NEW YORK — There are both long-term and shorter-term reasons for hopefulness across the hotel industry, according to experts speaking during the second day of the NYU International Hospitality Industry Investment Conference, but the industry also has a lot of work to do to realize its potential.
While the U.S. continues to experience more outgoing travel than incoming demand, a panel of experts on the topic began the day talking about how the country needs a more coordinated approach to streamline travel into the U.S. and remind travelers across the globe why the U.S. has long been held as the premiere international travel destination. For now, many travelers are eschewing the U.S. due to a particularly strong dollar and monthslong, or even yearslong, visa wait times.
The broad U.S. travel industry will have two major chances to highlight its strength in coming years, as U.S. cities play host to first the World Cup in 2026 before Los Angeles hosts the Summer Olympics in 2028.
"That's 8 million people going home and talking about their experience in the U.S. and how it may have exceeded their expectations, encouraging other people to go. The best marketing we can have is obviously the word-of-mouth marketing that we can get from these visitors," said Geoff Freeman, president and CEO of the U.S. Travel Association, speaking during the "International Inbound Demand" session.
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Quotes of the Day
"Even China coming out of the pandemic has recognized the challenges it confronted with the lack of visitation and has significantly eased its visa restrictions. So every country is looking at how to deal share [of international travel] from the United States."
—Geoff Freeman, president and CEO of the U.S. Travel Association, on the need of the U.S. to simplify the process for inbound international travel.
"The thing that is unique about our industry is exactly that combination of operations and real estate."
—Shai Zelering, managing partner, real estate, at Brookfield, on what sets hotels apart from other commercial real estate asset classes.
“As great as we think we are in our industry in revenue management, there’s still a thousand miles we can go with it. And maybe AI, some version of it — a JV version of it — can help with that.”
—Craig Smith, CEO of Aimbridge Hospitality, on the opportunities the hotel industry has with generative artificial intelligence.
“The point, as everybody up here said, if you’re not continually evolving, you’re at risk of losing market share, so it does depend a little bit where you are, but all of us need to be recognizing that transformation should be top of mind at all times.”
— Greg Juceam, CEO of Extended Stay America, speaking about the necessity of innovation in the hospitality industry.
Editors' Takeaways
The discussion about just how much influence artificial intelligence will have over the hotel industry reached a fever pitch early Tuesday when a panel of CEOs were hashing out whether the technology will have short-term and long-term impacts on lodgings. On the "Aligning Stakeholder Objectives" panel, MCR Chairman and CEO Tyler Morse insisted the impact of the tech is overblown and will have minimal effects on the hotel business over the next 10 years. Various hotel operators, including PM Hotel Group President and CEO Joseph Bojanowski and Aimbridge Hospitality CEO Craig Smith, noted it will be key for things like predictive staffing to streamline operations.
But Pyramid Hospitality Group President and CEO Warren Fields said whatever impacts new technology may have on hotels, it can't take the hospitality out of the business.
"The guest-facing part of our business will never go away. It can't," Fields said.
— Sean McCracken, news editor
@HNN_Sean
The current status of interest rates in the U.S. has had mixed results for hotel owners and developers. The good news is that the rates have held steady, and there’s every indication they’ll continue to hold, providing a greater sense of certainty. If there’s one thing we know the industry doesn’t like, it’s uncertainty. The less-than-great part, of course, is that the rates are holding steady at a higher level than most owners and developers want. Hoteliers and the broader business world have hoped for interest rate cuts, but they look less and less likely each month, and plenty doubt they’ll happen at all.
The acceptance of this by U.S. hoteliers has taken a few different approaches. Some are welcoming it, saying rates were held too low for too long, and even where they are now isn’t high by historical standards. Others see that the fundamentals of the industry are still good, and if it’s unlikely we’ll see much lower rates any time soon, it’d be better to move forward on a deal now than wait and be part of a much larger surge in supply.
It's a waiting game, of course, to see what the Fed does with rates this year. Regardless, though, I think we'll start seeing more adopt the belief that it's better to get something going now while hotels are still performing so well.
— Bryan Wroten, senior reporter
@HNN_Bryan
This is a hotel investment conference, no doubt about it. The majority of conversation is about who and what types of companies are finding investment dollars and opportunities to buy and build hotels. But a lot of Tuesday’s conversations went deeper on the value of the total hospitality experience for guests and how that translates to the value of an asset or a franchise to owners, and company expansion.
Members of the Industry Real Estate Finance Advisory Council, or IREFAC, stressed the value that growth through experience alignment can bring to hotel companies. Hilton CFO Kevin Jacobs predicted more partnerships for Hilton like the one the company struck with AutoCamp earlier this year. He added that in five years Hilton will be "like it is today but bigger, because we'll have more partnerships ... that we can connect through our loyalty program ... without having to build those companies ourselves."
Other executives at the conference talked about partnerships with cruise lines, yachts and other experiences that are "a great way to grow," compared to building new brands from scratch, according to IHG Hotels and Resorts Chief Development Officer Julienne Smith.
— Stephanie Ricca, editorial director
@HNN_Steph