NEW YORK — Despite macroeconomic headwinds, including inflation and the Russian invasion of Ukraine, hoteliers across the globe are still pushing rates — as long as customers allow it.
Executives from major hotel companies during the second day of the 44th annual New York University International Hospitality Industry Investment Conference said recovery these days is being led by rate instead of occupancy.
Some major gateway markets such as Boston and Chicago are still lagging in occupancy, so it's not been a uniform recovery, said Majid Mangalji, president of Westmont Hospitality Group.
Now might be the best opportunity to pay more attention to rate index versus revenue per available room index as additional intelligent revenue-management tools become available.
"I think if we can find ... that the pent-up demand offsets macroeconomic headwinds over the next 18 to 24 months, then we could find ourselves on the other side of this," said Noble Investment Group CEO Mit Shah.
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Quote of the Day
"We’ve tried to look into how can we use technology to make us 10% to 15% more efficient, because we have about 10% of an employee shortage. That's how we're looking at it, rather than fully automating an entire department through technology."
— Sloan Dean, CEO and president, Remington Hotels, on how his company is integrating technology with existing staff to operate hotels more efficiently.
Editors' Takeaways
In a world where there's a lot of factors that can't be controlled, Blackstone's Tyler Henritze said investors must play to their strengths.
But what does that look like? Henritze said the great thing about the hospitality industry is it's operationally intensive. So the most successful investors who reap their reward will be the ones who buy assets, transform them and then control the operations of it. Operators who have that strategy down to a science will stand out from ones who are fearful of how operationally heavy these assets can be.
He made a point to say that the operating element will be much more important going forward, and I'm willing to bet that he's right. After a few years of unknowns knocking owners and operators off their feet, they're going to need to step it up now and create the most value for all parties instead of waiting for macroeconomic trends to improve.
— Dana Miller, senior reporter
@HNN_Dana
The confidence the U.S. hotel industry is showing in the return of group and business transient travel is clear throughout the conference. Kevin Davis, CEO of the Americas for JLL Hotels & Hospitality, told me that 2022 will see the return of demand for urban hotel asset transactions, which dovetails nicely with the amount of capital still waiting to be deployed by private equity and real estate investment trusts. And rate growth isn't even taking a hit yet for the U.S. as a whole as these dormant segments layer back in, so all this adds up to a lot of hotelier confidence.
Last year's headlining worries of COVID-19 and massive labor shortages seem to be just that — yesterday's news. Many third-party management company executives on the stage described successes they've had in hiring recently, now that many are better-equipped to offer more flexibility and other benefits to prospective employees, and have invested in streamlining the hiring process. Hoteliers absolutely acknowledge shortages still persist, but by pivoting their businesses, it sounds like many have had success in deploying some best practices.
— Stephanie Ricca, editorial director
@HNN_Steph
Technology is providing hoteliers with solutions to many problems, but investing in and adopting new tech doesn’t come without challenges of their own. Brand executives speaking Tuesday morning explained that tech is one of the biggest areas they’re investing in, more than in buying new brands or real estate, but that doesn’t fix everything.
Tech debt, as Hilton Chief Financial Officer and President of Global Development Kevin Jacobs put it, is something hotel companies are still working they’re way out of, having to update and upgrade legacy systems that have long been in place while newer companies seemingly zip ahead of them because they only had to build, not rip anything out. Choice Hotels International President and CEO Pat Pacious agreed and went on to point out that the rapid obsolescence of technology means that a major investment today could easily turn into another expensive upgrade in just a few years once that tech is no longer supported.
Elie Maalouf, IHG Hotels & Resorts CEO for the the Americas, brought up an interesting point that technology is meant to make people’s jobs easier, but it also enables people to do more work.
“Technology gives you ways to work more parts of your day, more days of the week, all the time,” he said. “So, we have to also think about that, enabling workplace technology to make sure that our people get the break from working all the time that the tools allow them to do.”
— Bryan Wroten, senior reporter
@HNN_Bryan