Analysts are forecasting growth in U.S. hotel industry revenue of between 3% and 4% in 2024, but there are several variables that could push those estimates up or down as the year progresses.
The return of international inbound and corporate travel demand could provide some tailwinds. But challenges include high interest rates, short-term rental supply growing faster than hotel room supply and geopolitical uncertainties, speakers said during the second day of the Hunter Hotel Investment Conference.
“If we could get consumers to come back to traditional hotels, if we could get international inbound travel to recover, those would be two big paths, or what I would consider a full recovery in progress,” said Rachael Rothman, head of hotels research and data analytics for CBRE.
Consumers are still spending on travel, but a larger share of that is going toward short-term rentals and other alternative lodging, Rothman said.
Hotels in higher classes such as luxury have been performing well, while lower-class segments such as midscale and economy have lagged, said Jan Freitag, national director of hospitality analytics for CoStar Group.
“We’re looking at the forecast for the upper end, and we’re looking at 5% [revenue per available room] growth. We’re looking at the economy side, and it’s really small — it’s 1%,” he said. “We’re seeing supply deceleration, also some demand deceleration because of it. But on the upper end, we feel very positive about the return of business travelers, specifically the return of the group traveler and the return of leisure travel.”
Photo of the Day
Data Point of the Day
"We may see a lot of wheeling and dealing, but what I don't think we'll see is distress," Freitag said during a general session. CoStar data shows commercial mortage-backed securities delinquency rate around 5%.
Quotes of the Day
“We had a group of MIT graduate students touring our new headquarters … and one of the students raised his hand and asked, ‘With all these incredible innovations and advancements in artificial intelligence, is it possible there will be a day when you can run a hotel with no employees?’ And I said, ‘Gosh I hope not.’”
— Tony Capuano, president and CEO of Marriott International, on the future of technology in hospitality.
“People are out spending. They are traveling. It's just there's been competitive encroachment that we as an industry need to address.”
— Rachael Rothman, head of hotels research and data analytics for CBRE, on short-term rentals and other alternative lodging narrowing the supply gap with hotel rooms.
“My message today is this is a great industry and it’s because of great people. The entrepreneurs, the helpful attitude of everybody; yes, some of us are competitors, but we all help each other. It’s all about the people. We’ve had some blows. We’ve had some hard times. The respect I have for the [industry’s] hard work, risk-taking and ability to survive is high.”
— Bob Hunter, founder of Hunter Hotel Advisors and the Hunter Hotel Investment Conference, in his acceptance speech for the Hunter Conference Award for Excellence and Inspiration.
Editors' Takeaways
I hope no one is sick of me talking about property-improvement plans yet, because the second day of the Hunter Hotel Investment Conference was filled with expert advice on how owners can best navigate change of ownership PIPs or new brand PIPs. Listening to panelists during the “Room for Improvement: A CapEx + PIP Discussion,” FF&E Consultants Owner Charis Atwood summed it up best with the hashtag #DontSitOnYourPIP. Procurement, supply-chain and logistics experts on the panel stressed the importance of time. The sooner an owner gets started on the process of a renovation, the better the chance they’ll have in working with the vendors, purchasers and manufactures of their choice.
IHG Hotels & Resorts Director of Renovations Keita Cooper said items must be ordered right away; don’t sit around and wait. Even if you feel you’re ahead of schedule, he said, it’s important for owners to have a sense of urgency to get their PIPs done. This is especially important when considering some brands change their standards once or twice a year.
— Dana Miller, senior reporter
@HNN_Dana
The Hunter Hotel Investment Conference has a special notoriety on the U.S. hotel industry calendar, because it was the first event canceled in 2020 at the start of the pandemic lockdown. As a result, many of us use this mid-March conference as a timeline marker for recovery. One major trend stands out to me today, four years after that turning point: Even as the traditional economic cycle turns — inflation, high interest rates, low hotel transactions volume — the pandemic-borne zest for travel is still going strong. Hotel operators today at the conference talked about increased length of stay, increased demand for luxury hotels and our favorite term: bleisure travel. I interviewed Hotel Equities CEO Brad Rahinsky, and he shared his term for that blended business-and-leisure travel: multipurpose travel. The proof is in the data. Even after four years, more relaxed work-from-home policies, plus that prioritized spending on travel over goods in many cases, has shifted peak travel days.
— Stephanie Ricca, editorial director
@HNN_Steph
Bob Hunter, founder of Hunter Hotel Advisors and the Hunter Hotel Investment Conference, received the Hunter Conference Award for Excellence and Inspiration on Wednesday, an award he could have rightfully accepted at any of the previous 34 iterations of the conference.
In his acceptance speech, Hunter spoke about the value of cultivating relationships while conducting business in the hotel industry. That was one of the main reasons he created this conference, he said.
It’s clear that what he set out to do 35 years ago has left an impact on the industry, as many speakers at the conference have echoed his words of camaraderie with their fellow business partners.
At its heart, the hospitality industry is a people business. That’s something Hunter recognized from the start.
— Trevor Simpson, associate editor
@HNN_Trevor