the “View from the top” panel.

“What’s the probability of a recession? I would give it no more than 25%.”
—Bernard Baumohl, chief global economist, The Economic Outlook Group, on potential economic disruptors the industry faces.

Tweet of the day

Slide of the day

Ali Hoyt, senior director of consulting and analytics at STR, parent company of Hotel News Now, shared several key takeaways in the “Industry overview” panel, including this slide about demand growth. “Demand growth has exceeded our expectations this year and continues to outpace supply,” she said. “Supply has been growing at a slower pace this cycle, still below 2% on a trailing-12-month basis.”

Data point of the day
Adam Lair, managing director and senior partner at HVS, said year-over-year transaction volume was flat in the second and third quarters of 2017. While CMBS and institutional capital has come back into the hotel market, it’s not enough to move the needle, as HVS expects hotel values to remain flat through 2019.

Editors’ takeaways

I’ve seen dozens and dozens and dozens of panel discussions in my 20+ years covering the hotel industry. Most of them have tended to be a lot of nodding heads as speakers agree with one another on most points. Tuesday’s “View from the Top” general session at The Lodging Conference was a little different.

There was the usual mutual respect and camaraderie among the five industry leaders speaking on the panel. But the most refreshing thing about the entire day was a candid discussion, mostly between Best Western Hotels & Resorts’ President and CEO David Kong and LaSalle Hotel Properties’ President and CEO Michael Barnello, about scale. Marriott International’s 2016 acquisition of Starwood Hotels & Resorts Worldwide serves as a backdrop to all conversations about industry consolidation and the quest for scale.

Kong, whose company has 11 brands in its portfolio, accurately said scale—whether it comes through a transaction or a brand launch—is an important element in the distribution puzzle. “The reason its gaining momentum … look around at any consumer good and you see a dizzying array of choices,” Kong said. “People just want more choice.”

Barnello agreed, but said it’s not that simple from a hotel owner’s perspective. There is an impact on existing hotels when new hotels from the same company are brought into the market, he said. Kong agreed, but said the effect only lasts a year or two.

Later, Trump Hotel Group CEO Eric Danziger added: “It’s hard for me to imagine that some owner who bought into a company that had ‘X’ brand, and now that there’s 30 of them coming through the same distribution channel, that there isn’t impact.”

There is some benefit to consolidation and scale, according to Dave Johnson, president & CEO of Aimbridge Hospitality, who said bigger companies can better retain quality talent—which is a must when quality labor is hard to find.

Don’t expect the “growthmobile” to stop any time soon. Johnson: “When the opportunity is right (the industry is) going to be scaling up in all three aspects of our business (ownership, management and branding).”

Geoff Ballotti, president & CEO of Wyndham Hotel Group, most likely summed up the thoughts of nearly every brand leader when he said: “Size has never mattered more; loyalty has never mattered more. Size is where the opportunity is for us.”

An intriguing conversation indeed, and one that will continue for the foreseeable future.
—Jeff Higley, Editorial Director
@jeffhigley1

The best indication that the U.S. hotel industry is on a clear course for continued growth and opportunity came during the “Private equity players” panel that I moderated. Owners Mike Depatie (managing partner, KHP Capital Partners), Jon Mehlman (president and CEO, Hospitality Investors Trust) and Jon Kline (CEO, Clearview Hotel Capital) have vastly different portfolio strategies, ranging from boutiques to branded select-service hotels to full-service large-group hotels, yet each one pinpointed the demand drivers and opportunities that make each strategy work for their respective companies.

They all see opportunity in their corners of the world.

All three did touch on one major current event, and that was the impact of the recent storms and hurricanes affecting many pockets of the U.S. Each one’s portfolio was affected by one or more of the recent storms, and they talked about some of the more pressing short-term results they’ll see, like a tough competition for construction labor to manage rebuilding (which will only prolong the re-opening timeline), rising insurance rates and more.

Still, they exemplified some of the bigger-picture trends we saw emerging from Day One’s general sessions: That there’s still demand for all sorts of hotel products in all sorts of places.
—Stephanie Ricca, Editor-in-Chief
@HNN_Steph

There was a lot of talk of hiring and retaining employees during Day One of The Lodging Conference. During the “Transform your hotel operations” session, panelists started out by talking about how having a good company culture and empowering associates to do their job well and advance their careers is key to keeping employees on board. Chesapeake Hospitality’s Chris Green put it best: “If (culture) doesn’t run deep in your company, it’s a real risk for you.”

Throughout the day, some hoteliers said they focus on hiring good talent at the property level, such as GMs who are passionate about their jobs and move up through the ranks of the industry. Others said they try to hire hospitality students right out of college. While attendees said they have different methods of hiring associates, all agreed they’re looking for friendly, passionate people who can really deliver hospitality. Technology continues to affect the entire industry and is even emerging on the back end and HR side of things, so it’ll be interesting to see how the industry keeps the element of hospitality in mind when it comes to hiring people while utilizing new types of tech going forward.
—Danielle Hess, Reporter
@HNN_Danielle