NASHVILLE, Tennessee — Toward the beginning of the pandemic, experts were projecting the hospitality industry wouldn’t return to some sort of normalcy until 2024 or 2025, Vision Hospitality Group President and CEO Mitch Patel said. About two years later, he said, Vision Hospitality is amid a record year.
“It's still not normal, but we'll take this record revenue growth, at least what we're seeing so far,” Patel said during a video interview with Hotel News Now at the recent Hotel Data Conference.
Future of the Economy
Patel said he anticipated a downturn coming in 2019, but no one could’ve expected it to come in the form of a global pandemic. However, there’s a key difference between the recessions in 2008 and 2020.
“The pandemic was a medical crisis, not an economic crisis. … It disproportionately impacted our industry. Other industries were flourishing,” he said.
He said he wishes he had a crystal ball to project whether another recession is on the way or not, but the economy is trending toward a slowdown.
The strength of the economy comes down to two things: the market and home equity, he said. Following the initial years of the pandemic, those two components bounced back, but they’re now in a fickle state.
“If you look at those two things, home prices are starting to diminish, and the market has been a little unstable,” Patel said. “So we'll see what happens next, but clearly we're going down a path of lower growth.”
Supply Chain Update
Back in March at the Hunter Hotel Investment Conference, Patel said supply-chain issues made it “a very difficult time to be a developer.” Five months later, his opinion remains the same.
“I don't know if it's much better [than at the beginning of 2022] — certain items we're seeing some relief, but certain other items, we're still seeing major challenges. It is a very challenging time to be renovating or developing right now,” he said.
Along with high construction costs and labor challenges, Patel said some supplies have 14 to 16 months lead times, forcing development companies to seriously adapt their plans.
“Some of these projects that we are starting, we are committed and buying certain items well before we even start construction. … You have to have a whole different strategy if you want to build today,” he said.
Outlook on Remainder of 2022
Patel said he’s optimistic about the travel demand and the desire of Americans to take trips after largely staying indoors the past couple of years.
“I think we clearly saw that people wanted to travel; people wanted to spend money on experiences and travel more than any material thing,” he said. “I am just so thrilled that people have embraced that, and people are exploring this great country again.”
Vision Hospitality’s goal for its top line the remainder of the year is to continue to grow revenue per available room, aiming for 5% to 6% higher than its 2019 value, Patel said. Forecasting its bottom line is a little trickier.
Inflation is a double-edged sword, he said, since there’s been an upside to the industry’s rate growth but more pressures to the company’s bottom line. Overall, Patel said he’s confident in Vision Hospitality’s team after getting through the first few years of the pandemic.
“It's going to be really challenging. But our team is up for it, and what I'm most optimistic about is the team that we have, and the culture that we have, and if we can withstand what we went through two years ago, then onward and upward,” Patel said.
For more from Vision Hospitality's Mitch Patel, watch the video above.