With President-elect Donald Trump's inauguration roughly one month away, the U.S. hotel industry is looking ahead to the policies the new administration will likely put in place.
Though no one can successfully predict what an incoming president will do once in office, campaign promises and a first term give some insight into what Trump has planned.
Labor laws
In an HNN podcast interview, labor attorney Andria Ryan spoke about the likely changes coming to U.S. labor rules and laws. The discussion covered the U.S. Department of Labor, National Labor Relations Board and immigration.
The NLRB has been a “very union-friendly organization” during the Biden administration, Ryan said. At the same time, Trump did receive support from some labor unions, so she expects him to continue to offer them some support.
In fact, days after the interview, Trump named Oregon Rep. Lori Chavez-DeRemer to head the Labor Department. Chavez-DeRemer has a pro-labor record and gained support from unions while in office.
On the immigration front, Ryan said work visas still have a negative connotation associated with them. Lawmakers may be reluctant to expand the issuing of new work visas until they have a better read on the political situation.
Promises of mass deportations may lead some employees to leave the country, either because of their own immigration status or a family member's, through a process known as self-deportation, she said.
“We’re going to have some folks who are just going to simply say, ‘I better go,’” she said.
Potential tariffs
Throughout his campaign and after his election, Trump has promised to impose new tariffs on imported goods, targeting Chinese products in particular. Though it's unknown whether he'll actually implement the tariffs and, if so, for how much, they could potentially raise costs for hoteliers who need to order new furniture, fixtures and equipment starting next year. Putting orders in now aren't exactly a workaround.
“If we order today, nothing is going to ship before the inauguration anyway,” said Alan Benjamin, founder and president of hospitality procurement firm Benjamin West. “We’ve got our holidays, the Chinese New Year and everything else. None of this is going to be in place. It takes time.”
Tariffs are designed to boost domestic manufacturing by making foreign goods more expensive to import.
“That's going to potentially drive up prices of the goods that are produced in the United States, because businesses are going to say, ‘Well, they're going to pay that whether they get it from me or whether they get it from another country, so why shouldn't we charge more and increase our profits,’” said Neil Flavin, chief operating officer of asset and hotel management at HVS. "That's going to create a domino effect.”
Hotel valuations
During a meeting of the Lodging Industry Investment Council before the presidential election, hotel executives took an informal poll of whether they expected hotel values to increase, decrease or stay the same under a second Trump administration. A majority, 65%, said they expected values to go up.
Michael DeNicola, principal at EMA Lodging Group and Beacon Hospitality Advisors, said he expected values to increase, citing likely tax policies as well as new appointments to the NLRB.
"The president controlling and appointing to the NLRB is critical to this industry, to the cost of labor. And four years with a Democratic president will cause that arm to become even more aggressive than they are right now. So, that will impact labor costs, which will decline values, because it impacts [net operating income], then values go down.”